PJ/Case Laws/2010-11/30
CASE LAWS
Prepared By:
CA Pradeep Jain and
Sukhvinder Kaur,LLB[FYIC]
Excise Section
Case: Commissioner of Central Excise,
Citation: 2010-TIOL-1465-CESTAT-MUM
Issue: - The cenvat credit on capital goods can be taken by SSI units even though they are not registered with the department.
Brief Facts: - Respondent-assessee availed credit on capital goods purchased in the month of June 2006 and the remaining 50% was taken on 10.04.2007. But they applied for registration on 07.03.2007 and registration was given to them on 08.03.2007.Before registration, respondent were doing job work on the said machines only. Revenue issued show cause notice alleging that the respondent had wrongly availed the credit on capital goods before registration under Excise department.
It was also noticed that during March 2007, respondents had not manufactured any dutiable goods for the financial year 2006-2007.
The Adjudicating Authority confirmed the demand. In appeal, the Commissioner (Appeals) dropped the demand. Aggrieved by the same, Revenue is before the Tribunal.
Appellant’s Contentions: - Revenue contended that respondent did not manufacture any dutiable goods during the period 2006-07 and therefore, they were not entitled to take cenvat credit on these capital goods. Reliance was placed on Spentra International Ltd v/s Commissioner of Central Excise [2007 (216) ELT 133 (Tri-LB)] wherein it was held that assessee is eligible to take credit with reference to the dutiability of the final product on the date of receipt of capital goods. On facts, it was contended that in June 2006, at the time of the receipt of the said capital goods, respondents were neither registered with the department nor were manufacturing any dutiable goods, hence, credit was not admissible to them.
Respondent’s Contentions: - Respondent submitted that the case laws relied upon by the Revenue was not applicable to their case as the issue before the Tribunal in that case was of determination of relevant date for eligibility of cenvat credit on the capital goods. It was submitted that it is true that no credit is to be allowed on capital goods used captively in the manufacture of exempted goods as per the judgment in Spentra International Ltd case. It was submitted that they were availing the value based exemption as per Notification No. 8/2003-CE dated 01.03.2003 wherein it is specified that after crossing the limit of exemption the assessee can take credit but shall not utilize the same unless and until the exemption limit is crossed. This was also clarified by the Department in a query raised by the assessee.
Reasoning of Judgment: - The Tribunal perused the departmental clarification wherein it was clarified that in case of value based exemption notification, the unit can take credit of duty paid on capital goods, which can be used after crossing the full exemption limit. It was held that on similar facts, the issue was before the Tribunal and the Tribunal has held that the assessee is a SSI unit and had availed of full exemption during the year 2006-07 and had not registered themselves with the Department during the financial year and had only got registration on 16.04.2007.
It was held that since the assessee was not registered during the period of receipt of capital goods and had also not opted for availing credit available on capital goods on April 2007 instead of availing 50% credit during 2006-07, in that case the asssessee was entitled to take credit on the said capital goods. The Tribunal followed the ratio laid down in Progressive Systems and held that respondents were entitled for taking credit on the capital goods which may be utilized only after crossing the full exemption limit. No infirmity in impugned order.
Decision: - Appeal rejected.
Comment: - This is very good decision for SSI units and they can avail the cenvat credit on capital goods even though they are not registered with the department.
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Case: CCE, Chennai v/s Eveready Industries India Ltd
Citation: 2010 (102) RLTONLINE 114 (CESTAT-CHE)
Issue: - The penalty is not imposable in absence of intent to evade payment of duty.
Brief Facts: - Respondent-asseesee cleared goods from one of its factory to its another factory. Revenue alleged that the respondent had transferred the goods with intent to evade duty and therefore, were liable to penalty and interest. Demand was confirmed against the respondent. In appeal, the Commissioner (Appeals) set aside the levy of interest and imposition of penalty. The demand was set aside on the ground that the differential duty paid by the respondent was available to it in another factory and therefore, intention to evade payment of duty could not be alleged against the respondent.
Against this order, Revenue is in appeal before the Tribunal.
Reasoning of Judgment: - The Tribunal held that the payment of the amount before issue of the show-cause notice is no longer a ground to hold that penalty and interest are not sustainable. However, the availability of differential duty as credit to the respondent themselves is certainly a ground for holding that they cannot be guilty of any intention to evade payment of duty.
It was held that the decision in Autolite (India) Ltd. Vs. CCE, Jaipur [2003 (154) ELT A169 (SC)], relied upon by the Revenue is distinguishable because in that case, the credit was not available to the assessees themselves but to another assessee and it is in this context that Apex Court had held that revenue neutrality situation did not arise.
However, in the present case, it is the assessee (respondent) himself who is eligible to take the credit on the differential duty paid by him. With regard to interest, the Tribunal found merit in the submission of respondents that they were not liable to pay interest in terms of provisions of clause 2 of Section 11AB for the reason that the duty in this case was payable prior to 11.5.2001 which is the date of enactment of the Finance Act, 2001 introducing Explanation to Section 11AB. The fact that the assessments were also provisional is a further ground for holding that the respondents were not liable to pay interest or penalty. In the end, the Tribunal upheld the impugned order.
Decision: - Appeal rejected. Cross objection dismissed.
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Case: M/s Shardlow India Limited v/s CCE, Chennai
Citation: 2010-TIOL-1425-CSTAT-MAD
Issue: - When the action against supplier is not taken for passing on excess credit then credit cannot be disallowed to suppliers.
Brief Facts: - Appellants are manufacturers of steel forgings, axle shafts and dies. They received furnace oil from M/s Indian Oil Corporation Ltd (IOCL) and on the same, they took cenvat credit. Revenue found that appellant had availed excess credit as M/s IOCL had passed on excess credit by not adopting duty paid by CPCL, the original supplier of furnace oil. Also, it was alleged that the invoices were not valid documents as they did not satisfy Rule 9 (a) of the CCR, 2004. Accordingly, show cause notice was issued to the appellants. Demand was confirmed with interest and penalty was also imposed. The impugned order was upheld in appeal before the Commissioner (Appeals). Hence, appellant is before the Tribunal.
Reasoning of Judgment: - The Tribunal held that demand was not sustainable as it was not established whether any action was taken against M/s IOCL for passing excess credit. Also, the demand was barred by limitation as it was only in January 2006, appellant had come to know that M/s IOCL had passed on excess credit. Impugned order, accordingly, set aside.
Decision: - Appeal allowed with consequential relief.
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Case: Commissioner of C. Ex.,
Citation: 2009 (235) ELT 89 (Tri-Del)
Issue: - The undervaluation on sale to related person has to be proved. If the similar goods are sold to independent buyers on same price then charge of undervaluation is not sustainable.
Brief Facts: - Respondent, M/s Teknoforge Ltd, were selling goods to another company M/s HIM Gears (P) Ltd. Revenue alleged that both these companies were related person and there was under-valuation of goods sold by M/s Teknoforge Ltd to M/s HIM Gears (P) Ltd. It was alleged that the value of goods sold by them to M/s HIM Gears (P) Ltd should be on the selling price of M/s HIM Gears (P) Ltd.
The Adjudicating Authority confirmed the demand and imposed penalty. But in appeal, the Commissioner (Appeal) set aside the impugned order. Revenue is in appeal before the Tribunal against this decision.
Reasoning of Judgment: - The Tribunal perused the order passed by the Commissioner (Appeal) wherein a categorical finding had been given that the entire goods were not sold by the respondent to M/s HIM Gears (P) Ltd. There were sufficient sales to other independent buyers. It was also found by the Commissioner (Appeal) that the prices charged by the respondent from M/s HIM Gears (P) Ltd were more or less the same or even higher than the prices charged from the independent buyers. Accordingly, it was held by the Commissioner (Appeal) that there was no undervaluation done by the respondent and the valuation adopted by them under Section 4 (1) (a) was correct and Valuation Rules were not applicable.
The Tribunal found that the respondent had contended that the respondent and M/s HIM Gears (P) Ltd were to be treated as related persons because the Directors in both the companies were related as being uncle and nephew.
The Tribunal held that the two units were limited companies having independent existence and the sales made by one cannot be held to be same sale to their related persons. It was held that the Revenue had not rebutted the finding of the Commissioner (Appeal) that the prices charged by the respondent from M/s HIM Gears (P) Ltd were more or less the same or even higher than the prices charged from the independent buyers.
Thus, it was held that there is no merit in appeal. Impugned order of the Commissioner (Appeal) upheld.
Decision: - Appeals rejected.
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Case: Shree Laxmi Iron & Steels Works (P) Ltd v/s CCE, Kolkata-II
Citation: 2010 (102) RLTONLINE 123 (CESTAT-KOL)
Issue: - The marketability of intermediate products is proved by department for demanding duty on the same.
Brief Facts: - Appellants are manufacturers of railway construction materials like fish plates, two-way keys, bearing plates, base plates etc. falling under chapter heading 7302. They manufactured the above items using billets, slabs, blooms, ingots etc. Revenue issued show cause notice demanding that the appellants pay duty on the intermediate products manufactured by them which fell under the chapter sub-heading 72.14.90 and 72.16.10 which are attracting duty under Compounded Levy Scheme. Revenue also sought to deny credit of duty on inputs on the ground that such inputs were being used for products covered by Compounded Levy Scheme.
The Adjudicating Authority confirmed the demand and denied the credit and imposed penalty for the periods from September 1997 to March 1999 and for the period from April 1999 to March 2000. Appellant is in appeal before the Tribunal.
Appellant’s Contentions: - Appellant contended that they are not manufacturing any identifiable intermediate products which are marketable. It was submitted that Commissioner’s rejection of their claim that the intermediate products in red hot condition are not marketable is not legal and proper. It also submitted that Commissioner had gone beyond the Show Cause Notice and concluded that the so called intermediate product which emerged fall under ‘Flat-rolled Products’ falling under chapter 72 of Central Excise Tariff Act, 1985 without giving any finding as to which sub-heading the so called intermediate products fall under. Therefore, there was no basis to come to a conclusion that Compounded Levy Scheme is attracted for the said intermediate products.
Respondent’s Contentions: - Revenue contended that appellants were having hot re-rolling mill and that the Commissioner has come to a conclusion, based on the photographs, that the fish plates cut to the required length where being staked in red hot condition for natural cooling. Therefore, the products which emerged after cooling were the intermediate products which were dutiable under Compounded Levy Scheme.
Reasoning of Judgment: - The Tribunal held that the burden of proving excisability of any product is undisputedly on the department. It was held that Revenue’s claim that the fish plates which were cut to required length in red hot condition and which were cooled should be treated as ‘Flat-rolled Products’ and that they are marketable was not supported by any evidence. It was held that the Commissioner was not correct in ignoring the claim of the appellant that the intermediate products in red hot condition were not marketable especially when there was no evidence relied upon by the department contrary to such claim. It was held that Revenue has not contoverted by any reliable evidence the appellant’s submissions that the emergence of so called intermediate products were in the process of manufacture of final products like fish plates, bearing plates etc. Further, it was held that Commissioner has come to a conclusion that the intermediate products are flat rolled products falling under chapter 72 without giving any finding as to which sub-heading they fall under so as to attract the Compounded Levy Scheme. It was held that there was no finding by the Commissioner that the said intermediate products fall under 72.14.90 or 72.16.10 as alleged in the Show Cause Notice. Impugned order set aside.
Decision: - Appeals are allowed with consequential relief.
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Case: CCE & C,
Citation: 2010 (102) RLTONLINE 101 (CESTAT-AHMD)
Issue: - Interest in garb of penalty @ Rs. 1000/- per day is ultra vires as Rule 8(3) is going beyond the Section. But interest is to be paid for delay in payment of duty.
Brief Facts: - Respondents are engaged in the manufacture of fertilizer and for this they were receiving Aromatic Rich Naptha (ARN) and Natural Gasoline Liquid (NGL) without payment of duty. The condition was that the said chemicals were to be used in the manufacture of dutiable goods. However, Respondent used the said inputs in the manufacture of non-dutiable goods i.e. generation of electricity. Thus, the respondents were required to pay duty on NGL and ARN. Accordingly, once in a month they were discharging the duty liability. During the period from April 2003 to March 2004, while making such deposit there was some delay in every month.
Department contended that for such delayed payment, the respondents were required to pay 2% or Rs. 1,000/- per day, which ever is higher in terms of Rule 8 (3) of Central Excise Rules, 2002. Accordingly, demand was raised as interest from the respondents. On appeal, the Commissioner (Appeals) set aside the demand on the ground that respondent had sufficient balance in the PLA all through the period and therefore, no interest was needed to be paid. Revenue is in appeal against this decision.
Reasoning of Judgment: - With regard to payment of interest of Rs. 1, 000, the Tribunal relied upon the judgment of the Rajasthan High Court in the case of M/s. Lucid Colloids Limited Vs. UOI [2006 (200) ELT 377 (Raj.)] wherein it has already been held that Rule 8(3) of Central Excise Rules, 2002, to the extent of providing rate of interest Rs. 1,000/- per day or 2%, which ever is higher is ultra vires. Therefore, the demand for interest for Rs. 1,000/- per day cannot be sustained.
With regard to imposition of interest @ 2% under the Rule, Revenue had submitted that the Commissioner has rightly decided that respondent through out the period had PLA balance running to more than Rs. 10 Lakhs in their account and this represented the amount which was already deposited by them and credit to the Government and because of the concerned officers in the company who believed that payment in respect of goods not manufactured by them cannot be made by debiting in PLA, the payments were made by challans and while making such payments, there was some delay. Since the Government had more money in its account, which is yet to be debited by the respondent, a small amount as interest has been rightly condoned.
The Tribunal held that even though on equity ground, the respondents have a strong case but a strictly legal interpretation would require that duty payment has to be considered as having been made only when debit is made in the PLA or when TR 6 Challans evidencing payment is submitted. Therefore, Tribunal being creation of statute cannot go beyond the law and therefore payment made by the appellant by TR6 Challans has to be treated as payment of duty and date of credit has to be deemed as the date of payment. In these circumstances, the Tribunal held that respondents were liable to pay 2% interest for the period of delay.
Decision: - Appeal partly allowed.
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Service Tax Section
Case: The Commissioner of Central Excise,
Citation: 2010-TIOL-745-HC-MUM-ST
Issue: - Whether the service of an outdoor caterer used by the assessee is an input service used for the manufacturing of cement?
Brief Facts: - Respondent is engaged in the manufacture of cement. During scrutiny of credit register of respondent by Excise officers, it was noticed that for the period 2004-2008, respondent had availed credit of service tax paid on outdoor catering service utilized by them and used the credit to pay excise duty. The Adjudicating Authority held that outdoor catering service was not an input service under Rule 2 (1) of CCR, 2004.
In appeal, the Commissioner (Appeals) set aside the impugned order following the Larger Bench Decision in Commissioner of Central Excise v/s GTC Industries Ltd [2008 (12) STR 468 (T-LB)] wherein the Larger Bench had held that the cost of food borne by the factory would form part of the cost of production and hence, credit of duty thereon was allowable.
Against this decision, Revenue went in appeal before the Tribunal. The Tribunal upheld the order passed by the Commissioner (Appeal) following the ratio of the Larger Bench in GTC Industries Ltd case.
Revenue has filed appeal before the High Court challenging the order of the Tribunal.
Appellant’s Contentions: - Revenue contended that reliance could not be placed on the decision of GTC Industries Ltd’s case as it is distinguishable on facts. In that case duty on the final product was payable on the assessable value whereas in respondent’s case, the duty on the final product was payable on tonnage basis.
It was further contended that credit under Rule 2 (1) was available only if the taxable service is used in or in relation to the manufacture of final products. The outdoor catering service was not a service used in or in relation to the manufacture of cement and therefore credit could not be availed on the same.
It was further contended that in the case of M/s Maruti Suzuki Ltd v/s CCE,
Respondent’s Contentions: - Respondent contended that decision of the Tribunal is in consonance with the scheme of Value Added Tax. Reliance was placed on the Finance Minister’s speech given while introducing the Union Budget 2004-05, the Draft Cenvat credit Rules, 2004 and the Press note dated 12.08.2004 and it was submitted that the CENVAT scheme envisaged integration of tax on goods and services used in relation to the manufacturing business and therefore, credit of service tax on any taxable service that forms part of the assessable value of the final product has to be allowed under CCR, 2004. It was submitted that the expression “input service” as per Rule 2 (l) cannot be restricted to the services used in or in relation to the manufacture of final product. It is liable to be extended to all services that are used in relation to the business of manufacturing cement. Further, it is mandatorily required under the Factories Act, 1948 to supply food to the employees. It was submitted that to comply with the above statutory provisions, outdoor catering services were engaged. Such an activity mandatorily required to be complied with would be an activity relating to the business of the assessee covered under the definition “input services” under Rule 2 (1).
It was further contended that the inclusive part of the definition of “input service” under Rule 2 (l) makes it clear that the credit of service tax paid on services which are used in relation to the business such as accounting, auditing etc would be allowable even if the said services are not per se used in or in relation to manufacture of final product. The very object of the Cenvat Scheme is to allow credit of taxes paid on inputs used in or in relation to manufacture of final product and service tax paid on services used in or in relation to the manufacture of final products as well as the services used in relation to the business of the manufacture. The expression “such as” in Rule 2 (l) is merely illustrative and not exhaustive. Reference was also made to the definition of “such as” given in Concise Oxford Dictionary and Chambers Dictionary. Reliance was also placed on the judgment given in Good Year Ltd v/s Collector of Customs [1997 (95) ELT 450] and
It was further submitted that the business activity is an integrated/continuous activity and is not confined/restricted to mere manufacturing activity. Therefore, business activity covered all activities that are related to carrying on the business. Therefore, the term “in relation to business” in Rule 2 (l) cannot be given a restricted meaning so as to cover only those activities which churn out the final product from the raw materials. Reliance was placed on State of Karnatakav/s Shreyas Paper Pvt Ltd [2006 (1) SCC 615] and Mazgaon Dock Ltd v/s CIT [AIR 1958 SC 861].
It was submitted that the expression “activity relating to business” in Rule 2 (l) clearly denotes that the legislature intended to give wider meaning and not narrow meaning. Reliance placed on Doypack Systems (P) Ltd v/s Union of
Reliance was also placed on CIT v/s Chandulal Keshavlal and Co. [1960 (38) ITR 601 (SC)] and Eastern Investments Ltd v/s IT [1951 (20) ITR-I (SC)] and submitted that expenses incurred as a result of commercial expediency are covered by the term “activities relating to business”. Reliance was also placed on Customs and Excise Commissioner v/s Redrow Group PLC [1999 SIMON Tax Cases 161] and it was submitted that where the services used have direct and immediate link with the business of the assessee, then credit of service tax paid on those services would be allowable.
It was further submitted that the service tax is a value added tax which in turn, is a destination based consumption tax i.e. a tax on commercial activities and it is not a charge on the business, but a charge on the consumer. Reliance was placed on Board Circular No. 56 dated 25.04.2003, Circular No. 80 dated 17.09.204, and on All
Reasoning of Judgment: - The High Court held that all the relevant provisions as well as the history of enactment of Cenvat Credit scheme as well as the definitions of input and input services under the CCR, 2004.
The High Court held that the definition of input services consists of 3 categories of services. The first category covered services which are directly or indirectly used in or in relation to the manufacture of final products. The second category covers the services which are used for clearance of the final products upto the place of removal. And the third category covers services (1) used in relation to setting up, modernization, renovation or repairs of a factory and (2) used in an office relating to such factory.(3) Service like advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs and (d) Activities relating to business such as accounting, auditing etc.
Thus, it was held that definition of input service not only covers services which fall in the substantial part but also covers services which are covered under the inclusive part of the definition.
It was held that the substantive part covered services used directly or indirectly in or in relation to the manufacture of final products, whereas the inclusive part of the definition of “input service” covers various services used in relation to the business of manufacturing the final products. In other words, the definition of input service is very wide and covers not only services which are directly used in or in relation to the manufacture of final product but also includes various services used in relation to the business of the manufacture of final products, be it prior to the manufacture if final products or after the manufacture of final products.
It was held that the definition of input service is not restricted to services used in or in relation to manufacture of final products but extends to all services used in relation to the business of manufacturing the final product.
High Court further held that the expression “activities in relation to business” in the definition of “input service” postulates activities which are integrally connected with the business of the manufacture of final product, the service would not qualify to be a input service under Rule 2 (1).
It was further held that the case of Maruti Suzuki Ltd in context of the definition of input in Rule 2 (k) would equally apply while interpreting the expression “activities relating to business” in Rule 2 (1). Thus, it was held that the services having nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product would qualify to be input service under Rule 2 (1).
Decision: - Appeal disposed off accordingly.
Comments: - This is landmark decision. After
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Case: Commissioner of C. Ex., Ahmedabad v/s AIA Engineering Ltd
Citation: 2010 (20) STR 512 (Tri-Ahmd)
Issue: - The refund of service tax paid on port charges is allowed to exporters even though the service providers is not registered in port services.
Brief Facts: - Respondent is engaged in the manufacture and export of goods and filed refund claiming refund of service tax paid for the period from April 2008 to June 2008 on port services and transport of goods. Refund claim was allowed by the Commissioner (Appeals). Revenue is in appeal against the impugned order.
Appellant’s Contentions: - Revenue contended that terminal handling charges and REPO charges were paid in connection with the port service. Since the service provider was not authorized by the port, the refund was not admissible. With regard to transport of goods in container, it was submitted that the service should be provided in relation to transport of goods in containers by rail whereas the respondent had filed refund claim in relation to transport of goods in containers by road transport.
Reasoning of Judgment: - The Tribunal held that with regard to terminal handling charges and REPO charges, the issued was raised in the case of M/s Macro Polymers Pvt Ltd v/s CCE, Ahmedabad [2010 (19) STR 679 (Tri-Ahmd)] wherein it was held tat refund of service tax paid on terminal handling charges and REPO charges were admissible under the circumstances.
With regard to transportation of goods, the Tribunal considered the Notification and held that the said Notification provides for refund of service tax paid on transportation of goods from the place of manufacture to ICD or from ICD to the port. It was held that in the present case, the claim is for transportation of goods from ICD to the port and for the same no condition is prescribed that goods cannot be transported by road. No merit in appeal.
Decision: - Appeal rejected. Consequential relief granted to respondent-assessee.
Comments: - This is very good decision. The majority of refund on port charges is being rejected by the department on this ground only.
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Case: In Re: Ajjaree Engineering Industries Pvt Ltd
Citation: 2010 (19) STR 133 (Commr. Appl)
Issue: - The penalty is imposable for late deposit of tax and immunity U/S 80 will not be granted for reason of insufficient funds.
Brief Facts: - Appellant is providing services of maintenance of repair services, erection and commissioning and GTA. Revenue during scrutiny of ST-3 returns of appellant noticed that they had not paid service tax due in respect of all the services provided by him. Show cause notice was issued to the appellant for recovery of service tax short paid. Impugned order was passed confirming the demand with interest and equal penalty was also imposed.
Aggrieved by the same, appellant filed appeal before the Commissioner (Appeal).
Appellant’s Contentions: - Appellant contended that it is not the case of evasion of Service tax by suppressing the facts, since the demand is based on ST3 returns filed by the appellant. The amount involved was paid by them before adjudication proceedings. Reliance was placed on Busy Bee v. CCE [2007 (7) S.T.R. 195 (Tri.-Chennai)]. The appellant was already penalized by paying the interest and hence there was no need to penalize the appellant separately under Section 76 and in this regard reliance was placed on Indo Nippon Chemicals v. CCE [2009 (233) E.L.T. 141]. It was submitted that even for the sake of argument, the appellant is liable for penalty under Section 76, still it need not be equal to the amount of Service tax and there can be a minimum penalty under Section 76 if the late payment of Service tax is not deliberate/willful.
With regard to the findings of the Assistant Commissioner that there is no discretion to the adjudicating authority not to impose / to reduce the penalty under Section 76, the appellant placed reliance on the decisions given in CCE v. D.R. Gade [2008 (9) S.T.R. 348 (Bom.)], CCE v. Vinay S. Bele [2008 (9) S.T.R. 350 (Bom.)], CCE v. Mukul S. Patil [2008 (10) S.T.R. 115 (Bom.)], CCE v. Madhuri Travels [2008 (11) S.T.R. 408 (Tribunal)], M. R. Bhagat & Associates v. CCE [2008 (10) S.T.R. 130 (Tribunal)], J. K. D. Popat & Co. v. CCE [2008 (9) S.T.R. 541 (Tribunal)]. It was submitted that no explanation was given for imposing equal penalty when Section 76 provides for penalty of Rs. 200/- per day or 2% per month of the Service tax paid late whichever is higher. It was submitted that the total days of delay are 325 days and as per 2% per month on the amount defaulted, comes to Rs. 66,660/- and for the penalty of Rs. 200/- per day which comes to Rs. 65,000/- and hence on this ground also, the imposition of penalty is not sustainable.
Reasoning of Judgment: - The Commissioner (Appeal) held that there cannot be any intention attributable on the part of the appellant, in view of the fact that the demand was raised only based on ST3 returns filed by the appellant himself. It was held that had there been any mala fide intention, the appellant would not have come forwarded and filed the said returns.
On the question whether the appellant is liable to be penalized under Section 76 of the Act for late payment, the Commissioner (Appeal) held that Section 76 provides that the penalty for late payment, is imposable either @ Rs. 200/- per day or 2% of defaulted amount per month, whichever is higher. In other words, the penalty is imposable for late payment which cannot be under dispute and if the sufficient cause is shown for late payment, the discretion is also available to the Adjudicating Authority for waiver of penalty in terms of Section 80 of the Act. But in the present case, no sufficient/reasonable reason has been put forth by the appellant.
It was further held that as rightly held by the lower authority, non-availability/insufficient funds cannot be stated as the reason for making late payments. Under the above circumstances, there cannot be full waiver of penalty. However, as basis for imposing penalty by the lower Authority has not been disclosed, the penalty reduced only to the maximum payment of Rs. 66,660/-. Accordingly, I reduce the penalty from Rs. 3,22,543/- to Rs. 66,600/-.
Decision: - Appeal allowed after modifications.
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Case: Shri Ganesh Sahakari Sahkar Karkhana Ltd v/s Commissioner of Customs, Central Excise & Service Tax,
Citation: 2010-TIOL-1470-CESTAT-MUM
Issue: - The refund is to be filed within one year and doctrine of unjust enrichment applies to the same.
Brief Facts: - Appellant are engaged in the manufacture of sugar, molasses etc falling under Chapter 17.They were also registered under service tax. During the period from January 2007 to May 2007, appellant paid service tax on outward freight and availed cenvat credit of the same. Later on they utilized the credit for payment of duty on their finished goods. During audit, Department observed that appellant were not liable to pay service tax on outward freight as the transport charges were paid for transport of ‘Spent wash’ from factory to farmers land and the charges were ranging between Rs. 400/- to Rs. 700/-.
Department alleged that as service tax was not payable, the credit on the said transport charges taken was irregular and the appellant were required to reverse the inadmissible credit. Accordingly, appellant paid the same with interest. Thereafter, appellant filed refund claim of the credit so reversed on the ground that as the transport charges were less than Rs. 1500/- and as it was an outward transport they were not required to pay service tax and thereafter they had reversed the credit at the instance of the audit party.
The Adjudicating Authority rejected the refund claim on the ground that the payment was not made under protest nor subsequently appellant had raised any dispute for such voluntary payment. It was also held that the appellant had not produced certain original documents.
In appeal, the Commissioner (Appeal) upheld the impugned order on the ground that appellant’s contention that they claimed for the refund of the amount paid on 30.05.2007 was not acceptable as they never contested the audit objection neither they deposited the amount under protest. It was further held that the reversal was on account of wrong availment of cenvat credit of service tax paid on transport of goods and that altogether it was a different question as to how they would get back the service tax wrongly paid, if any.
Against this order, appellant are before the Tribunal.
Appellant’s Contentions: - Appellant contended that the Commissioner (Appeals) had traversed beyond the notice while adjudicating various issues. The respondent had not understood the issues from the purview of Section 11B of the Central Excise Act which provides that refund of duty paid/recovered wrongly can be filed within a period of one year and there should not be any unjust enrichment. Reliance was placed on Agra Beverages Corporation Pvt Ltd v/s
Reasoning of Judgment: - The Tribunal perused the order passed by the Commissioner (Appeals) and the show cause notice and held that the Adjudicating Authority had not considered the case in its proper perspective nor an opportunity was given to the appellant to file the documents which the appellants have allegedly not reproduced. It was held that the matter required reconsideration and examination in accordance with the provisions of Section 11B of the Central Excise Act, 1944 which provides for refund of duty collected/paid, and incidence of such duty has not been passed on to any other person, within a period of one year. Impugned order set aside.
Decision: - Appeal allowed by way of remand.
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SOY P ITTY on 21 Apr, 2016 wrote:
hitesh on 03 Apr, 2016 wrote:
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