Custom, Excise & Service Tax Tribunal
Econ Antri Ltd vs Bhopal on 7 September, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-DB
COURT - IV
Excise Appeal No. E/50036/2018 [DB]
[Arising out of Order-in-Appeal No. BHO-EXCUS-001-APP-155-
17-18 dated 28/08/2017 passed by the Commissioner
(Appeals), Central Excise & Service Tax, Bhopal]
Econ Antri Ltd ...Appellant
Vs.
CGST C.E. & C.C., Bhopal ...Respondent
Present for the Appellant : Ms. Rinki Arora, Advocate Present for the Respondent : Ms. Tamanna Alam, DR Coram: HON'BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) HON'BLE MRS. RACHNA GUPTA, MEMBER (JUDICIAL) Date of Hearing 07.09.2018 Pronounced on : 07.09.2018 FINAL ORDER NO. 53092/2018 PER: RACHNA GUPTA The appellants herein are engaged in manufacture of railway sleeper of cement concrete and are availing cenvat facility of duty / service tax paid on the inputs and input services under Cenvat Credit Rules, 2004(CCR 2004). During an audit for the year 2013-14, the Department observed as follows:-
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E/50036/2018 [DB] "(i) they have wrongly availed cenvat credit of Rs. 42,580/- (Correct figure Rs. 43,075/- including cess) under capital goods account, on the goods "MH Sheet Metal Components (Rail)" which is not covered under the definition of capital goods as defined under Rule 2(a) of Cenvat Credit Rules, 2004.
(ii) they irregularly availed cenvat credit of service tax amounting Ro Rs. 3,999/- and paid on vehicle insurance premium and health insurance premium and Rs. 2,66,822/- on „construction services‟ related to their office at „ATHENA‟ Building situated in City Central Gwalior which is excluded under excluding clause (BA) & [A(a)] from the definition of "input service" as defined under 2(1) of Cenvat Credit Rules, 2004.
(iii) irregularly availed Cenvat Credit of Service Tax of Rs. 78,663/- including cess paid on „Work Contract Service‟ which had been provided for laying of foundation i.e. fabricating structure like bench and its repair which is being used for support of moulds and other capital goods is also excluded under excluding clause [A(b)] from the definition of "input service" as defined under Rule2(1) of Cenvat Rules, 2004.
(iv) there was short payment of central excise duty of Rs. 9,26,377/- on price escalation bills raised for Rs.
74,94,955/- on final products manufactured and cleared by them."
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E/50036/2018 [DB] Resultantly, a Show Cause Notice No. 4879 dated 03.08.2015 was served upon them proposing a Central Excise duty amounting to Rs.9,26,377/- alongwith the interest at appropriate rate on the said amount and the proportionate penalties. The said Show Cause Notice was adjudicated vide the Order-in-Original No. 12300 dated 23.12.2016 vide which the wrongly availed cenvat credit of Rs. 3,92,559/- alongwith the penalty of Rs. 1,96,280/- was confirmed. An amount of Rs. 2,70,821/- as was already paid by the appellant was directed to be appropriated against the said demand confirmed. Aggrieved of the said order, the Appeal was filed which has been decided by the impugned order permitting the cenvat credit of Rs. 42,580/- Central Excise duty paid on such goods as used for repair of capital goods and the cenvat credit of Rs. 78,663/- service tax paid on work contract service were held to be admissible. The consequent interest and penalty was also set aside and rest of the order of original Adjudicating Authority was confirmed. Being aggrieved of the part confirmation of the demand, the impugned appeal has been filed.
2. We have heard Ms. Rinki Arora, Ld. Counsel for the appellant and Ms. Tamanna Alam, Ld. DR for the Department. 4
E/50036/2018 [DB]
3. It is submitted that the demand of Show Cause Notice as have been dropped by the Oder-in-Appeal since have not been challenged by the Department, the same have attained finality. With respect to the cenvat credit on the vehicle insurance and with respect to the construction services, it is submitted that the same was reversed on appellant's own that too prior the issuance of the impugned Show Cause Notice. The question of imposition of any penalty upon the respective amount does not at all arise. It is submitted that though the interest has not been reversed but the penalty still cannot be imposed with respect to the duty of clearance of railway sleepers. It is mentioned that the additional duty was required to be paid due to price escalation clause existing in the relevant contracts. Hence, the same could not be paid unless and until railway authorities finalised the relevant price escalation. Thus, the question of imposition of penalty (for an amount of Rs.7,68,906/-) as has been upheld by the order under challenge is liable to be set aside. Also, for the reason that the total duty of Rs. 7,93,136/- on finalisation of escalation bills for Rs. 55,22,821/- by the railway authorities alongwith the interest of Rs. 1,57,830/- is more than credit availed, the penalty is therefore neither justifiable nor sustainable and thus is liable to be set aside. The further modifications are therefore prayed for in the order under challenge. Appeal is accordingly prayed to be allowed.
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E/50036/2018 [DB]
4. While rebutting these arguments, it is submitted by the Ld. DR that the order under challenge is a speaking order having reasonable and relevant considerations. The Order-in- Original has already been modified. No question of subsequent modification at all arises. Appeal is prayed to be set aside.
5. After hearing both the parties, we are of the opinion as follows:-
The demand of cenvat credit of Rs. 42,580/- on the goods used for repair of capital goods and the demand of cenvat credit of service tax of Rs. 78,663/- paid on Work Contract Service has already been dropped vide the Order under challenge. The Department has not preferred any Appeal qua the said dropping. We otherwise find no infirmity in the said Order. Resultantly, the dropping of both the said demands is hereby upheld.
6. The irregularly availed cenvat credit paid on the vehicle insurance premium and health insurance premium has admittedly been reversed. It is also an admission that the same was reversed by the appellant on his own that too prior the impugned Show Cause Notice. It is the case of the appellant that the same was claimed under bonafide inadvertent mistake. In the given circumstances, invoking of provisions of Section 11A/Section 11AC for imposing penalty are opined not applicable. Those provisions can be invoked 6 E/50036/2018 [DB] only when there is the suppression of facts that too with an intent to evade tax. Law is settled that the allegations as that of suppression with a malafide mensrea of tax evasion are of grave nature and cannot be confirmed unless and until there is a cogent evidence to that respect. For imposition of penalty, it has to be proved by the Department that the assesse acted deliberately in defiance of law and was guilty of conduct concumacious or dishonest or acted in conscious disregard of its obligation. The Hon'ble Apex Court in the case Hindustan Steel Ltd. Vs. State of Orissa 1978 (2) E.L.T. 159 (S.C.) has held that even if a minimum penalty is prescribed, the authority competent to impose penalty will be justified in refusing the invoked penalty when there is a technical or venial breach of the provisions of the act or where the breach flows from the bonafide belief that the offender is not liable to act in the manner prescribed by the statute. Thus, on the same analogy the party shall not be liable for any penal action. Resultantly, the penal proceedings initiated in the Show Cause Notice, in such circumstances, merits to be dropped.
7. Relying upon the said case law and keeping in view that there is no such evidence on record by the Department which might prove a positive act on the part of the appellant that the credit was availed by him with the malafide intention of causing loss to the Revenue. In absence thereof, the penalties qua the reversal of wrongly availed cenvat credit are held to 7 E/50036/2018 [DB] have rightly been dropped. For the said reason itself, the penalty even for the short payment of Central Excise duty is hereby set aside.
8. Now, coming to the issue of short payment of Central Excise duty on the price escalation bills raised for Rs. 74,94,955/-. From the 13 escalation bills, it stands clear that there is a calculation error in arriving to the said amount and in fact out of said bills, the amount of Central Excise duty of price escalation bill is Rs. 62,20,925/-. Since the duty is payable on price escalation and the appellant could not have produced any document proving that the railway authorities had finalised the amount of those 13 bills at an amount of Rs. 55,22,821/-, it is held that the order under challenge has rightly confirmed the said demand. Apparently, the appellant has failed to prove that the Bills on which amount has been calculated were merely the proposal amount. As there are no two set of bills on record, it is held that demand has rightly been confirmed under this Head.
9. Finally, coming to the issue of short payment of Central Excise duty on extra considerations under the guise of freight, it is observed from the contracts/ purchase orders on record that the price of sleepers, freight, material, wages, taxes, etc. are all given by the railways as per the contract. The said sleepers are required to be loaded in wagons/ road vehicles. 8
E/50036/2018 [DB] The freight expenses incurred for the purpose by the appellant are to be reimbursed by the railways at agreed upon rate. In the given circumstances, the assessee premises becomes the place of removal. It is held that the element of freight is not to be included in the normal value of the goods. The authorities below have rightly relied upon the decision of Associated Strips Ltd. Vs. C.C.E., New Delhi 2002 (49) R.L.T. 50. Findings to that effect are also upheld. As a result of entire above discussion on the findings of order under challenge are hereby upheld qua the dropping of demand as well as confirmation of the demand except for the imposition of the penalty.
10. However, as far as the imposition of interest and confirmation thereof is concerned, though the appellant has taken the plea that the interest amount has been paid and has not been reversed. The said fact for want of any evidence on record required verification from the Adjudicating Authority below. For this limited purpose, matter is hereby remanded back. As a result of entire above discussion, the Appeal in hand is hereby partly allowed.
[Operative part pronounced in the open Court on 07.09.2018] (C.L. MAHAR) (RACHNA GUPTA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) D.J.