ST - The issues need to be addressed is, whether Cenvat credit availed by assessee on the services provided by them in State of Jammu and Kashmir need to be reversed back and whether the assessee is liable to reverse back the Cenvat credits availed on Consumer Places Equipments (CPEs), loss in transit at the distributor's premises before same is being put to use for providing the output service - So far as first issue is concerned, it has been contended by assessee that though it is a matter of fact that they have availed the Cenvat credit of capital goods which was used for providing output service in the state of Jammu and Kashmir where the provisions of Finance Act, 1994 are not applicable - However, they have regularly paid service tax to the Central Government since April 2009 to January 2013 - The service tax during this period i.e. from 2009-2010 to 2012-2013 has been paid by them not only by utilizing the Cenvat credit but also by making the cash payment to the Central Government - Assessee need to reverse back an amount of Rs. 87,35,678/- as per the provisions of Section 73 (3) readwith Rule 14 of Cenvat Credit Rules alongwith the applicable interest - Since all the facts and details of Cenvat credit and output services have been recorded in books of accounts of assessee and during the enquiry itself, the assessee has made a payment of Rs. 5 crores, there are no valid ground of issue of SCN for demanding of service tax amounting to Rs. 87,35,678/- and for imposition of penalty under Section 78 of FA, 1994 - Since, in this case, no malafide has been established by department against the assessee, provisions of Section 78 are not applicable in this case, therefore, no penalty required to be imposed under the provisions of Section 78 of FA, 1994 - Coming to second issue, it has been admitted by assessee that they own the liability of reversal of this amount of Rs. 66,66,437/- on account of the lost or destroyed CPEs, however, it was argued that there is no malafide involved in the matter as all the details were being maintained in their books of accounts - It has also been stated that before the issue of SCN, a substantial amount of Rs. 5 crore have been deposited by assessee for making good of the wrongly availed Cenvat credit of Rs. 62,66,437/- as well as the interest due on such credits - There is no valid ground for invocation of Section 78 of FA, 1994 readwith Rule 15 (3) of CCR, 2004 as there was no willful suppression of facts or contravention of any of the provisions of Finance Act with intent to evade the payment of the service tax as all the facts were recorded in the books of accounts - Assessee have also been reversing for the required amount of the Cenvat credit on the lost or transit CPEs which were not put for use for providing output service - Thus, as per the provisions of Rule 3 of Cenvat Credit Rules, assessee is required to reverse back the Cenvat credit of Rs. 62,66,437/- - The assessee is also required to pay interest as per the provision of Section 75 on this amount - However, no valid ground found for imposition of penalty under Section 78 readwith Rule 15 (3) of CCR, 2004 - Coming to the issue of imposition of the penalty under Section 78 of FA, 1994, the elements for invocation of provision of Section 78 such as fraud, collusion, willful mis-statement or suppression of facts with an intent to evade payment of service tax have not been found present and therefore imposition of penalty under Section 78 of the Finance Act, 1994 is set aside: CESTAT

- Appeal partly allowed: DELHI CESTAT

ST - The assessee is a partnership firm - Pursuant to an investigation, a SCN was issued alleging that the assessee had not declared actual amount realized under category of 'BAS' in their ST-3 returns in comparison with Balance Sheet for the period 2009-10 to 2011-12 and thus short paid Service Tax and also wrongly availed and utilized Cenvat Credit amounting to Rs.4,88,190/- during 2009-10 - The SCN demanded Service Tax and CENVAT Credit along with applicable interest - It also proposed penalty under Section 77 & 78 of FA, 1994 and penalty under Rule 15(3) of CCR, 2004 read with Section 78 of the said Act - On going through the Rule 9 of Point of Taxation Rules, 2011 as amended on 01.04.2011, it is found that the said Rule overrules the other Rules and specifically applies to the case in hand and as per the said Rule, taxpayer has given an option to pay tax on receipt basis where provision of services is completed on or before 30th day of June, 2011 or where the invoices issued upto 30.06.2011 - Admittedly, assessee has paid service tax on receipt basis for invoice issued upto 30.06.2011, which is in compliance with Rule 9 of Point of Taxation Rules, 2011 and on billing basis for the bill raised on or after 01.07.2011 as per Rule 3 of Point of Taxation Rules, 2011 - Thus, assessee has correctly discharged its service tax liability - Regarding penalty under Section 78 of the said Act, since there had been regular amendments and changes in Rules during the period and since the assessee have paid the tax alongwith applicable interest, which is also almost equal to the amount of demand, no penalties should be imposed and accordingly, the penalty is set aside - The impugned order is set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

ST - The assessee is registered with service tax department under category of "Commercial or Industrial Construction Services" and "Work Contract Services" - During audit, it was found that the contract did not involve any transfer of property or levy of sale tax on such property as such the service provided by assessee did not fall under "Work Contract Service" and it was covered under Commercial or Industrial Construction Service on which service tax was payable on 33% of gross value received - It was however noticed that the assessee has paid service tax @2% of the value under "Work Contract Service" - Therefore, it was alleged that the assessee has short paid service tax - The assessee is providing the service alongwith material and have paid VAT thereon - To that effect, the assessee has produced VAT Challans and same has been examined by Tribunal - As it is a fact on record that the assessee is paying VAT on the works contract amount, in that circumstances, the assessee has rightly paid service tax @2% of the value of works contract - The assessee is not required to pay further service tax on their activity and whatever service tax has been paid by them is the correct payment of service tax - Therefore, the impugned orde is set-aside: CESTAT

- Appeal allowed: CHANDIGARH CESTAT

CENTRAL EXCISE

CX - The assessee is engaged in manufacture of Sponge Iron - A SCN was issued - The main raw materials for production of Sponge Iron are mainly Iron Ore and coal - No irregularity was found in the stock, consumption of raw materials and in the ratio of input and output vis. a vis. manufactured goods - During search, few loose sheets of paper were found and accordingly, statements of the Director and various other persons were recorded - The Adjudicating Authority confirmed the demand and imposed equal penalty under Section 11AC and also imposed penalty on the Directors of assessee - In the entire records of proceedings, there is no evidence to indicate that there was clandestine manufacturing - There is no independent tangible evidence on record of any clandestine purchases or receipt of the raw materials required for manufacturing of alleged quantity of finished goods for its clandestine removal from the factory - In the entire notice and the order, there is no satisfactory and reliable independent evidence as regards the unaccounted manufacture and/or receipt of huge quantities of raw materials - The quantities of alleged bags dispatched from the factory would require some transportation arrangement for delivery from the factory - However, any reliable evidence about any vehicle coming in or going out of the factory without proper entries is not forthcoming - There is also no cogent evidence about any freight payment for any such movement - There is no cogent evidence of disproportionate power consumption, capacity utilization and labour employed, or any cogent evidence of clandestine manufacture of unaccounted quantity alleged as clandestinely removed - Unaccounted production in the factory of assessee has not been established - There is no dispute on the fact that in adjudication proceedings, the charge of clandestine removal and undervaluation is definitely to be established on the basis of preponderance of probabilities - However, it cannot be merely on the basis of presumptions and assumptions - Suspicion, however grave, cannot replace the proof - The link between the documents recovered in search and the activities of the assessee in their factory is required to be proved - However, due to various reasons as recorded, the Revenue has failed to prove the same - The ratio laid down by the Apex Court in Oudh Sugar Mills Ltd. - 2002-TIOL-307-SC-CX-CB, is clearly applicable in peculiar facts of the instant case inasmuch as the demand cannot be sustained without any tangible evidence, based only on inferences involving unwarranted assumptions - Accordingly, the impugned order is set aside: CESTAT

- Appeals allowed: KOLKATA CESTAT

CX - The issue to be adjudicated is; whether a manufacturer having credit balance in his account can utilize that credit for payment of Service Tax on goods transport by road - The perusal of Rule 3 (4) of CCR makes it abundantly clear that Cenvat Credit can be utilized for payment of Service Tax on any output service - Thus, the reasoning of adjudicating authority that since GTA do not qualify to be an output service as such is not eligible for Cenvat Credit - Hence, payment of Service Tax thereof cannot be made from accumulated Cenvat Credit is opined as incorrect - Though there are several other proviso attached to this sub-rule (4) but none of those provisos are applicable to the given situation - In addition, there is an explanation that cenvat credit cannot be utilized for payment of service tax in respect of services where the person liable to pay tax is the service recipient - But this explanation got incorporated in this Rule vide Notfn 28 dated 20th June, 2012 w.e.f. 1st July, 2012 - The period here is 2007-08 to 2009-10 - Hence, the explanation cannot be made retrospectively applicable to impugned period for which the said condition holds a good law that cenvat credit may be utilized for payment of Service Tax on any output service - High Court of Punjab & Haryana in case of M/s. Nahar Industrial Enterprises Ltd. - 2010-TIOL-868-HC-P&H-ST has held that there is no bar for payment of Service Tax from Cenvat Account and there is no legal restriction for utilization of cenvat credit for purpose of payment of Service Tax even on GTA services - The argument of Revenue that assessee cannot pay service tax from cenvat credit availed by them was held not tenable by High Court of Punjab & Haryana in view of CBEC’s Excise Manual of Supplementary Instructions - It is an apparent case that the service tax liability has been discharged by assessee though from the accumulated cenvat credit account but result remains is that no intention to evade duty can be attributed to the assessee - Discharging the liability by utilizing cenvat credit is otherwise a situation of Revenue neutrality, due to which, no mala fide can be attributed to assessee that there was an intention to cause a loss to Government Exchequer - Resultantly, the Department was not entitled to invoke the extended period of limitation - Vide the SCN of year 2010 demand with effect from Financial Year 2007 has been raised - The entire demand being beyond the normal period of limitation is not sustainable - SCN, resultantly, is held being barred by time - Finally, the order under challenge has gone beyond the scope of SCN by confirming the demand till December, 2010, despite that, it was proposed till 31st December, 2009 - The order under challenge is held not sustainable, same is hereby set aside: CESTAT

- Appeal allowed: DELHI CESTAT

Bharat Coking Coal Ltd Vs CCGST & CE

CX - The issue that arises for consideration is, whether demand is sustainable when the excess amount of central excise duty paid by assessee is suo-moto adjusted during the period March 2011 to March 2013 and whether there is a short payment of central excise duty as per ER-1 return filed by assessee for the month of February 2012 - The case of assessee can be decided on the ground of limitation inasmuch as the period in dispute is March 2011 to March 2013 for which the SCN has been issued in August 2016 by invoking extended period of limitation - The fact regarding the adjustment of excess duty was always in the knowledge of department - The SCN has been issued on the basis of change in opinion without taking into cognizance of practice already followed by assessee in which case there cannot be said to be any suppression on the part of assessee - Further, on perusal of entire SCN, except the allegation of suppression to invoke extended period of limitation, no specific instance found to show that the assessee deliberately suppressed any information from the Department - Moreover, the whole issue has arisen due to lack of knowledge in complying with the central excise procedure since the levy of central excise duty was introduced for the first time w.e.f. March 2011 and the assessee was new to the subject - The assessee is a PSU and will not have any reason to evade payment of duty as has been held by Apex Court in Chennai Petroleum Corporation Ltd. - 2007-TIOL-66-SC-CX and followed by this Tribunal in Nepa Ltd. - 2013-TIOL-2513-CESTAT-DEL and Burn Standard Co. Ltd. - Instead of going into the merits of the case, the appeal allowed on the ground of limitation - The impugned demand is therefore set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

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