Custom, Excise & Service Tax Tribunal
Cce, Raipur vs Shri Hare Krishna Sponge Iron Ltd on 6 June, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court No.2
Appeal No.E/4090/2012
With E/CO/56889/2013
(Arising out of OIA No.152/RPR-I/2012 dt.18.9.2012 passed by CCE(Appeals), Raipur)
Date of hearing/Decision: 06.06.2014
CCE, Raipur Appellant
Vs.
Shri Hare Krishna Sponge Iron Ltd. Respondent
Present for the Appellant: Shri B.B.Sharma, DR Present for the Respondent: Shri Manish Saharan, Advocate Coram: Honble Mr.Manmohan Singh, Technical Member FINAL ORDER No.53213/2014 PER: MANMOHAN SINGH The Revenue has come up in appeal against Order-in-Appeal No. 152/RPR-I/2012 dt.18.9.2012 wherein the appeal filed by the assessee was allowed.
2. Briefly stated the facts of the case are that M/s.Hare Krishna Sponge Iron Ltd..are engaged in the manufacture of sponge iron falling under chapter 72 of the first schedule to Central Excise Tariff Act, 1985. They are availing the facility of cenvat credit in respect of the duty paid on input/capital goods and service tax in terms Cenvat credit Rules, 2004. During the course of audit on the books and accounts maintained by the appellant for the period 10/2008 to 07/2010, it was observed that the appellant were removing coal as such from their factory, without using the same in the process of manufacture. They had availed credit of service tax paid on inward transportation at the time of receipt of the same. In terms of rule 3(5) of the Cenvat credit Rules, 2004, the appellant had to reverse proportionate credit involved on as such removal of raw materials (coal), but the appellant did not reverse the same. The amount of service tax credit taken on the whole quantity of coal removed as such was reversed without reversal of input service tax credit for the period 11/2005 to 09/2010. It was found that the appellant had removed 104841.940 MT of coal and the amount of proportionate service tax credit availed on the same comes to Rs.9,13,273/- (including cess). Rule 9(5) entrusts the responsibility on the manufacturer to take reasonable steps for correctly availing the credit on inputs. As per Rule 12 of Central Excise Rules, 2002 every assessee is required to submit a monthly return in the form specified by notification or by Board in regard to production and removal of goods and other relevant particulars, within ten days after the close of the month of which return relates. The appellant had shown as such removal in their monthly returns.
3. The Additional Commissioner of Central Excise, Raipur disallowed cenvat credit amounting to Rs.9,13,273/- and ordered to recover the said amount with interest from the assessee under Rule 14 of Cenvat Credit Rules, 2004 read with Rule 3(5) of Cenvat Credit Rules, 2004 and proviso to section 11A of the Central Excise Act, 1944. Penalty of equivalent amount was also imposed with option to pay 25% of penalty within 30 days of the communication of the order. However, Commissioner (Appeals) allowed the appeal filed by the respondent by dropping the cenvat credit demand of Rs.9,13,273/-.
4. Revenue has come up in appeal against Order-in-Appeal passed by the Commissioner (Appeals).
5. Major issue involved in the appeal is regarding availability of service tax credit on GTA service attributable to inputs rejected after processing based on CESTAT judgement in the case of Chirakoot Steel & Power Pvt.Ltd. vs. CCE, Chennai-2008 (10) STR 118 (Tri.-Chennai) wherein it was held that there is no provision to reverse credit of service tax availed in relation to such inputs or capital goods when removed from the factory. Moreover, Rule 14 of the Cenvat credit Rules, 2004 provides for recovery of cenvat credit availed or utilized wrongly.
6. In the present case, there is no imputation that the service tax credit has been availed or utilised wrongly. Further there is no provision in the Finance Act, 1994 which would render availment of such service tax credit erroneous for the reason that some of the inputs, transport of which yielded GTA service tax credit are returned as such on being found not suitable. Commissioner (appeals) also relied upon the judgments of the Tribunal in the case of J.S.Khalsa Steels (P) Ltd. Versus CCE, Chandigarh-2010 (17) STR 517 and Honble High Court of Punjab & Haryana in the case of CCE vs. Punjab Steels-2010 (260) ELT 521 (P&H) wherein it has been held that Rule 3(5) of the Rules only talks about the Cenvat credit taken on inputs or capital goods. It does not refer to the Cenvat on input service. Honble High Court further observed that it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. Words cannot be added or substituted so as to give a particular meaning.
7. Para 10 of the judgement of Hon ble High Court reads as under:
10.?Be that as it may, however, still even on merits, this court finds that the view as expressed by the Tribunal is strictly in conformity with the Rules. Rule 2(k) of the Rules defines input, whereas Rule 2(l) defines input service, meaning thereby both the terms have been defined independently. Rule 3 defines the term Cenvat credit, which includes duty paid under various enactments and also the service tax leviable under Section 66 of the Finance Act, 1994. Rule 3(5) of the Rules only talks about the Cenvat credit taken on inputs or capital goods. It does not refer to the Cenvat on input service, whereas Rule 5, on which reliance is sought to be placed by the Revenue, specifically talks about the Cenvat credit on any input or input service used in the manufacture of final product. This rule pertains to refund in case of exports, which stands altogether on different footings. Once the rule-making authority has defined the terms specifically and used the same in different provisions consciously, the argument of learned counsel for the Revenue that merely by analogy even if in one provision both the terms have been used, the same should be read in the other provision as well, where it has not been specifically mentioned, has no legs to stand, as the tax cannot be levied merely by inference or presumption. It is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. Words cannot be added or substituted so as to give a particular meaning. Reference can be made to the observations of a Constitution Bench of Honble the Supreme Court in Mathuram Agrwal v. State of Madhya Pradesh, (1999) 8 SCC 667 :
The intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature. The statute should clearly and unambiguously convey the three components of the tax law i.e. The subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients in a taxation statute then there is no tax in law. Then it is for the legislature to do the needful in the matter.
8. In view of above, it clearly comes out that the once there is no legal provision requiring reversal of credit in respect of input service credit, there is no authority to take back such input service tax credit.
9. In view of above judgement of High Court of Punjab & Haryana and the Tribunal referred above, Commissioner (Appeals) has rightly rejected the departmental appeal based on legal position laid down by the Honble High Court of Punjab and Haryana. Accordingly, I do not find force in Revenues appeal and its accordingly rejected.
(pronounced in the open court) (MANMOHAN SINGH) TECHNICAL MEMBER mk 5 8