Case Law Details
Inox India Pvt Ltd Vs C.C.E. & S.T. (CESTAT Ahmedabad)
As regard the limitation, I find that there is no dispute that the appellant is availing the Cenvat credit and declaring in their monthly returns. The issue involved is also of interpretation of Cenvat Credit Rules and on this issue there are number of cases were made out by the department. In these circumstances it cannot be said that the appellant had a mala fide intention to evade the excise duty by taking the wrong credit. I do not find any suppression of fact or misstatement on the part of the appellant. Therefore, the demand for the extended period, if any, in this case will not sustain.
Accordingly, the demand for the extended period is set aside remaining demand may be re-quantified by the adjudicating authority and recovered the same from the appellant in accordance with law.
As per my above observation on limitation that the appellant had no intention to evade duty, the appellant is also not liable for penalty under rule 15(2) of Cenvat Credit Rule 2004 read with section 11 AC of the Central Excise Act 1944. Accordingly, the entire penalty involved in the present case is set aside.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether the appellant is entitled for Cenvat credit of Service Tax paid on Outward Transportation Service for clearance of Excisable Goods by the appellant.
2. The Brief facts of the case is that the appellant raise the sale invoice in respect of sale of goods wherein after calculating the excise duty on the assessable value an amount of Rs. 45000/- was added and recovered from the buyer of the goods. On this freight the service tax was paid and the same was claimed as Cenvat Credit which is not in dispute in the present case.
3. Shri Dhaval K. Shah, Learned Counsel appearing on behalf of the appellant submits that the freight is included in the invoice value of the goods and the sale is on FOR basis therefore, the service tax paid on such transportation charges is admissible for Cenvat Credit. He referred to the sale invoice, contract with the buyers and CA Certificates. He submits that the price of the goods is on FOR Basis in support of the submission he placed reliance on the following judgments.
- 2019 (2) TMI 1487 – CESTAT Ahmedabad M/s. Ultratech Cements Limited Vs. CCE, Kutch
- 2019 (2) TMI 1488 – CESTAT Ahmedabad M/s. Sanghi Industries Limited Vs. CCE ,Kutch
- 2019 (4) TMI 11 – CESTAT Ahmedabad M/s. Salasar Copper Vs. CCE & ST, Vad.
- 2019 (12) TMI 848 – CESTAT Ahmedabad M/s. Transpek Industries Ltd Vs. CCE & ST, Vado.
- 2019 (11) TMI 1123 – CESTAT Ahmedabad M/s. Jayant Agro Organics Ltd Vs. CCE & ST, Vado.
- 2019 (6) TMI 9 – CESTAT Ahmedabad M/s. Gulf Oil Lubricants India Ltd Vs. CCE & ST
- 2021 (3) TMI 507 – CESTAT Ahmedabad Banco Products India Ltd Vs. CCE & ST, Vad.
- 2019 (5) TMI 1406 – CESTAT Ahmedabad M/s. GMM Pfaudler Ltd Vs. CCE & ST, Vad.
- 2019 (5) TMI 1480 – CESTAT Ahmedabad Western India Ceramics Pvt. Ltd Vs. CCE & ST., Vad
3.1 Alternatively he submits that the issue involved is of interpretation of Cenvat Credit Rules and there is bunch of litigation on the same issue of admissibility of Cenvat Credit on outward transportation, therefore being the pure question of law involved there is no intention to evade excise duty. Therefore the demand for the extended period should not have been made. He further submits that the appellant have declared the availment of the Cenvat Credit in their monthly return from time to time. Therefore there is no suppression or willful misstatement on their part.
4. On the other hand Shri R. K Bhashkar, Learned Superintendent (Authorized Representative) appearing on behalf of the revenue reiterates the finding of the impugned order. He placed reliance on the following Judgments.
- COMMISIONER OF CENTRAL EXCISE AND S.T. Vs. ULTRA TECH CEMENT LTD.- 2018 (9) G.S.T.L 337 (S.C.)
- NCL INDUSTRIES LTD Vs. COMMISSIONER OF CENTRAL TAX GUNTUR- 2020-TIOL -1149- CESTAT – HYD
5. I have carefully considered the submission of both sides and perused the records. I find that the issue of Cenvat Credit on outward transportation has been considered by this tribunal in detail in the case of M/S ULTRATECH CEMENT LTD. Vs. C.C.E KUTCH (GANDHIDHAM) – 2019 (2) TMI 1487-CESTAT AHMEDABAD and in case of M/S SANGHI INDUSTRIES LTD. Vs. C.C.E KUTCH (GANDHIDHAM) – 2019 (2) TMI 1488 – CESTAT AHMEDABAD. In these cases were decided distinguishing the Hon’ble Supreme Court judgment in the case of Ultra tech Cement Ltd 2018 (9) GSTL 337 (SC) after careful consideration of board circular No. 1065/4/2018 –CX, dated 08.06.2018 which was issued after the Hon’ble Supreme Court Judgment. This tribunal in the above cases observed as under.
“7. As regard the issue raised by the appellant that the excise duty paid on the element of freight being more than the element of cenvat credit on the outward GTA, therefore, there should not be any demand. We find force in the argument of the appellant however, since we are deciding the issue on merit, the admissibility of the Cenvat Credit on outward GTA on the basis of provision under Cenvat Credit Rules itself, we need not to deal this aspect hence, the issue related to this fact left open. As regard the submission made by Ld. Counsel that they have been operating as per the guideline given in the Circular dated 22.12.2014 and 23.08.2007 which was operative at the relevant time, therefore, even though the same were withdrawn w.e.f. 08.06.2018, but at the relevant time the benefit of said Circular shall be available. We find force in the argument of the Ld. Counsel as the law on this issue has been settled time and again by the Hon’ble Supreme Court as per the judgment cited by the Ld. Counsel and on various other judgments that beneficial Circular cannot be withdrawn retrospectively. Consequently, the benefit of the said Circulars shall be available to the appellant during the material period of this case. As regard limitation, we find that the issue was not free from doubt and right from introduction of Cenvat Scheme under Cenvat Credit Rules, the outward GTA was the matter under litigation and for that reason the Government has to come out with clarification thereafter the matter was subject to various litigation before Tribunal, Hon’ble High Courts and Hon’ble Supreme Court, therefore no malafide intention can be attributed to the appellant, therefore, wherever the demand is for extended period, the same will also not be sustainable on the ground of time bar also.”
5.1 From the above decision of this tribunal it is clear that in the case of M/s. Ultratech Cements Limited and M/s. Sanghi Industries Limited (Supra). The Cenvat credit was allowed on one of the important facts that the freight element was included in the assessable value and excise duty was paid there upon. It was also fact in those cases that the assessee had not charged the freight separately to the customers. However, in the present case to ascertain the fact, I reproduce the scan copy of the invoice:-
5.2 From the above invoice it can be seen that freight amount of Rs 45,000 was charged by the appellant to their customers separately, the said amount of the freight was also not included in the assessable value. This fact is further fortified from the bifurcation of the Sale value given in the contract of TAMIL NADU LIVESTOCK DEVELOPMENT AGENCY which is scanned below:
5.3 From the above contract also it is clear that the freight is not included in the assessable value however, the same was separately charged to the customers. This is a very important aspect to decide the admissibility of the credit. I have also carefully perused the CA Certificate submitted by the Learned Counsel according to which also it is clear that though the freight was included in the total invoice value however the same was not included in the assessable value of the excisable goods sold by the appellant. Therefore, the ratio of the judgments in the case of M/s. Ultratech Cements Limited and M/s. Sanghi Industries Limited is not directly applicable in the facts of the present case. These two judgments of the tribunal were upheld by the Hon’ble Gujarat High Court.
5.4 As per the above settled position the appellant on merit is not entitled for the Cenvat Credit. As regard the limitation, I find that there is no dispute that the appellant is availing the Cenvat credit and declaring in their monthly returns. The issue involved is also of interpretation of Cenvat Credit Rules and on this issue there are number of cases were made out by the department. In these circumstances it cannot be said that the appellant had a mala fide intention to evade the excise duty by taking the wrong credit. I do not find any suppression of fact or misstatement on the part of the appellant. Therefore, the demand for the extended period, if any, in this case will not sustain.
6. Accordingly, the demand for the extended period is set aside remaining demand may be re-quantified by the adjudicating authority and recovered the same from the appellant in accordance with law.
6.1 As per my above observation on limitation that the appellant had no intention to evade duty, the appellant is also not liable for penalty under rule 15(2) of Cenvat Credit Rule 2004 read with section 11 AC of the Central Excise Act 1944. Accordingly, the entire penalty involved in the present case is set aside.
7. The impugned order is accordingly, modified and appeal is partly allowed in the above terms.
(Pronounced in open court 25.03.2021)
