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/2015-16/2648

Whether issue of credit admissibility appealable to High Court or not?

Case:-COMMISSIONER VERSUSINDIAN FARMERS FERTILIZERS CORPN. LTD.
 
Citation:-2014 (305) E.L.T. 49 (Guj.)
 
Brief facts:- Revenue is in appeal against the judgment of CESTAT dated 12-6-2012 [2013 (287)E.L.T.467 (Tribunal)]. The case of the department is that the respondent-manufacturer had received capital goods in the nature of machinery which were utilised for manufacturer of fertilizer and availed Cenvat credit on such capital goods without payment of duty. According to the department, the capital goods were used in manufacturing Ammonia which in turn was utilised for manufacture of fertiliser which was an exempt item. According to the department therefore, the respondent was not entitled to claim Cenvat credit on such capital goods in terms of Cenvat Credit Rules, 2004.
The respondent’s case however, all along has been that in the course of production of Ammonia, a by-product Carbon dioxide also comes into existence which the respondent sold in the open market before and even after installation of the capital goods in question. Rule 6(4) of the Cenvat Credit Rules, 2004, therefore, does not disentitle the respondent from claiming such credit. The Tribunal ruled in favour of the respondent. Hence, the departmental appeal.
 
Appellant’s contention:- The learned counsel, Shri Ravani for the department insisted that appeal is maintainable. He submitted that the appeal does not involve any question of duty or any other question which in terms of Section 35L of the Central Excise Act, 1944, cannot be entertained by this Court.
Section 35L of the Central Excise Act reads as under :
“35L.Appeal to the Supreme Court. -An appeal shall lie to the Supreme Court from -
(a)any judgment of the High Court delivered -
(i)        In an appeal made under section 35G; or
(ii)        On a reference made under section 35G by the Appellate Tribunal before the first day of July, 2003;
(iii)       On a reference made under section 35H.
in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved, immediately after the passing of the judgment, the High Court certifies to be a fit one for appeal to the Supreme Court; or
(b)any order passed before the establishment of the National Tax Tribunal by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment.”
In terms of Section 35L of the Excise Act, therefore, any order passed by the Appellate Tribunal relating among other things to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment, must lie before the Supreme Court. Corresponding provision is made also in Section 35G of the Central Excise Act, 1944 pertaining to appeal to High Court in which such appeals arising out of the order of Tribunal relating among other things to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment, are excluded from purview of the High Court.
 
Respondent’s contention:- The learned counsel Shri P.K. Sahu for the respondent raised a preliminary objection about maintainability of this appeal. He drew out attention to Section 35G of the Central Excise Act, 1944, to contend that since the issue involved is one having relation to the rate of duty payable by the respondent, the appeal must lie before the Supreme Court. In support of his contention, he relied on following decisions of Karnataka High Court which had taken such a view :
(1)       CCE, Mangalore v. Mangalore Refinery & Petrochems Ltd. reported in 2012 (280)E.L.T.383 (Kar.) = 2013 (29)S.T.R.433 (Kar.)
(2)       Commissioner of C. Ex., Bangalore v. Switchgear & Control Technics P. Ltd. reported in 2011 (269)E.L.T.496 (Kar.)
(3)       Commissioner of C. Ex., Mysore v. Jaladarshini Pipes Pvt. Ltd. reported in 2011 (271)E.L.T.30 (Kar.) = 2012 (26)S.T.R.594 (Kar.)
(4)       Commissioner of C. Ex., Mangalore v. Rajashri Packagers Ltd. reported in 2011 (268)E.L.T.337 (Kar.)
 
Reasoning of judgement:- Short question therefore, is does this appeal involve any such question. They have briefly referred to the controversy between the parties in order to ascertain this. They have noticed that dispute between the department and the manufacturer is confined to the question whether in terms of Rule 6(4) of the Cenvat Credit Rules, 2004, the respondent could have availed the Cenvat credit on the capital goods. As per the department since the capital goods were used for manufacture of duty exempt product, Rule 6(4) would preclude the respondent from claiming any such Cenvat credit. The respondent contends that Ammonia was not the sole product manufactured by the respondent which was used for manufacturing of fertilizer but a by-product carbon dioxide comes into existence which is sold in the market after paying duty.
Whatever be the validity of the rival contentions, in their opinion, the sole question involved is whether Cenvat credit was available in terms of Rule 6(4) of the Rules or not. This question has no relation to the rate of duty or the value of goods for the purpose of collecting duty. Though strongly canvassed before them they do not see how such a question can be seen to be one of classification. They are conscious that a question of classification of a product is also considered a part of the question relating to the rate of duty. Such not being the question in the present case, they do not see how the appeal is not maintainable. They are of the opinion that the question requires consideration.
Theyare conscious of the decision of the Supreme Court in case of Navin Chemicals Mfg. & Trading Co. Ltd. v. Collector of Customs reported in 1993 (68)E.L.T.3 (S.C.)in which following observations were made :
“11.It will be seen that sub-section (5) uses the said expression ‘determination of any question having a relation to the rate of duty or to the value of goods for the purposes of assessment’ and the Explanation thereto provides a definition of it ‘for the purposes of this sub-section’. The Explanation says that the expression includes the determination of a question relating to the rate of duty; to the valuation of goods for purposes of assessment; to the classification of goods under the Tariff and whether or not they are covered by an exemption notification; and whether the value of goods for purposes/of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for. Although this Explanation expressly confines the definition of the said expression to sub-section (5) of Section 129D, it is proper that the said expression used in the other parts of the said Act should be interpreted similarly. The statutory definition accords with the meaning they have, given to the said expression above. Questions relating to the rate of duty and to the value of goods for purposes of assessment are questions that squarely fall within the meaning of the said expression. A dispute as to the classification of goods and as to whether or not they are covered by an exemption notification relates directly and proximately to the rate of duty applicable thereto for purposes of assessment. Whether the value of goods for purposes of assessment is required to be increased or decreased is a question that relates directly and proximately to the value of goods for purposes of assessment. The statutory definition of the said expression indicates that it has to be read to limit its application to eases where, for the purposes of assessment, questions arise directly and proximately as to the rate of duty or the value of the goods.”
In the result, appeal is admitted for consideration of following substantial question of law:
“Whether the Tribunal was right in law and on facts in holding that the respondent-manufacturer was entitled to avail of Cenvat credit on capital goods on the premise that such capital goods were used for manufacture of not only Ammonia used for manufacture of fertilizer which was exempted from duty but also in the process manufactured a by-product namely, carbon dioxide which was sold in the open market after payment of duty and that therefore, the limitation contained in Rule 6(4) of the Cenvat Credit Rules, 2004 would not apply?”
In view of the above findings, the appeal was admitted in the High Court.
 
Decision:-Appeal admitted.
 
Comment:- The crux of the case is that the issue of credit availment on capital goods does not has any relation to rate of duty or classification so as to be directly appealable to the Supreme Court. The High Court does not has jurisdiction to decide the cases pertaining to having relation with rate of duty, valuation of goods or classification and appeal in such cases lies to the Supreme Court only. As in the present case, the issue does not pertain to rate or valuation or classification and so the appeal was admitted by the High Court.
 
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