Tag: CESTAT

Relief To Welspun: Once The Input Credit Is Legally Taken And Utilized On The Dutiable Final Product, It Need Not Be Reversed, CESTAT

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad has held that once the input credit is legally taken and utilized on the dutiable final product, it need not be reversed on the final product.

BACKGROUND

The appellant is engaged in the manufacture of Cotton Terry Towels falling under Chapter heading No. 63 of the Central Excise Tariff Act, 1985. The appellant are availing the facility of Cenvat credit under the Cenvat Credit Rules, 2004. The appellant’s raw material was attracting Additional Duty of Excise (Textile & Textile Articles) in terms of Section 3 of Additional Duties of Excise (Textile & Textile Articles) Act, 1978. 

They have been availing Cenvat credit on the ADE (T&TA). Subsequently, vide Notification No. 31/2004-CE dated 09.07.2004, the ADE (T&TA) such raw materials was exempted whole of the additional duty of excise (T&TA) leviable thereon. However, the Cenvat credit availed before that was lying accumulated/ unutilized which had been carried forward from time to time.

The case of the department is that the appellant is liable to reverse the Cenvat credit lying unutilized in respect of ADE(T&TA) in terms of transitional provision of Rule 11(3)(ii) of the Cenvat Credit Rules, 2004. 

The show cause notice dated 26.11.2012 was issued proposing recovery of the accumulated Cenvat credit of ADE (T&TA). The show cause notice was adjudicated by the Commissioner, Daman.

The appellant submits that Cenvat credit of ADE(T&TA) was legally availed as per the Rule prevailing at the time of receipt of the raw material and thereafter the same has been carried forward. The department demanded the unutilized Cenvat credit of ADE(T&TA) only on the ground that as per Rule 11((3) of Cenvat Credit Rules, 2004 the assessee is required to reverse the credit. At the time of taking credit and even thereafter when the credit was carried forward there was no provision for recovery or reversal of Cenvat credit. Rule 11(3) was inserted in Cenvat Credit Rules, 2004 only with effect from 01.03.2007. Therefore, the exemption notification issued prior to this date and Cenvat credit earned much before this date of insertion of Rule 11(3), the provision of Rule 11(3) cannot be applied retrospectively.

RULING

The tribunal held that once the input credit is legally taken and utilized on the dutiable final product, it need not be reversed on the final product being exempted subsequently. Only if any products are purchased subsequent to the said exemption and if any tax is paid on such inputs, as the final product is exempted from payment of tax, the assessee would not be entitled to avail the Cenvat credit on such inputs. But the Cenvat credit availed on such inputs till the date of exemption, they vest in the assessee and the assessee cannot be divested of that credit as the law does not provide for the same. 

“Therefore, the authorities taking advantage of the notification exempting the final product cannot claim reversal of Cenvat credit either in respect of final product which have come into existence on the date of the notification or on the inputs stored in the godown or the work in progress and finished products,” the CESTAT said.

Case Title: Welspun India Limited V/s Commissioner of CGST & Central Excise

Citation: Excise Appeal No. 12251 Of 2014-Db

Welspun-India-LimitedDownload

Retracted Statements Cannot Be Sole Basis For Action Under Customs Act Without Any Independent Corroborative Evidence: CESTAT 

The CESTAT New Delhi ruled that the retracted statements cannot be the sole basis for action under the Customs Act without any independent corroborative evidence.

Facts 

Information was received that M/s Bhola Jewelmart Pvt Ltd., was engaged in the manufacture of gold coins, gold jewellery and in trading of the same, from their premises situated in Karol bagh, New Delhi. It was gathered that Shri Rajesh Bhola, Director of the company was engaged in the illegal procurement of smuggled gold coins of foreign-made markings of King Edward and Elizabeth etc. Acting on this information searches were conducted at the shop/office premises. Certain documents and gold coins/bars including those having foreign marking and gold jewellery were detained for further investigation. Searches were also conducted at the residential premises of the Director and gold bars having foreign marking, gold coins with foreign markings and gold jewellery were detained. 

Submissions 

Counsel for the appellant submitted that it was important to note that the alleged confessional statements tendered by the appellant had been retracted before the Magistrate, Patiala Court. Therefore, he submitted that there remains no evidentiary value of such a confessional statement which had been subsequently retracted. 

Authorised Representative submitted that the impugned order of releasing gold bullion of 1568.489 grams, setting aside the confiscation of jewellery of 6560.994 grams and of coins bearing the ISO mark of 4690.37 grams is bad in law being contrary to the facts and circumstances of the case and attendant provisions of law. 

Decision 

The division bench of Justice Dr. Rachna Gupta Member (Judicial) And Hemambika R Priya Member (Technical) noted that the critical evidence on which the entire case has been based is on the statements dated 27.04.2017, 28.04.2017 and 29.04.2017 of the appellant, wherein he has stated that he had no bills/invoice for the gold with foreign markings. 

The bench found that the appellate authority has concluded that sufficient independent evidence needs to be adduced to corroborate the department’s contention regarding smuggled nature of the gold and in the absence of the same, it cannot be concluded that all the gold which was seized from the business & residential premises was smuggled. 

The Tribunal held that the Appellate authority has rightly held in para 5.3.5 of the impugned order that “in view of the above, any conclusion that the seized gold, gold coins and jewellery which was not released and which has been subsequently confiscated were smuggled into India or made from the smuggled gold, on the basis of the statements of the appellant dated 27.04.2017, 28.04.2017 and 29.04.2017 is not sustainable”. 

“It was more so when the accused had admitted under Section 108 of Customs Act, 1962 to have purchased ten foreign marked gold biscuits of lesser weight, heated them and hammered to obliterate the foreign marks. Since the lawful possession of the said foreign marked gold biscuits were not proved, the same were held liable to confiscation”, the Tribunal said.

Case title: Rajesh Bhola V/S Principal Commissioner, Customs (Preventive), New Delhi   

Citation: CUSTOMS APPEAL NO. 51178 OF 2020 

Breaking: Service Tax Liability Can Not Be Imposed Only On The Basis Of Form 26AS [Read Judgement]

In the case of M/s Luit Developers Private Limited vs Commissioner of CGST & Central Excise, Dibrugarh, the CESTAT Kolkata has held that:

I also find that the appellant is a Pvt Ltd Company and figures in Form 26AS are already included in Revenue from Operations in the Profit/Loss Account of Balance Sheet, which is a public document, and therefore no suppression can be alleged as held in Hindalco Industries Ltd (supra). I also find that the Department has not adduced any positive evidence to show malafide intention for evasion of service tax and therefore extended period cannot be invoked as held in Pushpam Pharmaceuticals Limited (supra).

Therefore, in view of the above discussions and decisions cited, the entire demand fails on merits as well as on limitation. Thus, there can be no imposition of Service tax, interest and penalty on the appellant. The impugned order cannot be sustained and is set aside. Accordingly, the appeal is allowed with consequential benefits.

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