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Corporate News *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT. *  Services to singapore head office not ‘Intermediary Services’: CESTAT. *  Satellite transponder capacity received from foreign providers not taxable as business support service: CESTAT *  Sugar export ban upheld: Bombay High Court says private contracts and advance payments can’t override govt. policy. *  No CA or CMA certification required for interest on already-sanctioned GST refund: Telangana High Court. *  GST demand order uploaded only on common portal doesn’t trigger appeal limitation: Delhi High Court. *  GST refund can’t remain locked in ITC when business has closed: Allahabad High Court. *  Sec. 129 Penalty can’t be imposed on stock transfer without e-way bill: GSTAT. *  Subsequent supplier’s GST registration cancellation by itself, doesn’t establish fraudulent ITC availment: Karnataka High Court. *  DGGI Jaipur | Rajasthan High Court denies bail in central excise duty evasion case, cites seriousness of alleged unregistered tobacco Manufacturing. *  Dept. can’t force assessee to adopt more punitive CENVAT credit option under rule 6: Calcutta High Court. *  GST levy on corporate guarantees upheld: Gujarat High Court. *  Calcutta High Court allows appeal against Ex-parte GST order after medical emergencies prevented reply to SCN. *  Legality of gold confiscation based on retracted statement questioned: Madhya Pradesh High Court frames 8 substantial questions of law. *  Interest on delayed duty drawback runs from 1month after ‘Let Export Order’, not final adjudication: Delhi High Court. *  High Courts can’t grant post-dismissal arrest protection in GST pre-arrest bail matters; Sec. 69 arrest order must be communicated: Supreme Court. *  Whether RERA registration can determine GST classification of ‘Ongoing Project’: Rajasthan High Court issues stay notice. *  GSTAT admits Bharti Airtel’s appeal on ITC dispute involving section 17(5)(c) and (d) of CGST Act. *  Showroom interior fit-outs constitutes “Original Works”, CESTAT quashes ?2.61 crore service tax demand. *  CESTAT upholds extended limitation for inadmissible CENVAT credit availed during area-based exemption. *  Refund can’t be denied merely for not challenging Bill of entry when exempt duty was paid inadvertently: Punjab & Haryana High Court. *  GST Appeal limitation must run from DRC-07 communication, not detailed adjudication order: Madras High Court. *  GST amnesty waiver covers self-assessed tax: Madras High Court. *  AIFTP seeks one-time GST amnesty to revive appeals dismissed for delay under section. 107. *  Customs cargo service provider suspension can’t continue indefinitely under regulation 11(2) of HCCAR: CESTAT *  Madras High Court stays GST demand after finding prima facie double taxation in ongoing housing project. *  GST appeal filed before extended deadline can’t be rejected on limitation without considering CBIC relief notification: Gujarat High Court. *  No right to representation against Anti-dumping findings: Delhi High Court *  Wrong service classification alone can’t justify extended limitation without proof of tax evasion: Rajasthan High Court. *  Importer can’t be penalised when exporter’s DFIA licence remained valid, fraud allegations failed: CESTAT.
Subject News *  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. *  Madras High court stays GST recovery initiated under section. 79 without prior determination under section 73. *  GST Dept. must establish deliberate tax evasion before using extended limitation: GSTAT. *  GST officers can’t keep business premises sealed after search ends: Gauhati High Court. *  GST adjudication order ignoring CBIC circular challenged: Bombay HC grants ad-interim protection to Skoda Auto Volkswagen. *  Alleged evidentiary errors, cross-examination issues, earlier GST audit questions must be raised before Appellate authority: Delhi High Court. *  GST appeal can’t be rejected on erroneous limitation calculation: Madhya Pradesh High Court. *  Adjudication and Appellate orders passed without supplying seized documents to assessee quashed: Bombay High Court stays coercive GST recovery. *  GST search without sharing DIN violates transparency safeguards, but doesn’t invalidate search: Madras High Court. *  Statutory GST appeal can’t be circumvented by mere natural justice allegations: Bombay HC. *  Whether banks can simultaneously avail ITC u/s 17(2) and 17(4)? - Madras High Court stays GST adjudication against City Union Bank. *  Driver’s statement on plain paper has ‘Very Little Evidentiary Value’: Allahabad High Court quashes GST penalty order. *  CENVAT credit can’t be denied on duty-paid inputs from area-based exempt units: CESTAT. *  Ignoring taxpayer’s reply while rejecting GST refund is illegal: Bombay High Court. *  Dept. can’t allege suppression after earlier audit on same issue: CESTAT quashes Excise demand on limitation. *  Sales-tax concession cannot be denied unless government notification is expressly rescinded: Telangana High Court. *  GST appeal delay condoned after portal continued to show case as ‘Pending for order’: Rajasthan High Court. *  Customs duty exemption can’t be denied without test report to support reclassification: CESTAT. *  Recovery can’t continue during pending GST appeal: Punjab & Haryana High Court directs ITC unblocking after statutory pre-deposit. *  Revenue neutrality must be proven with evidence, not assumptions: Madras High Court restores Rs. 20.37 crore Excise demand. *  GST limitation applies to issuance of assessment order, not its service: Calcutta High Court. *  Time barred SCN can’t sustain service tax demand against sub-contractor: CESTAT.  

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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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