Central Board of Excise and Customs has issued circular No.1063/2/2018-CX dated 16.02.2018, wherein this compiles sixty three orders of Supreme Court, High Courts and CESTAT on the various issues relating to Central Excise, Service Tax and Cenvat Credit has been accepted by the department. This is an exercise has been under taken by the Board to reduce litigations and the cases were pending in the field can be decided with expeditiously, if the questions of law or facts involved are identical.
The author has made an attempt to highlights these 14 Orders; the Hon’ble High Courts have decided various questions of law. In the rest 49 Orders, the Hon’ble High Courts have delivered judgments on the basis of some settled case law or have decided points of facts or have dismissed the appeal on monetary grounds. The gist of the important orders has been summarized in the below Table:
| Sl.No. | Issue / case | Decisions of High Courts / Supreme Court. | Court Verdict / judgment |
| 1 | Question of law whether interest and penalty provisions under rules 96ZO,96ZP and 96ZQ which are framed to effectuate the provisions of section 3A of the Central Excise Act,1944 are consistent with the said Act and held that they are ultra vires. | Decision of the : Hon’ble High Court of Rajasthan dated 9.02.2016, Punjab & Haryana High Court dated 14.09.2015, High Court of Gujarat dated 13.10.2015 dismissed the department appeals relying on the decisions of the Hon’ble Supreme Court dated 24.11.2015 in the case of M/s Shree Bhagwati Steel Rolling vs. Commissioner of Cex. | “imposition of a mandatory penalty equal to the amount of duty not being by statute would itself make rules 96ZO, 96ZP and 96 ZQ without authority of law. We , therefore, uphold the contention of the assesses in all these cases and strike down rules 96ZO,96ZP and 96ZQ in so far as they impose a mandatory penalty equivalent to the amount of duty on the ground that these provisions are violate of Article 14, 19(1) (g) and are ultra vires the Central Excise Act” |
| 2 | The points of law examined were that the assessee had utilized credit from one unit for the purpose of duty liability of its other unit without pro rata distribution by the input service distributor and further the assessee had not registered itself under the Service Tax ( Registration of Special Category of Persons),Rules2005 | Decision of the Hon’ble High Court of Rajasthan dated 08.02.2016 in case of Commissioner Cex., vs. National Engineering Industries Ltd. and High Court of Gujarat dated 08.01.2016 in the matter of Commissioner of Cex, vs. Dashion Ltd. | The Hon’ble High Courts dismissed the Department’s appeal inter alia holding that substantial benefit of Cenvat Credit cannot be denied because of procedural irregularity when all the necessary records have been maintained by the respondent and non-registration of ISD is only a procedural irregularity. |
| 3 | The point of law that CENVAT credit of duty availed in excess and not proportionate to the assessable value of raw materials in terms of section 4 of the Central Excise Act, 1944, received by the party from their vendor is admissible to the manufacturer.
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Decision of the Hon’ble High Court of Allahabad dated 27.04.2016 in the matter of M/s Bhushan Steel Ltd, relying on Hon’ble Supreme Court decision in CCE vs. MDS Swithchgear Ltd. [2008(229) ELT 485 (SC)] and on CBEC Circular No. 877/15/2008-CX dated 17.11.2008. | The Hon’ble High Court upheld the decision of the CESTAT, wherein CESTAT decided in favour of the party holding that supplier had not claimed any refund on account of reduction in price. |
| 4 | The point of law is to examine whether merchant exporter is eligible get rebate claim by filing in incorrect format in first time and subsequent re-filing with correct format. | Decision of the Hon’ble High Court of Gujarat dated 17.12.2015 in the matter of Apar Industries (Polymer Division) vs. Union of India. | The Hon’ble Court held that the intention of claiming rebate was clear and first application should have been treated by the department as rebate application. Whatever defect arose from the incorrect filing could have been rectified. In such situations, re-submission should be seen as a continuous attempt and therefore in the matter department was directed to examine the rebate claims of the petitioner on merits. |
| 5 | Whether Reinsurance is an input service which is used for providing output service, namely, Insurance and whether CENVAT Credit taken on re-insurance service is admissible. | Decision of the Hon’ble Court of Karnataka at Bangalore in the case of M/s PNB Metlife India Insurance Company Ltd, | The Hon’ble High Court held that re-insurance is a statutory obligation and the same is co-terminus with the Insurance Policy. Issuance of insurance policy by insurer, and then taking of re-insurance by it, is a continuous process. Re-insurance is thereof an input service. |
| 6 | Whether unjust-enrichment would apply to State Government undertaking which applied for refund. | Decision of the Hon’ble High Court of Madras dated 20.03.2015 in respect of M/s SESCOT Sheet Metal Ltd, relying on the Supreme Court decision in the case of Mafatlal Industries. | Hon’ble Supreme Court in Mafatlal Industries case referred as [2002-TIOL-54-SC-CX-CB] held that the doctrine of unjust enrichment will not apply to the State. Relying on the same Hon’ble High Court allowed the party’s appeal.
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| 7 | Whether assessee’s request for Cross examination is tenable in case of Clandestine removal. | Decision of the Hon’ble High Court of Delhi dated 17.09 .2015 in the matter of Flevel International vs. C. Cex, | Hon’ble High Court held that no serious attempts were made to secure presence of witness in adjudication proceedings and, in cases of clandestine removal , a certain standard is expected of the Department before a finding can be reached against an Assessee. No evidence gathered to show procurement of basic raw material for alleged manufacture. So Hon’ble High Court was satisfied that the impugned order of the CESTAT cannot be sustainable in law. |
| 8 | Whether interest is payable from the date of expiry of three months from the date of receipt of refund application or from the date of decision. | Decision of the Hon’ble High Court of Gujarat dated 20.07.2015 in the matter of CCE , vs. M/s Tata Chemicals Ltd, relying on the Hon’ble Supreme court in case of Ranbaxy Pharmaceuticals Ltd. | Hon’ble High Court relying on the decision of the Hon’ble Supreme Court in the case of Ranbaxy Pharmaceuticals vs. Union of India, (2011) 10 SCC 29receipt2, wherein it has been held that the law to pay the interest commences from the date of expiry of three months from the date of receipt of application and not from the decision. Departmental appeal was therefore dismissed. |
| 9 | The admissibility of CENVAT Credit on photocopy of Bill of Entry. | Decision of Hon’ble Court of Allahabad dated 25.08.2015 in the case of CCE, vs. M/s Matsushita Television and Audio India Ltd., | Hon’ble High Court held that the inputs were received in the factory under the cover of a triplicate copy of bill of entry which was subsequently misplaced so upheld the assessees’ contention. In departmental appeal HC upheld CESTAT’s decision. |
| 10 | Whether reversal of CENVAT Credit is required on the inputs used in manufacturing the final product when such final product was destroyed and remission of duty was also allowed. | Decision of the Hon’ble High Court of Gujarat in the case of M/s Shree Rama Multi-Tech Limited. | Hon’ble High Court held inter alia that there was no statutory provision permitting the revenue authorities to direct reversal of credit already taken, the question of imposing any condition for reversal while granting remission of duty in terms of rule 21 of the Central Excise rules would certainly not arise. |
| 11 | Whether time bar provided in Section 11B of the Central Excise Act,1944 is applicable for filing rebate claim in terms of Rule 12 (1)(a) of the erstwhile Central Excise Rules,1944 | Decision of the Hon’ble High Court of Delhi dated 22.08.2016 in the case of Sun Pharmaceuticals Industries Ltd. relying on the decision of the Gujarat High Court in Choice Laboratories. | Hon’ble High Court of Gujarat ‘s order in the matter of Choice Laboratories where the Hon’ble Court inter alia held that “ Petitioners had bonafide belief field their appeal before a forum which lacked jurisdiction / before a wrong forum , surely the time spent in pursuing such remedy cannot be ignored while considering limitation. There is a clear distinction between the delay which can be excluded for considering limitation. So the Hon’ble Delhi High Court allowed the appeal by condoning the time bar which is provided in Section 11B of the Central Excise Act, 1944 for applying for rebate. |
| 12 | Whether manufacturer has the option of suo-moto abatement of duty in the event of closure of factory for a continuous period of 15 days or more. | Decision of the Hon’ble High Court dated 01.10.2015 in the case of M/s Thakkur Tobacco Products Pvt. Ltd, | Hon’ble High Court dismissed the departmental appeal on the question of law and as per provisions of the Central Excise Act,1944 and the PMPM Rules abatement is to be granted statute does not prescribe any order of abatement to be passed by the any authority such as DC / AC. |
| 13 | Whether clandestine removal can be proved on the basis of third party records. | Decision of the Hon’ble High Court dated 2.12.2005 in the case of M/s Vishnu & co ltd | Hon’ble High Court was held that clandestine removal cannot be proved on the basis of third party records without any positive evidence and there is no substantial question of law involved. |
| 14 | Whether amount of sales tax concession is required to be added in the assessable value for levy of Central Excise Duty. | Decision of the Hon’ble High Court of Punjab & Haryana dated 12.08.2 016 relying on the judgment of the Apex Court in the matters of Maritu Suzki India Ltd. vs. CCE, Delhi, 2014 (307) E.L.T.625(SC) and Super Synotex(India) Ltd, vs. CCE, Jaipur, 2014 ( 301) ELT 273. | High Court has held that CESTAT in its order has observed that under Circular dated 30.06.2000 CBEC had clarified that such amount retained by the assessee is not required to be added to assessable Value. This view was negated by Apex court in the above said orders. Since there was no clarity on the issue , the assessee cannot be said to be as fault, hence extended period would not be available to raise demand. |
| 15 | Whether penalty under section 11AC is imposable in the absence of necessary ingredients. | Decision of the Hon’ble High court order dated 11.03.2015 in the case of Commissioner of Cex, vs. Bright Brothers. | High Court observed that the penalty provisions may be termed as mandatory , but the imposition itself has to precede the satisfaction in terms of Section 11AC. Once there was a scope for entertaining a doubt and there is no wilful mis-statement or suppression of facts, then penalty is not called for. |
| 16 | Whether appeal is admit table when the question of law is beyond the scope of show cause notice. | Decision of the Hon’ble High Court of Gujarat in the matter of CCE, Rajkot vs. Reliance Ports & Terminals Ltd. | Hon’ble High Court dismissed the departmental appeal holding that since the questions proposed by the appellant was not subject matter of the sow cause notice and also do not arise out of the impugned order of passed by the Tribunal. |
| 17 | Whether CENVAT credit is entitled against fabricated document by CHA. | Decision of the Hon’ble High Court of Hyderabad dated 01.07.2017 in the case of M/s Hetro Drugs Ltd., | Hon’ble High Court held that in the present appeal there was no challenge with respect to the aspect of the limitation and that the appeal is devoid of merits. Department’s appeal dismissed by High Court. |
| 18 | Whether payment of interest is liable in case of credit reversed as per CBEC Clarification. | Decision of the Hon’ble High Court of Hyderabad dated 08.10.2015 in the case of M/s Bharat Dynamics Ltd. | Hon’ble High Court held that department Appeal is devoid of merits and therefore dismissed it, by upholding the CESTAT Order that on getting the clarification from TRU, CBEC, the appellant reversed the entire amount of CENVAT credit. In the Circumstances, CESTAT held that it cannot be said that the credit had been taken by the appellant wrongly. When credit is not taken wrongly, the question of payment of interest does not arise in terms of provisions of Rule 14 of CENVAT Credit Rules, 2004. |
Conclusion: To sum up, the CBEC’s endeavour to reduce litigations in the erstwhile Tax regime is a welcome step by issuing the said Circular. It is now obligatory role of adjudicating or appellate authorities to decide the cases in their jurisdiction pertaining to the questions of law or identical case on facts decided in the said orders. It is hope that CBEC may issue similar instruction in the matter of Customs also so that numbers of cases are lying at various stages of adjudication / appellate authorities can be closed.
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I had very high hopes when GST was spoken about the mother of all reforms. To my mind this should mean stoppage of litigation & clogging of the courts but that is not to be. There are already more than 100 petitions in the various High courts. However, it is good that CBEC has taken care to compile the data in respect of the old issues already settled & accepted. However, the important point is that it is the duty of the lawmakers to make a transparent & easy to understand law & implementers to take up the issues with the lawmakers in case of any any problems encountered by the assessee. If you will see every notification is containing at the end that if any difficulties are encountered in implementation then the issue should be referred back. I don’t understand why that is not done & why the courts have to do that & waste their time, energy & effort because of the stupidity of the lawmakers & implementers. The litigation is simply a pointer towards the incompetence & it is shameful & disgusting, the way things are.
I had very high hopes when GST was spoken about the mother of all reforms. To my mind this should mean stoppage of litigation & clogging of the courts but that is not to be. There are already more than 100 petitions in the various High courts. However, it is good that CBEC has taken care to compile the data in respect of the old issues already settled & accepted. However, the important point is that it is the duty of the lawmakers to make a transparent & easy to understand law & implementers to take up the issues with the lawmakers in case of any any problems encountered by the assessee. If you will see every notification is containing at the end that if any difficulties are encountered in implementation then the issue should be referred back. I dont understand why that is not done & why the courts have to do that & waste their time, energy & effort because of the lawmakers & implementer s. The litigation is simply a pointer towards the incompetence & it is shameful & disgusting, the way things are.
INSTANT
So much of good news, for a dramatic change in the course, marking a striking departure, in the commonly come-across otherwise rigid philosophy of tax-gatherers. A welcome breeze, blowing in the right direction !