2018 (9) TMI 1438 – MADHYA PRADESH HIGH COURT – 2018 (362) E.L.T. 975 (M. P.) – CENVAT credit – input services – GTA service – place of removal – recovery of CENVAT credit with Interest and penalty – Held that:- Though a plea was taken by the assessee in his reply that by issue of N/N. 2014-CE(NT) dated 11/07/2014, sub-rule (qa) has been inserted in Rule 2 of Cenvat Credit Rules 2004 incorporating the definition of place of removal, the Cenvat credit on outward freight was stopped w.e.f. 11/07/2014. This defense by the assessee appeared to be deliberate to overcome the show cause because even prior to insertion of definition of “place of removal” under Cenvat Credit Rules, 2004, the same definition of “place of removal” under Section 4(3)(c) of 1944 Act was applicable for Rule 2 of Rules 2004 in terms of Rule 2(t) of the 2004 Rules which stipulates that “words and expressions used in these rules and not defined but defined in the Excise Act or Finance Act shall have the meanings respe
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Act, 1944. [2] The facts giving rise to the controversy briefly are that, the appellant is engaged in the manufacture of excisable goods falling under Chapter 34 of Central Excise Tariff Act, 1985. It is also availing Cenvat Credit facility on inputs, capital goods and input services under the provisions of Cenvat Credit Rules, 2004. During the course of audit of records of the appellant for the period 2011-12 to 2014-15, the appellant was found to have availed the Cenvat Credit of the value on outward freight paid beyond the place of removal of input services amount to ₹ 70,714/-. [3] Show cause notice was served on the appellant in terms of Section 11A of 1944 Act, stating therein that as per Rule 2(1) of the Rules of 2004, input services includes services used in relation to inward transportation of inputs or capital goods and outward transportation upto the place of removal, which as per the definition under Section 4(3)(c) of 1944 Act means (i) a factory or any other place o
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able for rule 2 of Cenvat Credit Rules, 2004 in terms of rule 2(f) of the Cenvat Credit Rules, 2004, which reads as under: Rule 2(f) words and expressions used in these rules and not defined but defined in the Excise Act or the Finance Act shall have the meanings respectively assigned to them in those Acts. The definition of 'place of removal' has always been there in section 4 of the Central Excise Act, 1944. Prior to the inclusion of the definition in Cenvat Credit Rules, 2004, it is clearly mentioned that if any word or expression is not defined in Cenvat Rules, but defined in any other Acts, it shall hold good. Therefore, even before the place of removal was defined in Cenvat Credit Rules, the definition under section 4 was to be held good. 8. In view of the above, it is clear that prior to 11.07.2014 also, the cenvat credit on outward freight beyond the place of removal was not admissible to them in terms of rule 2(I) of the Cenvat Credit Rules, 2004 read with rule 2(f) of
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walior, by his order dated 19/09/2017 in an appeal by observing that:- For admissibility to credit for outward transportation there is no requirement that the cost of freight should enter into the transaction value of the manufactured goods. According to the department, since the cost of outward transportation does not form part of the transaction value of the manufactured goods as defined in Section 4 of the Central Excise Act, 1944, any service tax paid for the outward transportation of goods from place of removal cannot be allowed as credit to the manufacturer, although, the question of denial of credit does not arise if the cost of freight is included in the transaction value. The issue in dispute in the present case is not one of valuation of excisable goods in terms of Section 4 of the Central Excisable Act, 1994 or under the Central Excise Valuation Rules but admissibility of CENVAT credit of service tax on GTA service. The two issues, namely, 'valuation' and 'CENVAT
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of the Central Excise Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930) occurred at the said place. The Supreme Court has also held in the All India Federation of Tax Practitioners case 2007(7) S.T.R. 625 (S.C.) that service tax and excise duty are consumption taxes to be borne by the consumer and, therefore, if credit is denied on transportation service, the levy of service tax on transportation will become a tax on business rather than being a consumption tax. The submission of the Revenue that CENVAt credit cannot be allowed for services if the value thereof does not form part of value subjected to excise duty is clearly against the fundamental concept laid down by the Supreme Court in the All India Federation of Tax Practitioners case. There is an additional reason for holding that CENVAT credit is admissible on services even if the value thereof is not part of the value subjected to duty. This is because the interpretation of the expression input ser
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ended period, what is required to be seen is whether certain ingredients on the part of the assessee such as suppression of facts etc. are present or not. The provisions of the CENVAT Credit Rules are very clear and unambiguous. The appellant have taken credit on GTA services used beyond place of removal which is in blatant violation of the CENVAT Credit Rules. The fact of availment of such irregular credit was also not disclosed to the department. It was a clear case of suppression warranting invocation of extended period and imposition of mandatory penalty under Section 78. 13. It is well settled that mens rea is not a necessary ingredient for imposition of penalty. It was a clear case of suppression and there is not discretion in the matter of imposing penalty under section 11AC of the Act. 14. In view of the above, the cenvat credit of ₹ 70,714/- irregularly availed by the respondent is hereby disallowed and ordered for recovery along with interest. [11] This order has been u
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ocation of the extended period for the demand beyond one year on the ground of suppression, since no suppression of material fact is alleged or established against the appellant? [13] Clause (a) of sub-section (1) of Section 11A of 1944 Act stipulates:- 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded.- (1) Where any duty of excise has not been levied or paid or has been shortlevied or short-paid or erroneously refunded, for any reason,other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,- (a) the Central Excise Officer shall, within two years from the relevant date,serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show c
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3/02/2017-CX dated 10/03/2017 issued by the Central Board of Excise and Customs F.No. 96/1/2017-CX.1, which envisages:- 2.7 Discussion on Limitation: As per the provisions of Central Excise Act, 1944, the duty which has not been levied or paid or has been short levied or short paid or erroneously refunded can be demanded only within normal period i.e. within two years from the relevant date. However, in specific case, where any duty of excise has been not paid or short paid or erroneously refunded, by reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or rules made thereunder with intent to evade payment of duty, then the duty can be demanded within a period of vie years from the relevant date. The SCN should clearly spell out the ingredients for invoking the extended period of five years with evidence on record. A more detailed discussion on the subject is contained in paragraph No. 3.1 to 3.6. 3.2 Ingr
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ate the contentions. [18] In M/s Larsen & Turbo Ltd. (supra), in respect of period March 1993 and December 1994 show cause notice on 27/01/1994 was issued for recovery of ₹ 32,35,575/- in regard to manufacture of 75 PSC girders but excise duty was paid. The said show cause was withdrawn and after a long time on 01/05/1996 another show cause was issued on same premise by invoking extended period of limitation under Section 11A(4) alleging suppression of fact. It was held by their Lordships that the acts of fraud or suppression must be specifically pleaded. The allegations in regard to suppression of facts must be clear and explicit so as to enable the noticee to reply thereto effectively. It was observed by their Lordships that since first show cause notice did not contain the allegation of suppression of facts, the same could not have been taken to justify the invocation of extended period of limitation. It was also observed that the assessee having raise the plea of bonafide
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issue of notification No. 2014-CE(NT) dated 11/07/2014, sub-rule (qa) has been inserted in Rule 2 of Cenvat Credit Rules 2004 incorporating the definition of place of removal, the Cenvat credit on outward freight was stopped w.e.f. 11/07/2014. This defense by the assessee appeared to be deliberate to overcome the show cause because even prior to insertion of definition of place of removal under Cenvat Credit Rules, 2004, the same definition of place of removal under Section 4(3)(c) of 1944 Act was applicable for Rule 2 of Rules 2004 in terms of Rule 2(t) of the 2004 Rules which stipulates that words and expressions used in these rules and not defined but defined in the Excise Act or Finance Act shall have the meanings respectively assigned to them in those Act . The show cause notice clearly mentioned that vide spot Memo No. 4 dated 15/09/2015, the assessee was requested to pay the amount of ₹ 70,714/- along with interest and penalty, but since he failed to pay and took plea that
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