Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *   CBIC issues draft rules for Customs valuation *  Top Headlines: Threshold for Benami deals, green bond investors, and more *  Govt aims 1-hour clearance for goods at all ports *  Exporters Allowed To Use RoDTEP, RoSCTL Scrips To Pay Customs Duty, Transfer Them; Rules Amended *  Millions of labourers to be affected by brick producers’ strike over hike in GST, coal rates *  Inauguration of ‘kendriya GST parisar’ *  Transporter can seek Release of Conveyance alone, not Goods under GST Act: Madras HC *  GST: Quoting of DIN Mandatory for Responding to Notice, Govt Modifies Portal *  Firms can soon file claims for GST credits of ?400 cr *  CBIC issues modalities for filing transitional credit under GST. *  Mumbai: Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr *  Report to restructure Commerce Ministry under study; idea is to set up trade promotion body: Goyal *  Firms can soon file claims for GST credits of ?400 cr *  Gambling Alert! Govt May Levy Up To 28% GST; UP, Bengal Back Move *  EPFO backs raising retirement age to ease pressure on pension funds *  India Moving Up Power Scale, Set to Become Third Largest Economy By 2030 *  Airfares Get Expensive: What Changes for Flyers From Today? *  IRCTC Latest News: Passengers to Pay More For Cancelling Confirmed Rail Tickets Soon. *  IBC prevails over Customs Act, says Supreme Court. *  As GST enters sixth year, a time for evaluation and reassessment *  There’s GST on daily essentials as Centre needs money to buy MLAs: Arvind Kejriwal *  Now, GST on cancellation of confirmed train tickets, hotel bookings *  GST kitty for top States could rise 20% in FY23, says Crisil *  French customs officials seize another cargo vessel over Russia sanctions *  TradeLens builds on Asia momentum with Pakistan Customs deal *  Hike tax on tobacco, reduce affordability & increase revenue: Civil society organizations to GST council *  Bihar: ?10 crore tax evasion on tobacco products detected in raids *  Centre failed on GST, COVID; would it be anti-national? Rajan on Infosys row *  Service Tax not Chargeable on Income Tax TDS portion paid by recipient: CESTAT grants relief to TVS *  Foreign portfolio investors make net investment of Rs 7575cr in Sep so far
Subject News *  Run-up to Budget: Monetary threshold for GST offences may rise to Rs 25 cr *   GST (Tax) E-invoice Must For Businesses With Over Rs 5 Crore Annual Turnover *   Both Central GST and excise duty can be imposed on tobacco, rules Karnataka high court *   CBIC Issues Clarification On Extended Timelines For GST Compliance *   CBIC Issues Clarification On Extended Timelines For GST Compliance *  Budget 2023- 9.6 crore gas connections *  GST: Tamil Nadu Issues Instructions for Assessment and Adjudication Proceedings *  GST: CBIC Extends Last Date for filing of ITC *  GST collection in September surpasses Rs 1.4 lakh crore for straight seventh time *  Dollar smuggling case: Customs chargesheet names M Sivasankar as key conspirator. *  Hike in GST rates fuels inflation *  Assam: CBI arrests GST commissioner in Guwahati *  GST fraud worth ?824cr by 15 insurance Cos detected *  India proposes 15% customs duties on 22 items imported from UK *  Decriminalising certain offences under GST on cards *  Surge in GST collections more due to higher inflation: India Ratings *  MNRE Notifies BCD and Hike in GST Rates as ‘Change in Law’ Events But With a Condition | Mercom India *   Solar projects awarded before customs duty change allowed cost pass-through *  Rajasthan High Court Dismisses Writ Petitions Challenging Levy Of GST On Royalty *   GST revenue in September likely at Rs 1.45 lakh crore *  Govt working on decriminalising certain offences under GST, lower compounding charge *  Building an institution like GST Council takes time, trashing is easy: Sitharaman *  GST collections in Sept may touch ?1.5 lakh crore *  KTR asks Centre to withdraw GST on handlooms *  After Gameskraft, More Online Gaming Startups To Receive GST Tax Claims *  Madras HC: AAR Application Filed Under VAT Does Not Survive After GST Enactment *  Threshold for criminal offences under GST law may be raised *  Bengaluru: Gaming company faces biggest GST notice of Rs 21,000 crore *  CBIC clarifies Classification of Cranes for GST, Customs Duty *  Customs seize gold hidden in bicycle in Kerala airport  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2785

Credit availment without receiving the inputs.

Case:-RELIANCE CELLULOSE PRODUCTS LTD. VERSUSC.C.E., CUS. & S.T., HYDERABAD-I

Citation:- 2015 (319) E.L.T. 341 (Tri. - Bang.)

Brief Facts:-The only issue in this case is whether the appellant is entitled to take credit without receiving the inputs. Admittedly in this case, only invoices were moving between manufacturers, registered dealers, etc. without any movement of goods.

Appellants Contention:-The learned counsel put forth several arguments. The first was that Hon'ble High court of Orissa has held that Central Government did not have rule making powers in respect of Cenvat issues. The second argument was that Government has not lost any revenue. Third argument was that this was done only to show higher turnover by all the concerned people. Fourth argument was that when there is no revenue loss to Government, appellant cannot be asked to pay Cenvat credit taken by them.

Respondents Contentions:-The learned AR also submits that appellants do not deserve any sympathy and the entire amount should be required to be deposited including the penalty. He also submits that Hon'ble High Court of Andhra Pradesh in the case of Hira Ferro Alloys Ltd.v. CC, CE & ST (Appeals), Vizag- 2014-TIOL-334-HC-AP-CX = 2015 (315)E.L.T.376 (AP)observed that in case where there is no absolute debatable case, appeal may be allowed to be prepared with full deposit.

Reasoning of Judgement:-In Tribunal’s opinion, they are not required to go into all these details. The only thing that is to be considered by them is whether the Cenvat credit which has been demanded was correctly taken in the first place or not. According to sub-rule (5) of Rule 9 of Cenvat Credit Rules, the manufacturer of final products or the provider of output service shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant information recording the value, duty paid, Cenvat credit taken and utilized, the person from whom the input or capital goods have been procured is recorded and the burden of proof regarding admissibility of the Cenvat credit shall lie upon the manufacturer or provider of output service taking such credit. The only way the burden of proof can be discharged is to show that the invoices are in accordance with law, inputs have been received, accounted for and have suffered duty. The appellants are able to show only invoice and nothing else. When the burden of proof is clearly on the assessee and when he fails to discharge the same, there is no other option but to make the assessee to reverse the credit or if the credit is not available, to make the payment. In this view of the matter, the tribunal find that appellant has failed to make out prima facie case for waiver.
At this stage, learned counsel pleads severe financial hardship. When asked for the evidence, he submits that he has produced the latest balance sheet available with the appellant for the year ending 31-3-2013. On going through the balance sheet and the profit & loss account of the appellant, tribunal find that under the category of Reserves and Surplus under Note 2 in the balance sheet, it has been shown that profit brought forward from previous year is Rs. 15,35,39,946/- and amount available for appropriation is Rs. 12,30,37,004/-. No doubt the appellant has made a loss of Rs. 3 crores during the current year but this does not mean that appellant is under serious financial difficulty when the amount available for appropriation is more than Rs. 12 crores.
In this case even though tribunal have taken a view that appellant has absolutely no case, they have to be conscious of the fact that the aspect as to whether such Cenvat credit taken by the appellant was subsequently reversed was not argued before them nor pressed. Therefore, in Tribunal’s opinion, in this case if the appellant deposits Cenvat credit availed by them with interest that would be sufficient. Accordingly, appellant is directed to deposit the entire amount of Cenvat credit with interest within eight weeks and report compliance on 10-6-2014.At this stage, they have to consider whether the Managing Director who is the second appellant is also required to deposit the amount. From the records, they find that the Managing Director has clearly admitted that these transactions were only made for turnover purpose without any receipt of the goods. A Managing Director of a company is expected to know legal provisions and does not indulge in such activities. Therefore, tribunal direct him also to deposit an amount of Rs. 2 lakhs (Rupees two lakhs only) within eight weeks and report compliance on 10-6-2014.Subject to compliance with the above directions, the requirement of pre-deposit of balance dues is waived and stay against recovery is granted during the pendency of appeals. Both the stay applications are disposed of in above terms.
 
Decision:- Pre-deposit ordered.

Comment:- The crux of the case is that according to Rule 9(5) of Cenvat credit rules it is necessary for the manufacturer of final products or provider of output serviceto maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods for which credit is taken. In the present case, the Managing Director admitted that no goods were received. Hence, when there was no receipt of inputs, the question of credit availment does not arise and accordingly, entire cenvat credit availed along with interest was ordered as pre-deposit.

Prepared By:- Neelam Jain
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com