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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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PJ/Case Laws/2010-11/1068

Reversal of Cenvat credit under Rule 6 of CCR, 2004

Case: Commissioner of Central Excise v/s Maan Pharmaceuticals Limited
 
Citation: 2011 (263) E.L.T. 661 (Guj.)
 
Issue: - When cenvat credit is reversed then there is no need of reversal of Cenvat credit.
           
Brief Facts:- Respondent assessee is engaged in the manufacture and clearance of P & P medicines falling under Chapter 30 of Central Excise Tariff Act, 1985. Respondent were manufacturing both dutiable and exempted products. Respondent were availing modvat credit of duty paid on the raw materials used in the manufacturing of their products.
 
An audit objection was raised regarding availment of credit on raw material used in the manufacture of exempted product. Respondent contended that it was not possible for them to maintain separate records for common inputs. However, they agreed to work on the modvat credit in respect of the inputs used in manufacture of exempted final product and reverse the credit so availed by it. Accordingly, respondent reversed the modvat alongwith interest.
 
Revenue issued show cause notices demanding duty equal to 8% of the total price of the exempted final goods with interest and penalty. The Adjudicating Authority held that though the issue was decided in favour of respondent in many cases as well as by the decision of the Supreme Court in M/s Chanrapur Magnet Wires Ltd [1996 (81) ELT 3 (SC)], in light of the Circular stating that assessee has no option but to reverse 8% of the price of exempted products, and which is binding on them, the demand with interest was confirmed and equal penalty was imposed.
 
The Tribunal set aside the impugned order and allowed the appeal of the respondent. Aggrieved by the impugned order, Revenue is in appeal before the High Court.  
 
Appellant’s Contention:- Revenue contended that in the light of the provisions of Rule 6 of the Cenvat Credit Rules, 2002 it was incumbent upon the assessee to either maintain separate accounts or pay duty at the rate of 8% in case it did not opt to maintain separate accounts.  
 
Respondent’s Contention:Respondent-assessee contended that the Tribunal has placed reliance upon the decision in the case of M/s Chandrapur Magnet Wires Ltd., as well as a decision of High Court in case of M/s Maize Products v. Ahmedabad [2007 (79) RLT 662]. It was submitted that the Revenue’s appeal in High Court was dismissed as reported at 2009 (234) ELT 431 (Guj). It was submitted that the decision of the Tribunal being in consonance with the principles enunciated by this Court as well as the Supreme Court in the above referred decisions, no case is made out to warrant any interference.
 
Reasoning of Judgment:- It was noted that the Tribunal has merely followed the decision of the Supreme Court in the case of M/s Chandrapur Magnet Wires Ltd as well as the decision of the High Court in the case of M/s Maize Products.
 
It was noted that this Court had held that “…Under the Rule, Explanation-1 provides that the amount mentioned in any of the conditions shall be paid by the manufacturer by debiting the Cenvat credit or otherwise.” It was further held that “……the respondent-assessee having accepted before the Tribunal to reverse the Cenvat credit as recorded by the Tribunal…and accordingly the Tribunal has issued directions accordingly.”
 
It was held that examining the impugned order of the Tribunal it cannot be said that Tribunal has committed any legal infirmity which require interference. No question of law arises.
 
Decision:- Appeal accordingly dismissed.
 
Comments:- This  is very good decision as Mumbai High Court has maintained in case ofNicholas Primal (India) Ltd [2009-TIOL-649-HC-MUM-CX] that the assessee does not have any option except to reverse the cenvat credit @ 8%. Even the government has given retrospective amendment after this judgement. But this decision of Gujarat High Court has given relief to assessee.  

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