M/s Medisray Laboratories P. Ltd. Versus CCGST, Kolhapur
Service Tax
2018 (11) TMI 230 – CESTAT MUMBAI – 2019 (369) E.L.T. 717 (Tri. – Mumbai)
CESTAT MUMBAI – AT
Dated:- 1-11-2018
APPEAL NO. E/85429/2018 – A/87803/2018
Service Tax
DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL)
Shri Rajesh Ostwal, Advocate for Appellant
Shri Sanjay Hasija, Superintendent (AR) for Respondent
ORDER
None payment of duty @ 6%/7% of the trading value for non-maintenance of separate dutiable and exempted accounts to avail CENVAT credit is the subject matter of this appeal.
2. Briefly stated, the appellant's case is that it is engaged in the manufacturing of dutiable goods namely “PP Medicines” and during the Audit it is also observed that it has carried out sale of raw materials by selling the same to M/s Cipla Ltd., Mumbai, on whose behalf it also undertakes manufacturing process on job work basis. As per Rule 6 of CENVAT Credit Rules, 2004, if separate account for manufacturing on su
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buying and selling of raw-material in relation to manufacture of excisable goods is not tantamount to trading and appellant is a manufacturer who is not engaged in any activity that can be treated as trader, but, the impugned order passed by the Commissioner (Appeals) had disregarded the judicial ruling prevalent on the point. It has also challenged invocation of extended period of limitation on the ground that the said act of appellant was well within the knowledge of the Department before whom appellant had submitted annual report and credit availed by them. It was under the bona fide belief that credit was admissible besides the fact that proportionate reversal of input credit was done to establish sufficient compliance of provision contained in Rule 6 of CENVAT Credit Rules, 2004. Further Learned Counsel for the appellant contented that the imposition of penalty is not in conformity to the law and procedure prevailing during the disputed period which should never had extended the
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its raw-material which is fully exempted product, duty liability including interest and penalty on the appellant was not in conformity to the Indirect Tax Rule and therefore, interference by the Tribunal is uncalled for.
5. Heard at length from both sides and perused the case records and provisions of law including definition of trade and the purpose of Audit.
5.1 Dispute relating to taxability on sale and levy of duty by the excise authority is not new in its origin and on many scores, matter had reached the apex court level that necessitated passing of the Constitution (Forty Sixth Amendment) Act, 1982 and going by its Statement of Objects and Reasons, it can be ascertained that in conformity to the judgment of Hon'ble Supreme Court passed in Ganon Dunkerley's case (AIR) 1958 SC 560 whereby the sale of goods as used in entry of the 7th schedule to the constitution was treated to have carried the same meaning as in the Sale of Goods Act, 1930, coupled with subsequent decisions
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atory in nature since definition of service as contained in 65B(44) and exempted service in 66D are to be read conjointly and not in exclusion of each other. This being the statutory definition, sale of goods-be it made in the high sea or within the territorial boundary of India in which Finance Act, 1994 has its force, cannot be called a service to impose tax liability or deny the credit under Rule 6 of Cenvat Credit Rules.
7. Now coming to the statutory audit procedure, the purpose of audit, as available in the Manual published by the Institute of Chartered Accountants of India in respect of EA audit and CERA audit under Chapter 17 is that the idea behind such conduct of verification is to reasonably ensure that no amount, which under the central excise law is chargeable as duty, escapes taxation and the process of verification is always carried out in the presence of assessee and in the process, the auditor is required to discuss the matter with the assessee and advice him to follo
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