ST - The assessee is manufacturing Iron, such as, CR Coils, HR Coils, MS Angles, MS Channels, MS Flats – As well as engaged in job work of such products and in trading of CR Coils, HR Coils, MS Angles, MS Flats – The Revenue issued SCN demanding Cenvat credit for the period in dispute on exempted services – The grounds for demand was assessee failed to maintain separate records on input service Cenvat credits availed by them as required under Rule 6 (2) CCR.

Held – With respect to credit on goods used in trading activities, the law is settled that the Cenvat credit on input services going into the trading of goods is not available – With respect to retrospective application of the explanation, which has been inserted under Rule 2 (e) of the CCR 2004 becomes applicable retrospectively as same is being considered as an explanation to the already existing provisions – Therefore, no credit on input services which has been used in the furtherance of trading activity - With respect to common input services, the Department should recover the input service credits which have gone only into exempted services – The input services include exempted as well as taxable services - Hence, the case is remanded to re-adjudicate the matter with regard to quantum of input service credits have gone in the exempted services on proportionate basis – In addition, the penalty u/s 78 of FA Act, 1944 is deleted : CESTAT (para 1, 5, 6, 7, 8, 9, 10)

- Case remanded: DELHI CESTAT

2018-TIOL-2598-CESTAT-DEL

Balkrishna Industries Ltd Vs CGST, C & CE  

ST - The assessee was engaged in the manufacture of tyres - It procured flaps, tube and 'O' ring & availed Cenvat credit on tube/ flap/ O 'rings' as well as discharged excise duty on the sets consisting of tyre, tube as well as flap - The Revenue noticed that assessee was not maintaining separate account of receipt and use of input services in or in relation to manufacture of tyre and for purchase and sale of tyre, flap and others - The Revenue opined that the activity of procurement of tube, flap and selling of the same amounted to the trading of goods - Duty demand was raised u/s Rule 6(3) (i) CCR, 2004 along with interest and penalty.

Held - The assessee procured tubes & flaps for supplying them with the tyre - The issue at hand is whether the assessee is required to pay an amount as required under Rule 6(3)(i) of the CCR, 2004 - In the present case, common input services have been used in the manufacture and clearance of tyres along with its accessories - These common input services have been used for trading as well as manufacture - Therefore, the activity of procurement of tube or flap and clearing the same along with tyre as sets cannot be termed to be activity of trading - Hence, the order challenged is set aside : CESTAT (para 2, 9, 10, 11, 12)

- Appeal allowed: DELHI CESTAT

2018-TIOL-2597-CESTAT-DEL

CCE Vs Hindustan Zinc Ltd  

CX - The assessee is engaged in manufacture of Lead and Zinc Concentrates, Zinc Cathode & Sulphuric Acid and availed Cenvat credit of service tax paid by them for services received by them for raising the height of tailing Dam for disposal of Industrial Waste in compliance with requirement of Environmental laws - According to department, since the aforesaid services received by assessee could not be termed as input service therefore the assessee had wrongly availed Cenvat credit in contravention of provisions of Rules 2(l) and 3 of CCR, 2004 - The services availed by assessee in relation to raising height of tailing dam are used essentially for purposes of disposal of hazardous waste, in compliance with Environmental laws - Without complying with said environmental laws, assessee couldn't carry out the manufacturing process and cannot run the factory - Therefore the services received are integrally connected with the manufacturing of finished products by assessee - There is no allegation that the services received for raising the height of tailing dam were being used for other purpose than collecting the waste generated during the manufacturing process - Therefore the service received for rising of height of tailing dam falls under the scope of 'input service' as defined under Rule 2(l) of CCR, 2004 and as per Rule 3, a manufacturer or producer of final product is allowed to take credit of service tax paid on any 'input service' received by them - On an identical issue in assessee's own case 2017-TIOL-3004-CESTAT-DEL Tribunal held that the Cenvat credit in dispute is allowable to assessee - Appeal filed by department is devoid of merit and is accordingly dismissed: CESTAT

- Appeal dismissed: DELHI CESTAT

2018-TIOL-2596-CESTAT-KOL

AB Polymer Vs CCE  

CX - In the present case, the Revenue alleged clandestine manufacture & clearance of goods by the assessee – The Central Excise Anti-Evasion Unit recovered documents and records from the CPU of the factory of the assessee - On the basis of statement recorded and the computer print out including other corroborative documents duty demand was raised – The grounds for issuing SCN was unaccounted raw material, clandestine removal of finished goods, statement recorded under Section 14 of the Act and Contravention of Central Excise Rules.

Held - The statement recorded during the investigation is required to be admissible as evidence only when the maker is examined by the Adjudicating Authority as per the procedure prescribed as per Section 9D of the Central Excise Act – In this case, this exercise has not been carried out by the Revenue which means that statements do not have evidentiary value - The computer print outs and the names appeared in the registers maintained by the Department has not been shown to MD of assessee-company – Further, against the statement Revenue has not obtained his comments on each and every narration as to whether and how the sales has been made and how the payment has been received - The Revenue has not conducted investigation regarding the supply made to the person whose name is found to be entered in the Register if it is for clearance of finished goods clandestinely – Reliance has been placed on ratio laid down in cases of Jindal Drugs Private Ltd. Vs. Union of India and Commissioner of Central Excise, Delhi-I Vs. Kuber Tobacco India Ltd. - Hence, the order under challenge is set aside: CESTAT (para 1,2, 9, 10, 11)

- Appeal allowed: KOLKATA CESTAT

2018-TIOL-2595-CESTAT-KOL

SAIL Vs CCE  

CX - The assessee was engaged in the manufacture of iron and steel products and during the course of manufacture of the said goods, ‘molten slag’ emerges as a by-product – This molten slag is used in manufacturing granulated slag – The Revenue noticed that during the period in dispute there was discrepancy in clearance of granulated slag when compared with Annual Statistical Report & quantity shown in monthly return filed – Differential duty demand was raised.

Held - There is no other evidence of removal of goods from the factory, except the difference in the said two statements - the entire demand has been confirmed without ascertaining the appellant’s capacity to manufacture the additional quantity of 6,91,315 MT, on which demand has been raised- Further, molten slag is exempt as per Notification No.4/2006- CE – Moreover, assessee has duly paid duty on the slag manufactured by the entity which is separate from the assessee-company – Following the decisions of Oudh Sugar Mills Ltd vs UOI & Centurian Laboratories vs. CCE wherein the issue involved has been settled in favour of the assessee - Hence, the order under challenge is set aside : CESTAT (para 2, 9, 10, 11)

- Appeal allowed: KOLKATA CESTAT