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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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PJ/Case Laws/2012-13/1388

Whether credit denied on the ground that the raw material was directly sent to the job worker’s factory?

Case:- COMMISSIONER OF CENTRAL EXCISE, JAIPUR V/S KEC INTERNATIONAL LTD.
 
Citation:- 2012 (28) S.T.R. 399 (Tri. – Del.)
 
Brief Facts: - The present appeal has been filed by the revenue on being aggrieved with the order passed by the Commissioner Appeals. The respondents – assessee were engaged in the manufacture of galvanized parts of transmission tower and lining falling under Chapter 73 of the Schedule to the Central Excise Tariff Act, 1985. The starting raw material for the said final product is billets which the assessee is procuring from outside. Instead of bringing billets into their factory, they purchased the same and sent it directly to the factory of job worker who convert the same into angles and channels. Duty of Excise paid on the said billet is availed as modvat credit by the said job workers. The angle and channels were manufactured by the job workers and supplied to the assessees who further converts into their final products.
The main dispute here in the present appeal relates to the availment Cenvat credit of Service tax paid by the respondents on the GTA service so received by him for transportation of billets. The Revenue alleges that as the said billets are not brought into the respondent’s factory and are directly sent to the job workers factory, the Service tax paid by the assessee for transportation of said billets is not available to them as credit.

Reasoning of Judgment: - The Hon’ble Tribunal held that it is rightly accepted by the Commissioner (Appeals) that as the respondents have paid freight along with the Service tax and billets are essential inputs, the credit of Service tax paid by them should be allowed. They further reiterated the finding of the Commissioner (Appeals) that there is no dispute that the assessee has purchased the raw material namely MS billets which have been used in the manufacture of finished goods MS Angles/Channels manufactured by the job worker and supplied to them. Then after taking Cenvat credit on these MS Angles/Channels these have been used by the assessee in the manufacture of galvanized parts of transmission tower and lining. The transportation charge on MS billets from the supplier to the job worker premises including service tax has actually been borne by the assessee and finished goods manufactured by using the input MS Billets which got converted into Angles/channels by job worker and then got converted into galvanized parts of transmission tower and lining by the assessee were sold by the assessee themselves. Further it was observed that the expense incurred by the assessee on GTA service for procurement of MS Billets is definitely an ingredient cost of galvanized parts of transmission tower and lining sold by the assessee and thus the GTA service is input service under Rule 2(l) of Cenvat Credit Rules, 2004.
Further, they find that Hon’ble Apex Court in case of Regional Director v. High Land Coffee Works [(1991) 3 SCC 617] has held that the word “include” is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not restriction. Similar view has been taken by the Larger Bench of the Tribunal in Commissioner of Central Excise v. GTC Industries Ltd. [2008 (12) S.T.R. 468 (S.C.). In this case since the cost of all these services indicated in the chart submitted by the assessee are included in the cost of the final product, hence they are to be treated as input service in terms of said order of the Larger Bench of CESTAT. Further Hon’ble Larger Bench of CESTAT in the case of M/s. GTC Ltd. - 2008-TIOL-1634-CESTAT-Mumbai and Hon’ble High Court of Bombay in the case of M/s. Coca Cola India vide its order dated 26-8-2009 - 2009 (242) E.L.T. 168 (Bom.) has held that any input service which form part of the value of final product on which duty is paid, should be eligible for Cenvat credit. Thus, following the said decisions the Commissioner (Appeals) hold that GTA service for procuring the MS billets which ultimately has been used for manufacture of galvanized parts of transmission tower and lining sold by the assessee is an input service and they are entitled for the Cenvat credit amounting to Rs. 289008/- and thus they set aside the impugned order confirming the demand for recovery of Cenvat credit amounting to Rs. 289008/-.
Thus, they held that from the said order of the Commissioner (Appeals) it is found that the billets are admittedly the raw material for the respondents final product, if the said billets are brought to the factory by the respondents and then sent to the job workers, there could be no dispute about the availability of credit of Service tax paid on GTA services. Merely because to save transportation, the billets are directly offloaded in the factory of job workers, should not be adopted as a reason for denial of credit, especially when the freight as also Service tax stand paid by the respondents. Undoubtedly, the billets are first required to be converted into angles and/channels which are further converted into the final product. As such, the billets are essentially starting raw materials for the final product and their transportation has to be held as an input service. Thus, there is no valid reason to interfere in the impugned order of the Commissioner (Appeals).
 
Decision: - The department’s appeal was rejected.

Comment:- This is yet another case that confirms the principle of eligibility of input service credit whereby the same is undoubtedly admissible to the assessee if the service is used in the manufacture of final product irrespective of the fact that the said service is directly availed to/from the factory.

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