Custom, Excise & Service Tax Tribunal
Rishi Kiran Logistics P Ltd vs Rajkot on 19 February, 2024
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO.3
Service Tax Appeal No. 11503 of 2014- DB
(Arising out of OIO-RAJ-EXCUS-000-COM-169-13-14 dated 15/01/2014 passed by
Commissioner of Central Excise, CUSTOMS (Adjudication)-RAJKOT)
Rishi Kiran Logistics P Ltd .........Appellant
Sector-8, Plot No. 8,
Opp Gandhidham Post Office, Gandhidham,
Kutch, Gujarat
VERSUS
C.C.E. & S.T.-Rajkot .........Respondent
Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat- 360001 WITH Service Tax Appeal No. 11554 of 2014- DB (Arising out of OIO-RAJ-EXCUS-000-COM-169-13-14 dated 15/01/2014 passed by Commissioner of Central Excise, CUSTOMS (Adjudication)-RAJKOT) C.C.E. & S.T.-Rajkot .........Appellant Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat- 360001 VERSUS Rishi Kiran Logistics P Ltd .........Respondent Sector-8, Plot No. 8, Opp. Gandhidham Post Office, Gandhidham, Kutch, Gujarat APPEARANCE:
Shri Amal Dave, Advocate for the Appellant-Assessee Shri, R K Agarwal Superintendent (AR), for the Respondent - Revenue CORAM: HON'BLE MEMBER (JUDICIAL), MS. SULEKHA BEEVI C.S. HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR Final Order No.10425-10426/2024 DATE OF HEARING: 23.01.2024 DATE OF DECISION: 19.02.2024 Per: MS. SULEKHA BEEVI C.S. Both these appeals arise out of the same impugned order and so were heard together and are disposed of by this common order. The parties are here after referred to as assessee and department for the sake of convenience.
2|Page E/11503 &11554/2014 1.1 The assessee is a service provider and is registered under the categories of Storage and Warehousing services, Cargo handling services, Goods transport agency. The assessee is also availing Cenvat credit of service tax paid on various input services. The assessee is engaged in generating electricity which falls under CETSH (Central Excise Tariff Sub Heading) 27 16 0000 which is not leviable to excise duty. During the course of audit of records of the assessee such as ST-3 returns for the period 2007-
08, Cenvat credit account up to October-2008 and balance sheet for the year 2007-08, it was observed that under the head income, the assessee had shown "electricity generating receipt" of Rs. 1,47,99,356/- and under the head of "other income" in schedule "O" to the profit and loss account, the assessee had shown to have earned Rs. 91, 24,000/- by raw salt sales. 1.2 Further, assessee had availed Cenvat credit of service tax paid in respect of terminal charges, Stevedoring services, Telephone Service, Mobile Services, courier services, Travel services, etc. as input services. Out of these services many services except Stevedoring services, survey charges, terminal charges, etc. are common input services which have been used for taxable as well as exempted goods/ services.
1.3 As per definition of exempted goods and exempted services given in Rule 2(d) and 2(e) of Cenvat Credit Rules, 2004, the electricity generated by assessee is not leviable to duty and comes under exempted goods. So also the sale of raw salt is an activity of trading which is an exempted service. In term of Rule 6 an assessee is prohibited from availing Cenvat credit on exempted goods and exempted services. On verification of accounts of the assessee it was noticed that the assessee has availed Cenvat credit of common input services used for taxable as well as exempted goods/services. The assessee had not maintained separate accounts as required under sub
3|Page E/11503 &11554/2014 Rule (3) of Rule (6) of Cenvat Credit Rules, 2004. The department was of the view that as the assessee has not maintained separate accounts, and has not intimated about option to reverse proportionate credit, the assessee is liable to pay an amount equal to 5%/6% of the value of the exempted goods as provided under Rule 6(3A) (i) of the Cenvat credit Rules, 2004. 1.4 Again, during the period up to 2008 as per Rule 6(3)(c), the assessee could utilise only 20% of the Cenvat credit when they are engaged in providing both taxable as well as exempted services. In the present case, assessee had utilised excess of 20% of Cenvat credit which was against the provisions of law.
1.5 Accordingly, show cause notice was issued proposing to disallow and recover the wrongly availed credit as well as the credit utilised in excess of the permissible limit of 20% along with interest and for imposing penalties. After due process of law, the Original Authority vide order impugned herein confirmed the duty of Rs. 72,18,957/- being the wrongly availed credit in respect of common input services used for taxable and exempted services (trading). The Original Authority, however, dropped the demand of Rs. 59, 32, 265/- proposed in the SCN to be recovered for utilizing in excess of 20% for the period 2007-08. Penalties were imposed under Section 77 and 78 of the Financial Act, 1994. Aggrieved by such order, the assessee is now before the Tribunal.
2. The Learned Counsel Shri Amal Dave appeared and argued for the Assessee. It is submitted these appeals involved two issues to be decided. The first issue is with regard to the appeal filled by the department in respect of service tax of Rs. 59,32,265/-. for the period 2007-08. The Original Authority dropped this demand proposed in the show cause notice which was raised alleging utilization of credit in excess of the 20% as
4|Page E/11503 &11554/2014 provided under Rule 6(3)(c) Cenvat Credit Rules, 2004. It is the contention of the department that the Adjudicating Authority has wrongly dropped the demand by considering the issue relating to trading of raw salt only. In their appeal department contends that as the assesse is engaged in generating and selling electricity also the same has to be considered as exempted goods. The department has filed appeal against the impugned order on the ground that the adjudicating authority while dropping the demand of Rs. 59,32,265/- has not given any specific findings with regard to manufacture/ sale of electricity.
2.1 It is submitted by the learned Counsel that even if Rule 6(3)(c) puts restrictions on an assesse for utilization of Cenvat credit in excess of 20% in a particular financial year, the assesse would be eligible to avail 100% credit in the subsequent years as after 2008 the said restriction was ommitted. Therefore, when 80% remaining credit would be available in the next financial year and when many years have been passed since the dispute arose, the demand has been correctly dropped. The learned Counsel submitted that the very same issue was considered by the Tribunal in the case of M/s Duraflex Services and Construction Technologies Ltd. Vs. Commissioner of Customs CE & ST 2019 (25) GSTL 226 (Tri.- Hyderabad) and M/s Tinna Oils and Chemicals Ltd. Vs. Commissioner of CE, Cus. & ST 2020 (42) GSTL 98 (Tri.-Hyderabad). The learned Counsel prayed that the department appeal may be dismissed.
3. The second issue is with regard to the demand of Rs. 72,18,957/- confirmed for the period April-2007 to March -2012. The allegation is that the assessee has used common input services for taxable services as well as generation/selling electricity in Tamil Nadu and for trading activities. It is submitted that the assessee had used input services like terminal charges, Stevedoring services and Telephone services for their business activities in
5|Page E/11503 &11554/2014 Gandhidham area. The activity of generating electricity by use of windmills was under taken in Tamil Nadu. The department has not established that such input services were actually used for generation of electricity in Tamil Nadu. The allegations in the show cause notice has to be proved by the department. In the impugned order, the Commissioner has rendered a finding that because the assesse was maintaining common profit and loss account for both activities, the plea that the input services were not used commonly for generating of electricity and sale of salt cannot be accepted. It is argued by the Learned Cousnel that the said findings is erroneous in as much as maintaining common profit and loss account has nothing to do with the availment of input services and their utilization thereof. The original authority has erred in observing that assesse has failed to demonstrate by furnishing documents that such common input services were not used for the activity of generating electricity at Tamil Nadu and that these were exclusively used for taxable output services at Gandhidham. 3.1 The Learned Counsel argued on the ground of limitation also. It is submitted that the show cause notice is issued invoking the extended period, alleging suppression of facts on the part of the assessee. The learned Counsel adverted to the show cause notice as well as from the impugned order and submitted that the demand has been raised pursuant to an audit and verification of records such as, ST-3 returns for the period 2007-08, Cenvat credit account up to October-08 and balance sheet for the year 2007-08. The entire case has been booked on the basis of the accounts maintained by the assessee. Specifically in the SCN there is only a vague allegation of suppression of facts without stating as to what is the act of suppression committed by the assessee. The learned Counsel relied upon the decision in the case of M/s Musaddilal Projects LTD. Vs, Commissioner of C EX, Cus & ST, Hyderabad-I 2017 (4) GSTL 407 Tribunal Hyderabad to argue that in the said case the Tribunal held that when the investigation conducted
6|Page E/11503 &11554/2014 by the DGCEI did not bring out any act of suppression by the assessee and the entire Cenvat credit was disclosed in ST-3 returns which were filed regularly, the show cause notice issued alleging suppression of facts is not sustainable. The decision of the Hon'ble Gujarat High Court in the case of M/s. Dynamic Industries Ltd. 2014 (307) ELT 15 as well as decision of Hon'ble High Court of Madhya Pradesh in the case M/s. ZYG Pharma Pvt. Ltd. 2017 (358) ELT 101 (M.P.) was also relied. The Learned Counsel prayed that the demand raised invoking the extended period may be set aside.
4. Shri R K Agarwal, Learned Superintendent (AR) appeared and argued for the department.
4.1 It is submitted that the department has filed the appeal against order passed by the Commissioner who dropped the demand of Rs. 59,32,265/- being the Cenvat credit utilized in excess of 20% during the period 2007-08. It is submitted by Learned AR that the said demand has been arrived in Annexure- B of the show cause notice, on the basis of the Provisions of Rule 6 (3) (c) of the Cenvat Credit Rules, 2004. The said issue obviously includes the fact that the assessee manufactured/sold electricity and also engaged in trading of raw salt. However, the Original Authority has considered the activity of trading of raw salt only to drop the demand. In Para 15 the Original Authority has discussed that the assessee is involved in sale of raw salt. However, there is nothing mentioned with regard to the manufacture/ sale of electricity. Since, the demand in the show cause notice is arrived at on the basis of excess of 20% utilization of Cenvat credit, the dropping of the entire demand on this score on the mere observation that assessee is engaged in sale of raw salt is erroneous and requires to be set aside. It is prayed that the said demand may be confirmed.
7|Page E/11503 &11554/2014 4.2 In regard to the appeal filed by the assessee on confirmation of
demand of service tax of Rs. 72,18,957/-, it is submitted by the Learned AR that the assesse has used common input services for both taxable services and exempted services (activity of trading). With effect from 01.04.2011 an explanation has been added in the definition of exempted services by which trading is also an exempted service. The activity of manufacture/ sale of electricity at Tamil Nadu as well as the sale of raw salt are trading activities of the assessee. The input services in the nature of Mobile phone services, ,Travel service, Bank Commission, maintenance & repairs of offices, Courier services are input services, which are in the nature of being commonly used for taxable output service as well as trading activities. The main argument of the Assesse is that the output services were provided in Gandhidham and that their activity of generating and sale of electricity had occurred in Tamil Nadu and therefore, common input services had not been used for generation and sale of electricity. It is submitted that when their Cenvat account itself shows that credit has been availed of service tax paid on the above mentioned input services, the burden is on the assesse to establish that they have not availed such common input services for generation/sale of electricity as well as trading of raw salt. The Learned AR submitted that the assessee has not been able to establish that they have not availed the above input services for generation of electricity, sale of electricity as well as sale of raw salt. For the said reason, the demand confirmed is legal and proper.
4.3 The fact that the assessee has availed common input services for both taxable services as well as exempted services would not have come to light, if the audit had not been conducted. For this reason, the show cause notice issued invoking the extended period is proper and requires no inference. It is prayed by the Learned AR that the appeal filed by the assessee may be dismissed.
8|Page E/11503 &11554/2014 5. Heard both sides.
5.1 The first issue that arises for consideration in the appeal filed by the department is whether the dropping of the demand of Rs. 59,32,265/- which was proposed in the show cause notice alleging that the assessee has utilised in excess of 20% of the credit in violation of Rule 6(3)(c) of Cenvat Credit Rules, 2004 is legal and proper. The very same issue was considered by the Tribunal in the case of M/s Duraflex Services and Construction Technologies Ltd. (supra). The Tribunal observed in the said case that an assessee during the said period was not barred for from taking credit but was only barred utilizing it. Further an assessee would be free to utilize remaining 80% in the subsequent financial year. The relevant Part of the said order reads as under:-
"8. As far as the demand of Rs. 58,30,168/- is concerned, this is on the ground that assessee has utilized 100% of credit taken instead only 20% as was prevalent during the relevant period in terms of Rule 6(3)(c) of CCR, 2004. It is true that during the relevant period only 20% of credit could be utilized but we find force in the argument of the assessee that they were not barred from taking credit but were only barred from utilizing it. They were free to utilize remaining 80% in the immediate next financial year. Therefore, the demand on this ground does not sustain. As several years have passed, the assessee would have been entitled to utilize the credit subsequent to the period in question and therefore the demand on this ground needs to be set aside and we do so."
5.2 Similar view was considered by the Tribunal in the case of M/s Tinna Oils and Chemicals Ltd. (supra). It was observed that the Tribunal post 01.04.2008 the said provision restricting the utilization of credit was amended and the bar of utilizing credit was omitted. After such lapse of time it did not make any difference whether the asssessee had utilized the credit in excess of 20% prior to 01.04.2008 and therefore the demand was set aside. The relevant Para reads as under :-
9|Page E/11503 &11554/2014 "3. The assessee herein is engaged in providing 'Cargo Handling Service', 'Port Service', 'Clearing and Forwarding Agent Service' and 'Storage & Warehousing Service' and are registered with the Central Excise Department. The department gathered intelligence that the assessees were (i) not paying service tax on 'storage & warehousing service' rendered in respect of certain dutiable goods and (ii) wrongly utilized Cenvat credit of input services consumed in exempted output services for payment of service tax on dutiable output services. The Officers of the Department visited the assessee's premises, collected records, recorded statements of the personnel of the assessee and investigated the matter. After investigation, they came to the conclusion that the assessee had short paid service tax of Rs. 1,37,12,690/- (including CESS) under the head of 'Storage & Warehousing Services' for Soya Bean Meal, for the period 2004-05 to 2008-09 in respect of the services which they rendered. They also came to the conclusion that they had, in violation of the provisions of Rule 6(3)(c) of CCR, 2004, utilized Cenvat credit to the extent of 100% in respect of common input services while they should have utilized only 20% of this credit as per the rules prevalent during the period. Accordingly, a show cause notice was issued :
(a) Demanding service tax amounting to Rs. 1,37,12,690/- for the period 2004-05 to 2008-09 along with interest, under Section 75 of the Finance Act, 1994.
(b) Proposing to impose penalties under Sections 76 & 78.
(c) Seeking to deny and recover an amount of Rs. 49,69,486/- being the irregularly utilized Cenvat credit in cash under the proviso to sub-section (1) of Section 73 of the Finance Act, 1994, read with Rule 14 of CCR, 2004 along with interest.
(d) Proposing to impose penalty upon them under Section 78 of the Finance Act, 1994 read with Rule 15 of CCR, 2004.
13. As far as the demand for recovery of Cenvat credit wrongly utilized by the assessee is concerned, we do find that Rule 6(3)(c) as it stood during the relevant period prohibited utilization of Cenvat credit in excess of 20% but did not forbid availment of Cenvat credit. After 1-4-2008, when Rule 6(3)(c) was amended, the accumulated Cenvat credit did not lapse as there was no provision to that effect in the amended rules. Nothing stopped the assessee from utilizing the Cenvat credit post 1-4-2008. Therefore, we find that the assessees have utilized Cenvat credit to the extent of 80% well before they were entitled to do so. At this point of time, since more than a decade has passed, post 1-4-2008, it does not make any difference whether they had utilized the Cenvat credit to the extent of 80% prior to 1-4-2008 or post this date. In view of the above, we find that the demand on this accounts needs to be dropped and we do so.
14. In view of the above, we pass the following order :
(i) The assessee is not liable to pay service tax under "Storage & Warehousing Services" on the service charges which they have received for stevedoring/cargo handling.
(ii) They are liable to pay service tax on storage and warehousing charges of any amount received on account of storage of goods by warehousing charges ground rent or any type of rent, etc.
(iii) The assessee is liable to pay interest as applicable on the above amount.
(iv) The demand on account of denial of Cenvat credit is set aside.
(v) All penalties are set aside." 10 | P a g e E/11503 &11554/2014 5.3 In the present case the SCN has been issued in this regard for the
period 2007-08. After such lapse of time, the demand raised alleging that the assessee has utilized in excess of 20% prior to 01.04.2008 appears to be purposeless as the assessee would be eligible to utilize the entire credit in subsequent financial years. Following the ratio laid in the above decisions, we are of the opinion that the order passed by the Original authority dropping the demand does not require any interference. This issue is found in favour of the assessee and against the Revenue. Consequently, the appeal filed by the department requires to be dismissed.
6. The second issue is with regard to the confirmation of the demand of Service tax to the tune Rs. 72,18,957/-. The allegation of the department is that the assessee is engaged in providing taxable output services as well as generation/sale of electricity at Tamil Nadu and sale of raw slat. With effect from 01.04.2011 'trading' is included in the definition of exempted services. The assessee in the present case, has availed the credit of service tax paid on input services in the nature of Telephone Services, Mobile Services, Courier Services, Travel Services etc. Such services cannot be said to have been used only for taxable output services when the activity of the assessee includes generation/sale of electricity as well as sale of raw slat. These expenses have been accounted in the common Profit and Loss account. It is the burden of the assessee to establish with documents that they have not used common input services for trading. The argument of the Learned Counsel for assessee that since assessee is situated in Gandhidham and is providing output services only in Gandhidham they have not used common input services for generation of electricity in Tamil Nadu is too flimsy and not acceptable. We find that the assessee has not been able to establish that common input services have not been used for trading activity also. The issue on merit is found against the assessee and in favour of the Revenue. 11 | P a g e E/11503 &11554/2014 6.1 Learned Counsel for the Assessee has argued on the ground of the limitation also. The definition of exempted services was amended with effect from 01.04.2011 so as to include 'trading' as exempted services. Prior to this date, there was much confusion as to whether credit can be availed in respect of trading. In the present case, the show cause notice for the period April-2007 to March 2012 has been issued on 18.10.2012, which is after the amendment dated 01.04.2011 bringing the activity of trading within the exempted services. As per the show cause notice itself it is seen that the demand has been raised after perusal of ST-3 returns, Cenvat account, balance sheet, profit and loss account of the assessee. It is seen that the assessee has disclosed the entire credit availed as well as their income earned by generation of electricity and sale of salt, in their accounts and financial statements. The show cause notice does not allege any particular transaction/figure has been suppressed by the assessee with intent to evade the payment of service tax. In Para 7 of the show cause notice it is stated that as per the records of the assessee, the department has arrived at the excess utilization of credit for the period 2007-08. So also the demand on availment of common input services has been raised on the basis of account of the assessee. All these lead to the probable conclusion that the assessee has disclosed all the transactions in their accounts and has not willfully suppressed any facts with intent to evade payment of service tax/duty. There is no positive act of suppression established by the department against the assessee so as to invoke the extended period. 6.2 The Tribunal in the case of M/s Musaddilal Projects LTD. (Supra) observed that when the assessee has filed returns regularly disclosing details of credit, the demand cannot be raised invoking the extended period alleging suppression of fact. The relevant Para reads as under;- 12 | P a g e E/11503 &11554/2014 "6. With regard to the credit availed on input services it is submitted by the ld. AR, that all the services have been availed after 1-4-2011. The definition of input services got amended w.e.f. 1-4-2011, deleting the services relating to "setting up of factory/premises" of "output service provider". In the present case the input services are availed by assessee after 1-4-2011. Therefore the same has been rightly disallowed by the Commissioner as these are services used for setting up of premises of the assessee. In regard to limitation, the ld. AR submitted that, but for the detailed verification and scrutiny of the records, the availment of irregular credit would not have to come to light. That it is not an inadvertent or genuine mistake and the credit has been availed with intention to evade payment of duty. That the Show Cause Notice issued invoking the extended period of limitation is therefore correct and proper." 6.3 Hon'ble High Court of Gujarat in the case of M/s. Dynamic Industries Ltd. held that when the Cenvat Credit availed by the assessee is disclosed in the ER-1 returns filed by them it was not proper on the part of department to invoke the extended period. The relevant Para reads as under:-
"12. Accordingly, the substantial question of law raised in respect of the following three categories of services i.e. (i) Customs House Agents Services, (ii) Shipping Agents and Container Services and (iii) Services of Overseas Commission, is answered partly in favour of the assessee so far as aforesaid category Nos. (i) and (ii) are concerned. Insofar as category No. (iii) i.e. Services of Overseas Commission, is concerned, the same is answered in favour of the Revenue and against the assessee. So far as present appeal is concerned, after extending the period of limitation under the proviso to Sections 11A and 11AB of the Act, the show cause notice is issued by the Joint Commissioner, Central Excise, upon the respondent-assessee on the ground of contravention of provisions of Rules 2(1)(ii) and 9(2) read with Rule 3(1) of the Rules. Admittedly, the respondent-assessee had shown availment of Cenvat credit in Part IV and V of ER-1 returns filed by it. The assessee-Department has sought to justify its action by submitting that during the course of audit by the Office of the Accountant General, when a detailed examination of the material was done, it was realised that the respondent-assessee had availed Cenvat credit on the services of all the three categories. The respondent-assessee has rightly pointed out that all the service providers charge the service tax on all the three services and such services since were rendered at the port of export, which was the place of removal, the services were in relation to manufacturing activities as far as the first two services are concerned. However, insofar as the third service where this Court has held in favour of the Revenue and against the respondent- assessee, we are of the opinion that the extended period of limitation would not be 13 | P a g e E/11503 &11554/2014 available to the Revenue in absence of any material to indicate suppression on the part of the respondent-assessee. It is not in dispute that there was no suppression nor any misrepresentation in respect of Cenvat credit availed by the respondent-assessee in respect of these services.
13. Resultantly, the question of law is answered in the above manner. Appeal is disposed of accordingly. There shall be, however, no order as to costs."
6.4 The Hon'ble High Court of Madhya Pradesh at Indore, in the case of M/s. ZYG Pharma Pvt. Ltd. (supra) had occasion to consider the issue of invocation of extended period and held that in an allegation of availment of ineligible Cenvat credit the extended period cannot be invoked when the assessee has been filling monthly return showing the credit availed. The relevant paragraph reads as under:-
"6. The Division Bench of Gujarat High Court in the case of Commissioner v. Dynamic Industries Ltd., reported in 2014 (307) E.L.T. 15 (Guj.) in paragraph 12 has held as under :
12. Accordingly, the substantial question of law raised in respect of the following three categories of service ie., (i) Customs House Agents Services, (ii) Shipping Agents and Container Services and (iii) Services of Overseas Commission is answered partly in favour of the assessee so far as aforesaid category nos. (i) and
(ii) are concerned. Insofar as category No. (iii) ie., services of Overseas Commission, is concerned, the same is answered in favour of the Revenue and against the assessee. So far as present appeal is concerned, after extending the period of limitation under the proviso to Sec. 11 A and 11 AB of the Act, the Show Cause Notice is issued by the Joint commissioner, Central Excise, upon the respondent-
assessee on the ground of contravention of provisions of Rule 2(l)(ii) and 9(2) read with Rule 3(1) of the Rules admittedly, the respondent-assessee had shown availment of Cenvat credit in part (iv) and (v) of E.R.-l Returns filed by it. The assessee-Department has sought to justify its action by submitting that during the course of audit by the Office of the Accountant General, when a detailed examination of the material was done, it was realised that the respondent- assessee has availed Cenvat Credit on the services of all the three categories. The respondent-assessee has rightly pointed out that all the service providers charge the service tax on all the three services and such services sincerely were rendered at the port of export, which was the place of removal, the services were in relation to manufacturing activities as far as the first two services are concerned. However, insofar as the third service where this Court has held in favour of the Revenue and against the respondent-assessee, we are of the opinion that the extended period of limitation would not be available to the Revenue in absence of any material to indicate suppression on the part of the respondent-assessee. It is not in dispute that there was no suppression nor any misrepresentation in respect of Cenvat credit availed by the respondent-assessee in respect of these services. 14 | P a g e E/11503 &11554/2014
7. In the aforesaid case also, the availment of credit was discovered during the course of audit when detailed examination of material was done.
8. In the present case, there was no suppression or misrepresentation in respect of availment of CENVAT credit and, therefore, this Court is of the considered opinion that in the light of the judgment delivered by the Division Bench of Gujarat High Court, the Tribunal was justified in remanding the matter back and holding that mandatory equal penalty and extended period of 5 years are not attracted.
The High Court of Karnataka in the case of Commissioner of Central Excise. Bangalore v. Sanmar Speciality Chemicals Ltd., reported in 2016 (43) S.T.R. 347 (Kar.) in paragraphs 7 and 8 has held as under :
7. It is an admitted fact that the input tax credit was claimed in the return of the assessee from time to time and therefore, it was not a matter for suppression of facts, as sought to be canvassed on behalf of the assessee.
8. Once full facts were disclosed, the normal period of limitation would be one year, whereas the proceedings are initiated after the expiry of a period of one year.
Therefore, we do not find that the Tribunal has committed any error in observing that the demand was barred by limitation.
9. In the aforesaid case also, as facts were fully disclosed and there was no suppression, it was held by the Division Bench that extended period of limitation is not invocable.
A similar view has been taken in the following cases : Cosmic Dye Chemicals v CCE reported in 1995 (75) E.L.T. 721 (S.C.); Simplex Infrastructures Ltd. v CST reported in 2016 (42) S.T.R. 634 (Kar.); Gopal Zarda Udyog v CCE reported in 2005 (188) E.L.T. 251 (S.C.); Apex electricals Pvt. Ltd. v UQI reported in 1992 (61) E.L.T. 413 (Guj.); Unique Resin Industries v CCE reported in 1995 (75) E.L.T. 861 (T); CCE v Chemphar Drugs and Liniments reported in 1989 (40) E.L.T. 276 (S.C.); Padmini Products v CCE reported in 1989 (43) E.L.T. 195 (S.C.); Pushpam Pharmaceuticals Co. v CCE reported in 1995 (78) E.L.T. 401 (S.C.); Anand Nishikawa Co. Ltd.- v. CCE reported in 2005 (188) E.L.T. 149 (S.C.); CCE v Pioneer Scientific Glass Works reported in 2006 (197) E.L.T. 308 (S.C.); Uniworth Textiles Ltd. v CCE reported in 2013 (228) E.L.T. 161 (S.C.); Pahawa Chemicals Pvt. Ltd. v CCE reported in 2005 (189) E.L.T. 257 (S.C.); CCE v. N. R. Agarwal Industries reported in 2014 (300) E.L.T. 213 (Guj.); CCE v Triveni Engineering & Industries Ltd., reported in 2005 (317) E.L.T. 408 (Allh.); Associated Pigments Ltd. v CCE reported in 1993 (68) E.L.T. 514 (Cal.); CCE v Punjab Laminates Pvt. Ltd. reported in 2006 (202) E.L.T. 578 (S.C.); and, Cadila Pharmaceuticals Ltd. v CCE order dated 10- 11-2016 [2017 (349) E.L.T. 694 (Guj.)] passed by the Gujarat High Court, at Ahemdabad and, therefore, this Court is of the considered opinion that the Tribunal was justified in holding that extended period of five years and mandatory equal penalty are not attracted.
10. No substantial question of law arises in the present appeal and, therefore, the admission is declined."
15 | P a g e E/11503 &11554/2014 6.5 After appreciating the facts and following the decisions as above, we are of the considered opinion that the department has failed to establish the allegation of suppression of facts with intent to evade payment of duty against the assessee so as to invoke the extended period. The show cause notice issued beyond the normal period cannot sustain and requires to be set aside. The issue on limitation is answered in favour of assessee and against the department. However, the adjudicating authority is directed to verify and quantify the demand that falls within the normal period. The demand of interest for the normal period is sustained and the demand of interest for extended period on this issue is set aside. For the same reason, the penalties are entirely set aside.
7. In the result, the impugned order confirming the demand, interest and penalties on second issue for Rs. 72,18,1957/- is modified as above by limiting the demand and interest to the normal period. The appeal filed by the assessee is partly allowed in above terms with consequential reliefs, if any. The appeal filed by the department is dismissed.
(Pronounced in the open court on 19.02.2024) (MS. SULEKHA BEEVI C.S.) MEMBER (JUDICIAL) (C L MAHAR) MEMBER (TECHNICAL) Raksha