Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

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