Larsen & Toubro Limited (EAIC) Versus Commissioner of CGST, Mumbai East
Central Excise
2018 (11) TMI 829 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 26-10-2018
APPEAL NO: E/86348/2018 – A/87789/2018
Central Excise
Dr. Suvendu Kumar Pati, Member (Judicial)
Shri Jitendra Khare, AGM with Shri Kishore Ahuja, AGM for appellant
Shri S.J. Sahu, Assistant Commissioner (AR) respondent
ORDER
Imposition of penalty on ground of suppression of alleged availment of inadmissible credit even after subsequent reversal upon audit noting before issue of show cause is the subject matter of this appeal.
2. Brief fact of the appellant's case is that it is a large tax payer which is subjected to CERA and EA-2000 audits every year. During EA audit conducted in the month of June 2016 it was brought to the notice of appellant that certain inadmissible Cenvat Credits were availed by the appellant for the period between Oct-11 to Mar-15 amounting to Rs. 8,71,885/- and the same wa
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h facilities available in the form prescribed for e-filing of returns. The appellant also contended that every year Excise Department had conducted audit of its records and verified the detail of Cenvat Credit availed by it but they had not raised any objection on previous occasions for which no mens rea can be inferred from the conduct of the appellant since entire allegedly erroneous credit is only 0.2% of the total availed of credit of Rs. 45,37,57,775/- covering 72,266 numbers of invoices and error might have occured in handling such huge volume of data. The Learned Counsel for the appellant Shri Jitendra Khare & Shri Kishore Ahjuja further submitted that in the previous occasions, on similar situations, favourable Order-in-Originals had been passed in favour of appellant and the same may be treated as judicial precedent in setting aside the order.
4. In response to such submissions of the appellant, the Learned AR for the Department Shri S.J. Sahu supported the order of the Commi
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arties which firm part of the appeal case record. Admittedly, appellant's availment of Cenvat credit which was held by the audit party is inadmissible is not being questioned in this appeal about its legality. In his Order-in-Appeal the commissioner has distinguished the appellant's case in respect of earlier decisions concerning the appellant on similar issue passed by the adjudicating authority and he hold that previous audit cannot be taken as a plea of non-suppression. To him audit is nothing but vouching a document in a selective and comprehensive way but it is not a complete checking of each and every document for which it cannot be said that there was no suppression or non disclosure of fact since it was appellant's responsibility to bring facts of availment of credit which they failed to do. However, in order to find out the purpose of audit, reference is made by me to the Manual published by the Institute of Chartered Accountants of India in respect of EA audit and CERA audit.
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ined by CERA audit party to point out the deficiencies, leakage of revenue and non recoveries of dues by the Central Excise Department. Therefore it cannot be said that only because audit party had found some credit availed as inadmissible, suppression of fact is made out.
6. As found from the show cause notice as well as from the OIO and OIA, the credit was held to be inadmissible on the ground that after sale services credit should not go to the manufacture but nowhere it has been referred that sale was done by the third party other than the manufacturer itself but there is no point in discussing on the merit of admissibility of the credit since the same is accepted by the appellant and not challenged though there is a difference between acceptance of the direction of the executive authority and imposition of tax without compliance to Article 265 of the Constitution of India.
7. Appellant has placed heavy reliance on the case law reported in 2015-TIOL-223-SC-CX in the matter of Com
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lleged inadmissibility runs into lakhs, considering the largeness of tax payment by the appellant in crores, it comprised of only 0.2% of its total Cenvat Credit allegedly wrongfully availed. It is also found from the show cause and OIO that one to one co-relation of the credit availed is not a basic requirement of Cenvat Credit rules. Furthermore appellant had not only reversed the credit which was held by the audit party as inadmissible but had also intimated the fact of such reversal by e-mail to the competent authority. Audit being one of the ways by which departmental authorities can bring the fact of inadmissibility of credit to the knowledge of the assessee on verification of its document for which no specific mode is prescribed in the statute for suo moto submission of Cenvat Credit documents or related information to Excise Department and self assessment mechanism being introduced, it cannot be said that any suppression of fact has been established against the appellant. Hence
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