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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/2012-13/1239

Whether Modvat credit on rejected goods is admissible on party’s own invoice?
 
 

Case: - COMMISSIONER OF C. EX., MEERUT-II VERSUS POLYPLEX CORPORATION LTD.

Citation: - 2008 (224) E.L.T. 46 (UTTARAKHAND)

Brief fact: - The brief fact of the case is that M/s. Polyplex Corporation Ltd. Khatima, U.S. Nagar is engaged in the manufacture of Polyster film. The Show cause notice issued to the party by the Assistant Commissioner, Central Excise, Division Rampur with the allegation that they availed Modvat credit of Rs. 1,10,230/- during the period of September, 1998 to November, 1998. Another show cause notice was issued by the Range Superintendent for the period of December, 1998 to February, 1999 with the allegation that the party had availed Modvat credit of Rs. 1,94,702/- on the goods against their own invoice without filing D-3 intimation. On adjudicating both the show cause notices, the Deputy Commissioner, Central Excise, Rampur confirmed demand of Rs. 3,04,932/- and also imposed penalty of Rs. 3,04,932/-. In Appeal, the Commissioner (Appeals) Central Excise, Ghaziabad vide order dated 13-4-2000 confirmed demand of duty, and, however, reduced penalty from Rs. 3,04,932/- to Rs. 1,52,000/-. Against the order of the Commissioner (Appeals), appeal was preferred before the Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi, who vide impugned order dated 13-7-2000 allowed the appeal of the Firm.
Being aggrieved by the judgment and order of the Tribunal, the Revenue has preferred this Reference before this Court.


Reasoning of Judgment: The Hon’ble High Court held that questions framed in the Reference Application have rightly been decided by the Tribunal and do not require to be considered by this Court. The Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi has rightly held that the defective/rejected final products returned to the manufacturers and used in or in relation to the manufacture of final products are eligible inputs for the purpose of Modvat credit and the appellants were allowed unconditional waiver of pre-deposit of amount of the duty and penalty imposed on them. The Hon’ble High Court do not find infirmity and illegality in the aforesaid view taken by the Tribunal. Therefore, the Reference Application is disposed of in favour of the Firm and against the Revenue. The impugned order dated 13-7-2000 passed by the Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi is upheld.
 
 
Decision:- Reference disposed off
 
Comments :- This issue is normally raised by the audit party wherein they object how a party can take the credit on its own invoices. But new Rule 16 of Central Excise Rules also say that the goods should accompany with duty paying document and does not warrant that the same should be issued by the buyer. Moreover, when the buyer does not take the credit (normally in consumer goods industry) then the goods are returned on party’s own invoice only. In spite of number of decisions on this matter, the department raises the objection. This is truly said that the central excise and service tax department is highly litigant department.
 
 
 
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