Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
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.  

Comments

Print   |    |  Comment

PJ/CASE LAW/2014-15/2560

Whether credit can be utilised for payment of excise duty under Compound levy Scheme ?

Case:- COMMR. OF C. EX., LUDHIANA VERSUS PUNJAB CASTING PVT. LTD.
 
Citation:- 2014 (306) E.L.T. 612 (P & H)

Brief facts:- These two appeals under Section 35G of the Central Excise Act, 1944 (for short, the Act) are directed against common order dated 2-8-2011 (Annexure A-3) of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for short, the Tribunal) [2011 (274)E.L.T. 554 (Tri.-Del.)] whereby order, dated 20-12-2004 (Annexure A-2) passed by the Commissioner (Appeals), Customs & Central Excise, was affirmed. Both these appeals have been taken up together for adjudication as the same question of law is involved therein. Respondents in both these appeals are engaged in manufacture of non-alloy steel ingots. In pursuance to floating of Compounded Levy Scheme w.e.f. 14-5-1997 by the Finance Act, 1997 in respect of furnace and hot steel re-roller units, the respondents opted to pay fix duty in terms of capacity of their induction furnaces. Consequently, each respondent was required to pay fixed duty of Rs. 5 lacs per month on three metric ton capacity of its induction furnaces. The respondents debited their Cenvat Credit Account of inputs for discharging their liability of payment of excise duty for the period under the Compounded Levy Scheme.
 
Appellant’s contention:- As per the department, the respondents could not have made use of Cenvat Credit Account and the duty was to be paid only through Personal Ledger Account (for short, PLA). Finding fault with the procedure of payment of duty, the Adjudicating Authority i.e. the Joint Commissioner, Customs & Central Excise confirmed the demand of Rs. 8,04,195/- against M/s. Punjab Castings Pvt. Limited and demand of Rs. 17,71,208/- against M/s. R. Ess Iron & Steel Private Limited via PLA along with interest, disallowing the duty discharged through Cenvat account. In addition, penalty of equal amount was also confirmed against them.

Respondent’s contention:- The respondents challenged this order of the Adjudicating Authority by way of separate appeals. Vide order dated 20-12-2004 (Annexure A-2), the Appellate Authority found that as arrears in question were on account of excise duty, there was no bar in paying the same through cenvat account. Appeals of the respondents were allowed. Dissatisfied with order Annexure A-2, the department went in appeal. In its joint order, the Tribunal, vide order dated 2-8-2011, confirmed the view taken by the Commissioner (Appeals) holding that excise duty liability on final products covered under Compounded Levy Scheme could be discharged through cenvat credit. Payment of duty through cenvat credit account thus was found to be in order. Levy of interest and imposition of penalty by the Adjudicating Authority was set aside.
 
Reasoning of judgment:- After considering the submissions produced by both the sides the Hon’ble High Court concluded on the part that plea of the department is that benefit of cenvat credit could not be availed by the respondents as they were required to discharge their duty liability only through PLA. It is claimed that payment of duty via cenvat credit does not discharge duty liability of the respondents. In short, it is claimed that first as also second Appellate Authority went wrong in approving the action of the respondents of payment of duty through cenvat credit. Seeking reversal of orders of the Appellate Authority, restoration of the order in original is sought.
 
When counsel for the appellant-department vociferously espousing the cause of the department has contended that strict compliance of rules was to be made by the respondents in discharging their duty liability and payment was to be made only through PLA, it has been conceded that there is neither evasion of duty nor any loss has been occasioned to the revenue.
 
Even if whole case of the department is considered in entirety, the only defect is in the procedure adopted by the respondents for discharging their duty liability. At this stage, findings of the Tribunal, are reproduced as below :
 
“On careful consideration of the submission made from both sides, we find that the case put against the assessee in the show cause notice clearly indicates that the demand, penalty and interest on the demand is only on the ground of discharge of duty liability on the final products covered under compounded levy scheme after 1-4-2000 through Cenvat Credit account. It is seen that the learned Commissioner (Appeals) has come to conclusion that such amounts which were duty from the appellants could be discharged through debit in Cenvat credit and were accordingly debited by them on their own. Such a debit through Cenvat credit account cannot be faulted with and there is no need for imposition of penalty and interest as Cenvat Credit Rules specifically indicate utilization of legit credit availed for discharge of duty liability. There is no dispute that the credit availed was eligible credit.”
 
It is evident from these findings that both the appellate authorities had found no fault with the mode of payment of excise duty by the respondents. Cenvat account of the respondents had sufficient credit and they discharged their duty liability through the same instead of making payment through PLA; there is neither loss to the revenue nor there is evasion of duty.
 
Consequently, the appeals being devoid of merits are dismissed in limine.
 
Decision:-Appeals dismissed.

Comment:- The crux of the case is that utilisation of cenvat credit for payment of excise duty under  Compound levy Scheme is proper discharge of liability on the premise that the notification of compound levy scheme only puts restriction on credit availment during the period of option. It does not restricts utilisation of rightly availed cenvat credit earned by assessee. Similar decision was given by Rajasthan High Court in the case of Shankeshwar Fabrics.

Prepared by: Kushal Shah

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