Pee Cee Cosma Sope Limited Versus Commissioner, CGST, Customs & Central Excise Hqrs
Central Excise
2018 (9) TMI 1438 – MADHYA PRADESH HIGH COURT – 2018 (362) E.L.T. 975 (M. P.)
MADHYA PRADESH HIGH COURT – HC
Dated:- 14-9-2018
Central Excise Appeal No. 72/2018
Central Excise
Shri Sanjay Yadav And Shri Ashok Kumar Joshi JJ.
For the Appellant : Shri Alok Kumar Sharma, learned counsel
JUDGMENT
Per Justice Sanjay Yadav:
This appeal under Section 35(G) of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 is directed against order dated 02/07/2018 in appeal No. ST/51046/2018-EX(SM) passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi affirming the order of disallowing Cenvat Credit of Rs. 70,714/-, recovering thereof and the penalty under Section 78 of the Central Excise 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
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mitted to be deposited without payment of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory.
[4] The appellant was noticed that he was entitled to avail Cenvat Credit of service tax on GTA up to the place of removal only and therefore, the credit of Rs. 70714/- (BED Rs. 68666, Ed Cess Rs. 1364 and H&S Ed. Cess Rs. 684) on outward freight was inadmissible.
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[6] The Assistant Commissioner (Audit-1) negatived the claim holding:-
“7. The contention of the Noticee appears not correct in as much as prior to insertion of definition of “place of removal” under Cenvat Credit Rules, 2004, the same definition of “place of removal” laid down under section 4(3)(c) of the Central Excise Act, 1944 was applicable 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
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Cess Rs. 684/-), availed by the Noticee on outward freight beyond the place of removal is liable to be recovered from them along with interest under rule 14 of the Cenvat Credit Rules, 1994 read with section 11A and 11AA of the Central Excise Act, 1944.
9. By wrongly taking the credit of service tax, in contravention of rule 2(I) read with rule 2(t) of the Cenvat Credit Rules, 2004, with intent to evade payment of duty, the Noticee also appear to have rendered themselves liable to penalty under rule 15 of the Cenvat Credit Rules, 2004 read with section 11AC of the Central Excise Act, 1994.”
[7] The appellant was also subjected to levy of penalty under Rule 15 of the Rules 2004 read with Section 11AC of 1944 Act.
[8] The demand order was dropped by the Assistant Commissioner, Central GST & Central Excise Div. II Gwalior, 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 fr
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Board Circular No. 97/8/2007 dated 23-08-2007, there may be situations where a manufacturer / consignor may claim that the sale has taken place at the destination point because in terms of the sale contract / agreement (i) the ownership of goods and property in the goods remained with the seller of the goods till the delivery thereof in acceptable condition to the purchaser at his door step (ii) the seller bore the risk of loss of, or damage to, the goods during transit to the destination; and, (iii) the freight charges were an integral part of the price of goods and in such cases, the credit of service tax paid on the transportation upto such place of sale would be admissible if it can be established by the claimant of such credit that the sale and transfer of property in goods (in terms of the definition under Section 2 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
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ied to duty under Section 4A of the Central Excise Act or tariff value under Section 3(2) of the Central Excise Act or the product attract specific rate of duty.”
[9] Accordingly, it held that the definition of “input service” has to be interpreted in the light of requirements of business and it cannot be read restrictively so as to confine only upto the factory or upto the depot of manufacturers.
[10] The Commissioner (Appeals) in an appeal by the department set aside the order and upheld the recovery with interest by order dated 28/02/2018, it held:-
“12. The respondent has contested the invocation of extended period on the ground that the matter was in the knowledge of the department. It is well settled that date of knowledge of the department is not relevant for the purpose of computing the five years period. For invoking the extended 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 n
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extent that the show cause notice was time barred. And proposes following substantial question of law:-
“(i) Whether the learned Tribunal and the appellant authority erred in passing the decision on the ground time limit which was not the subject matter of appeal, holding suppression of fact of availing cenvat credit without there being any allegation in the Show Cause Notice for the same? The order of the adjudicating authority was reviewed by the Commissioner and directed for filing the appeal only on merit of the case and not on time limit.
(ii) Whether, the demand for the cenvat credit from May, 2011 to July, 2014 is time barred as issued beyond normal period of one year as the Show Cause Notice was issued on 20.01.2016?
(iii) Whether the Tribunal and the appellate Authority was justified in holding the entitlement of department for invocation of the extended period for the demand beyond one year on the ground of suppression, since no suppression of material fact is alleged
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the period prescribed was one year).
[14] Furthermore, sub-section (4) of Section 11A of 1944 Act stipulates:
“(4) Where any duty of excise has not been levied or paid or has been shortlevied or short-paid or erroneously refunded, by the reason of –
(a) fraud; or
(b) collusion; or
(c) any wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,
by any person chargeable with the duty, the Central Excise Officer shall,within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice.”
[15] Relying on clause 2.7 and 3.2 of the circular No. 1053/02/2017-CX dated 10/03/2017 issued by the Central Board of Excise and Customs F.No. 96/1/2017-CX.1, whic
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to justify the demand for the period in a case leading to short payment or non-payment of tax. The onus of establishing that these ingredients are present in a given case is on revenue and these ingredients need to be clearly brought out in the Show Cause Notice alongwith evidence thereof. The active element of intent to evade duty by action or inaction needs to be present for invoking extended period.”
[16] It is urged that if extended period of five years are availed, incumbent it is upon the Revenue to spell out the ingredients for invoking the extended period of five years with evidence on record. And the onus is on the revenue to establish the same.
[17] Reliance is placed on the decision in Escorts Limited Vs. Commissioner of Central Excise, Faridabad [(2015) 9 SCC 109] and M/s Larsen and Turbo Ltd. Vs. The Commissioner of Central Excise, Pune – II [2007 AIR SCW 6234] to substantiate the contentions.
[18] In M/s Larsen & Turbo Ltd. (supra), in respect of period March 1993 and
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act of malafide, thus found fault with the department invoking the extended period of limitation.
[19] In Escorts Ltd. (supra), their Lordships were please to observe that whether in a particular set of facts and circumstances there was any fraud or collusion or willful mis-statement or suppression or contravention of any provision of any Act is a question of fact depending upon the facts and circumstances of a particular case. Mere failure or negligence on the part of the assessee where there was scope for doubt whether goods were dutiable or not, would not attract Section 11A of the Act.
[20] In the case at hand, it was noticed that for the period 2011-12 to 2014-15, the assessee had availed Cenvat credit of service tax amounting to Rs. 70,714/- on outward freight paid beyond the place of removal, as input service. Though a plea was taken by the assessee in his reply that by issue of notification No. 2014-CE(NT) dated 11/07/2014, sub-rule (qa) has been inserted in Rule 2 of Cenvat
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rongly taking the credit of service tax, in contravention of rule 2(I) read with rule 2(t) of the Cenvat Credit Rules, 2004, with intent to evade payment of duty, the Noticee also appear to have rendered themselves liable to penalty under rule 15 of the Cenvat Credit Rules, 2004 read with section 11AC of the Central Excise Act, 1994.”
[21] Clause (e) of sub-section (4) of Section 11A stipulates that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, by the reason of contravention of any of the provisions of the Act of 1944 or of the rules made thereunder with intent to evade payment of duty, by any person chargeable with the duty, the Central Excise Officer shall,within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in t
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