Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Dept. Can’t Classify Product as Zarda Scented Tobacco After Repeatedly Approving It As Chewing Tobacco: CESTAT *  Mere Uploading Of GST Order On Portal Is Not “Valid” Service: Tripura HC *  CGST Can Proceed Even If SGST Closed Similar Case Earlier: Delhi HC *  SC upholds 28% GST on online gaming with retrospective effect. *  West Bengal Govt cuts E-way Bill Threshold limit to Rs. 50,000 for intra-state goods movement. *  Criminal Prosecution Under Central Excise Act Can’t Continue After CESTAT Sets Aside Duty Demand on Merits: Punjab & Haryana High Court. *  Madras High Court Quashes GST Assessment Orders for Denial of Personal Hearing; Remands Matter Subject to 10% Deposit *  Ex Parte GST Order: Madras High Court Directs Immediate Removal of Bank/ITC Attachment Upon 25% Deposit *  J.K. Cement Receives GST Demand Order of Rs 8,02,113/- from Ahmedabad Tax Authority *  Delhi Police EOW Busts Alleged Rs. 128 Crore GST Fake Invoice Network. *  REPLY TO SCN CAN’T BE TREATED AS “EMPTY FORMALITY”: ORISSA HIGH COURT QUASHES GST DEMAND OF RS. 57.30 LAKH *  Challenge to CGST Provisions restricting ITC to Bonafide Purchasers : Allahabad HC issues notice *  CBIC Notifies Revised Customs Tariff Values for Edible Oils, Gold, Silver, Brass Scrap and Areca Nuts *  Delhi HC Orders Removal of GST Attachment After Statutory 1 Year Period Expired *  GSTAT Extends Relaxed Appeal Filing Guidelines till December 31, 2026 *  AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation *  Gold, Silver Imports To Get Costlier As Govt Raises Customs Duty To 10%  *  GSTAT Enables Pre-Payment Access to Document Upload and Checklist for GST Appeal Filing *  GST Portal Restrictions Can’t Override Statute: Gujarat HC Allows Cross-State Transfer Of CGST ITC After Amalgamation *  Centre Revises HS Codes for Large Diameter Steel Pipes Used in Oil & Gas Pipelines *  Customs Duty Liability Arises On Warehouse Clearance Date: Supreme Court *  Government lifts export ban on de-oiled rice bran *  CESTAT Grants 12% Interest on Pre-Deposit for Investigation from Date of Deposit till Refund and Denies Interest on Interest. *  Government Overhauls GST Classification Framework for Non-Alcoholic Beverages; Fruit Juice Drinks, Milk-Based Beverages and Caffeinated Drinks to Attract Revised 5% and 40% GST Rates from May 1, 2026 *  India’s gross GST collections hit a record Rs 2.42 lakh crore in April, up 8.7% *  Customs clearance stalled, revenue hit over MRP dispute *  Shipping Corporation explores Middle East routes as Hormuz tensions disrupt cargo movement *  India, Kenya signs MoU for exchange of pre-arrival customs information *  No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge *  The India-New Zealand Free Trade Agreement, signed "once-in-a-generation" deal that eliminates tariffs on 100% of Indian exports to New Zealand
Subject News *  Consignment Sales Can’t Be Reclassified as Inter-State Sales Based on Pre-Agreement Evidence: CESTAT *  Exporter Can’t Be Denied Advance Authorization Benefit Due To ICEGATE Technical Glitch: Delhi High Court *  No GST Demand For Mere Wrong Set-Off Of IGST Credit Under CGST And SGST Heads: Kerala HC. *  Cenvat Credit Can’t Be Denied on Input Services Having Nexus With Manufacturing Activities: CESTAT *  Pending Proceedings Can’t Survive Without Saving Clause: Calcutta High Court Quashes GST Demand of Rs. 6.28 Crore After Omission of Rule 96(10) *  Madras HC Quashes GST Demands on TASMAC (Tamil Nadu State Marketing Corporation) Bar Licence Fee *  GST Proceedings Cannot Survive Omitted Rule Without Saving Clause: Calcutta HC *  Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT *  Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court *  Punjab & Haryana HC Directs Reconsideration of Contractors’ Claim for Additional GST Payment After Tax Rate Hike From 12% to 18% *  S. 108 Statements Can’t Be Sole Basis Without Following Section 138B Procedure: CESTAT *  Bombay High Court Frames Key Questions on Mandatory Distribution of ITC U/s 20 CGST Act *  Filing of Annexure-B for Refund Applications involving Accumulated ITC using the offline utility in GST portal: GSTN *  No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT  *  Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  GSTAT Issues Major Bench Allocation Framework; All Appeals to First Go Before Division Bench *  ITC Blocking Without Reasoned Order Violates Rule 86A; Punjab & Haryana HC Directs Release of Credit *  Allahabad HC Refuses Bail to CGST Superintendent In Rs. 70 Lakh Bribery Case *  S.130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings *  SC grants Bail to Rs 54cr GST case  *  Karnataka HC Sets Aside Duplicate GST Orders, Orders Fresh Hearing on GSTIN Cancellation *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  Transfer Of Unutilized ITC After Amalgamation - Supreme Court Issues Notice *  PUNJAB & HARYANA HC QUASHES GST CANCELLATION NOTICE FOR FAILURE TO PROVIDE CBIC ENQUIRY REPORT *  LICENSE FEE, TECHNICAL ASSISTANCE CHARGES NOT INCLUDIBLE IN CUSTOMS VALUE UNLESS THEY ARE A CONDITION OF SALE: CESTAT *  DELHI HC ORDERS REMOVAL OF GST ATTACHMENT AFTER STATUTORY 1 YEAR PERIOD EXPIRED *  CUSTOMS BROKER CAN’T BE FAULTED JUST BECAUSE EXPORTER’S GST REGISTRATION WAS PREVIOUSLY CANCELLED: CESTAT   *  Supreme Court Dismisses Review Plea Against Delhi HC Ruling Holding Real Operator Behind Fake GST Firms Liable As ‘Taxable Person  *  GST Appeal Can’t Be Rejected Merely Because DRC-07 Was Not Uploaded On Portal: Bombay High Court  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/3031

Imposition of interest and penalty after debonding by EOU.

Case:-SHREE KADERI AMBAL MILLS LTD. VersusCOMMISSIONER OF C. EX., MADURAI
 
Citation:- 2016 (331) E.L.T. 444 (Tri. - Chennai)
 
Brief facts:-  This appeal is against the Commissioner (Appeals) order dated 27-5-2005.
The appellant was registered with EOU Development Commissioner. They availed credit on the capital goods. Subsequently, the appellant opted for de-bonding of the same unit. Before de-bonding, the appellant has reversed the credit. The adjudicating authority in his order dropped the demand in his order dated 12-1-2005 and ordered for recovery of interest of Rs. 11,97,139/- and also imposed a penalty of Rs. 1,20,000/-. On appeal, the Commissioner (Appeals) has rejected the appeal and upheld the order. Hence the present appeal.
 
Appellant’s contention:- The learnedadvocate submits that they had two units one is registered as EOU and the other is registered as DTA. EOU unit had applied for debonding and paid appropriate duty on the capital goods. The same was transferred by raising invoice dated 30-3-2001 to the Unit-II. Unit-II has availed credit on 31-3-2001 whereas the AC has demanded interest on Unit-II and he submitted a date chart showing the date of availing the credit and date of debonding and date of approval by the Development Commissioner. The Development Commissioner approved the debonding w.e.f. 31-3-2001 whereas the adjudicating authority took the relevant date from 14-8-2001 and demanded the interest. He further submits that when there was no demand, question of interest does not arise. The relevant date for the demand should be taken as 31-3-2001 as approved by the Development Commissioner.
 
Respondent’s contention:- On the otherhand, ld. AR reiterates the findings and submits that final debonding was given by the Asst. Commissioner only on 14-8-2001 and till such time unit has remained as an EOU. Therefore, interest is payable. He relied on para 20 of the O-I-O.
 
Reasoning of judgment:-On a carefulconsideration of the submissions of both sides and also on perusal of records and the date chart submitted by the appellant, they find that adjudicating authority in his order dropped the proceedings in respect of recovery of demand of reversal of Cenvat credit. However, he demanded the interest. On perusal of the DC’s letter dated 20-7-2001 addressed to the appellant, where the appellant applied for de-bonding on 30-3-2001, final debonding order was issued and appellant was allowed to operate as DTA unit with effect from 1-4-2001. Subsequently, the Development Commissioner clarified that appellants have been permitted to operate as DTA unit on 31-3-2001 instead of 1-4-2001 as they have completed Central Excise formalities on 30-3-2001 itself. In view of the Development Commissioner’s letter allowing for debonding of EOU, the DTA unit of the appellants have reversed the credit on 30-3-2001 itself and the Development Commissioner in the above letter has also approved debonding w.e.f. 31-3-2001. Therefore, the question of demand of interest and imposition of penalty does not arise and also find that there was no removal of capital goods till the same unit becomes the DTA unit. There was no physical removal or clearance of capital goods or excisable goods. They find that the adjudicating authority instead of taking the date as 31-3-2001 has taken the date of debonding as 14-8-2001 which is not correct. Hence, they hold that appellants are not liable for any interest or penalty. Accordingly, the impugned order is set aside and appeal is allowed.
 
Decision:- Appeal allowed.
 
Comment:- The analogy of the case is that in view of Development Commissioner’s letter dated 20-7-2001, approving debonding and permitting assessee to operate as DTA from 31-3-2001 as Cenvat credit already reversed. There was no demand of any dues, so question of payment of interest and penalty does not arise for period 31-3-2001 to 14-8-2001. Also, there is no physical removal of capital goods as same Unit became DTA Unit. The date of debonding as 14.8.2001 taken by revenue is incorrect. So there is no liability arise for interest and penalty.

Prepared by:- Monika Tak

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