Case Law Details
Posco Poggenamp Electrical Steel Pvt Limited Vs Commissioner of Central Excise & ST (CESTAT Ahmedabad)
CESTAT Ahmedabad held that duty was paid on the clearance value on which demand was raised. Accordingly, as duty was paid demand under rule 6(3)(i) of Cenvat Credit Rules, 2004 unsustainable.
Facts- The case of the department is that during audit of records of appellant (Audit Report No.576/19-20 dated 28.02 2020), it was observed that the appellant is engaged in manufacturing of excisable goods i.e. Parts of Transformer” and “CRGO Core Lamination” and also engaged in the trading of goods which is a declared service in terms of Section 66E(a) of the Finance Act, 1994. Further, trading of goods is one of the services is listed in the Negative list of service under Section 66(D)(e) of the Finance Act, 1994 and therefore, service tax is not eligible on trading of goods in terms of Section 66 B of the Act. It was also observed that appellant have availed the Cenvat credit of service tax paid on the services viz. Chartered Accountant, GTA, Manpower Recruitment etc which were used in the manufacturing of dutiable goods as well as trading activity. Since the trading is an exempted service and Cenvat credit of all these services were availed by the appellant and the same was utilized for discharging the central excise duty liability of the manufactured goods is the violation of Rule 6 of the Cenvat Credit Rules, 2004. Accordinly the appellant is liable to pay 6% / 7% of the value of exempted goods i.e. trading in the present case, in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004.
Conclusion- Held that it is crystal clear that on the clearance value on which the demand was raised, the appellant have admittedly paid the duty except for the period 19.04.20 16 to 23.01.2017 wherein the appellant have not availed Cenvat credit. Thus, the appellant have paid the excise duty/ Cenvat on the clearances on which the demand was raised in the present case. With these details, there was no difficulty to the Adjudicating Authority as well as the appellate authority to arrive at the conclusion that there is no case of demand under Rule 6(3)(i) of Cenvat Credit Rules, 2004. However, both the lower authorities on flimsy ground that details were not given by the appellant, confirmed the demand. Therefore, I do not agree with both the authorities. The Revenue is at liberty to verify calculation of payment and or reversal of Cenvat in respect of inputs cleared as such and clearances on which no Cenvat credit was availed.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The case of the department is that during audit of records of appellant (Audit Report No.576/19-20 dated 28.02 2020), it was observed that the appellant is engaged in manufacturing of excisable goods i.e. Parts of Transformer” and “CRGO Core Lamination” and also engaged in the trading of goods which is a declared service in terms of Section 66E(a) of the Finance Act, 1994. Further, trading of goods is one of the services is listed in the Negative list of service under Section 66(D)(e) of the Finance Act, 1994 and therefore, service tax is not eligible on trading of goods in terms of Section 66 B of the Act. It was also observed that appellant have availed the Cenvat credit of service tax paid on the services viz. Chartered Accountant, GTA, Manpower Recruitment etc which were used in the manufacturing of dutiable goods as well as trading activity. Since the trading is an exempted service and Cenvat credit of all these services were availed by the appellant and the same was utilized for discharging the central excise duty liability of the manufactured goods is the violation of Rule 6 of the Cenvat Credit Rules, 2004. Accordinly the appellant is liable to pay 6% / 7% of the value of exempted goods i.e. trading in the present case, in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004.
2. Shri S.J. Vyas, learned Counsel appearing on behalf of the appellant submits that firstly, the show cause notice has not pin pointed that in respect of which item the credit was taken therefore, the charge of availment of credit in respect of input service used in trading goods is hypothetical. He further submits that in respect of all the trading goods, either excise duty was paid or Cenvat credit was paid in respect of removal of inputs as such, and all the packing materials of inputs was also cleared on payment of duty. Therefore, there is no application of Rule 6(3). He submits that Adjudicating Authority has accepted submissions of the appellant but confirmed the demand on the ground that separate details of item-wise payment of duty was not given. He invited my attention to the worksheet of 2015-16, 2016-17 and 2017-18 wherein he pointed out that the value on which the duty was paid and particulars were shown, the value is exactly tallied with value on which the demand under Rule 6(3) was made. Therefore, there is no dispute that on the entire value of the goods which were considered by the department has suffered the duty either in the form of excise duty or in the form of Cenvat credit under Rule 3(4)(5) of Cenvat Credit Rules, 2004. Therefore, merely because separate details were not given demand should not have been confirmed. He placed reliance on the following judgments:-
(a) 2018 (4) TMI 655 – CESTAT Mumbai – Exide Industries Limited vs. Commissioner of Central Excise & Service Tax, Raigad.
(b) 2018 (5) TMI 912 – CESTAT Bangalore – M/S. Kairali Steels and Alloys Pvt. Ltd. vs. Commissioner of Central Tax & Central Excise, Calicut
(c) 2018 (9) TMI 981 CESTAT Chennai – M/S. Messer Cutting Systems India Pvt. Ltd. vs. Commissioner of GST & Central Excise, Coimbatore
(d) 2022 11 TMI 861 – TRI AHD – GE Power India Limited
(e) 2022 10 TMI 695 – TRI AHD – A Menarini India Pvt. Limited.
3. Shri Rajesh K Agarwal, learned Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.
4. I have carefully considered the submissions made by both sides and perused the record. I find that the department has demanded the amount under Rule 6(3)(i) on the ground that appellant have traded the goods which is deemed exempted service. In the show cause notice, the detail of the demand was given in Para 5.5, which is reproduced below:-
As per submissions of the appellant, even before the Adjudicating Authoritytheir claim of payment of duty, year-wise given as under:-
For the year 2017-18 are as under
5. From the above details, it is crystal clear that on the clearance value on which the demand was raised, the appellant have admittedly paid the duty except for the period 19.04.20 16 to 23.01.2017 wherein the appellant have not availed Cenvat credit. Thus, the appellant have paid the excise duty/ Cenvat on the clearances on which the demand was raised in the present case. With these details, there was no difficulty to the Adjudicating Authority as well as the appellate authority to arrive at the conclusion that there is no case of demand under Rule 6(3)(i) of Cenvat Credit Rules, 2004. However, both the lower authorities on flimsy ground that details were not given by the appellant, confirmed the demand. Therefore, I do not agree with both the authorities. The Revenue is at liberty to verify calculation of payment and or reversal of Cenvat in respect of inputs cleared as such and clearances on which no Cenvat credit was availed.
6. In view of my above observation, the impugned order is set-aside and the appeal is allowed.
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