Custom, Excise & Service Tax Tribunal
Mittal Pigments Pvt Ltd vs Commissioner, Central Excise & ... on 8 December, 2022
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Service Tax Appeal No. 51729 of 2022-SM
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO. II
Service Tax Appeal No. 51729 of 2022-SM
(Arising out of order-in-appeal No. 297(CRM)ST/JDR/2021 dated 29.09.2021 passed
by the Commissioner (Appeals), Central Excise & Central Goods and Service Tax,
Jodhpur).
M/s Mittal Pigments Pvt. Ltd., Appellant
A-203, Indraprastha Industrial Area
Kota, Rajasthan-324005.
VERSUS
Commissioner of Central Excise Respondent
& Service Tax 142-B, Hiran Magari, Sector-11 Udaipur-313002 (Rajasthan).
APPEARANCE:
Sh. Vijay Kumar, Advocate for the appellant Sh. Divey Sethi, Authorised Representative for the respondent CORAM:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) FINAL ORDER NO. 51211/2022 DATE OF HEARING/DECISION: 08.12.2022 ANIL CHOUDHARY:
Heard the parties.
2. The issue involved in this appeal is whether the demand have been rightly raised under Rule 6(3)(i) of Cenvat Credit Rules read with Rule 14 and Section 11A(4) of the Central Excise Act.
3. Brief facts of the case are that the appellant is a manufacturer of lead oxide, lead ingots, letharge, zinc oxide, yellow litharge etc. which are dutiable to excise duty under the Central Excise Tariff Act. The appellant is also registered with Service tax Department 2 Service Tax Appeal No. 51729 of 2022-SM since 2009. The appellant purchases inputs for manufacture of dutiable outputs. Sometimes, the appellant also clears some of the inputs as such by way of trade. The appellant sometimes also makes high-sea sales in the course of import of the inputs. Pursuant to audit sometime in the year 2017-18 for the period April, 2013 to June, 2017, it appeared to Revenue that appellant have not reversed the proportionate amount of credit as required under Rule 6(3) of Cenvat Credit Rules on trading activities. It further appeared that trading is an exempt service as defined in Rule 2(e) read with Section 66B. It also appeared that appellant did not maintain separate account for receipt and use of input services as envisaged under Rule 6(2) of Cenvat Credit Rules. Thus, it appeared that the appellant was liable to pay by way of reversal, fixed percentage as prescribed in Rule 6(3) read with Rule 6(3A) of Cenvat Credit Rules, which was calculated and demanded as follows:-
Period Cost of Sale value Value of trading Amount purchase (column 3 minus payable (6% column 2 or 10% of of column 4) column 2 whichever is higher 1 2 3 4 5 2013-14 6637334 8018295 1380961 82858 2014-15 82915526 88552394 8291553 497493 2015-16 4855064 5214714 485506 29130 (Apr. & May) Total 94407926 101785406 10158024 609486 3 Service Tax Appeal No. 51729 of 2022-SM Period Cost of Sale value Value of trading Amount purchase (column 3 minus payable (7% column 2 or 10% of of column 4) column 2 whichever is higher 1 2 3 4 5 2015-16 107080886 110126420 10708089 749566 (June onwards) 2016-17 192898351 196683581 19289835 1350288 2017-18 39079055 39719403 3907905 273553 (upto June
17) Total 339058294 346529407 33905833 2373413
3. Accordingly, the show cause notice proposed to demand Rs.29,82,899/- for the period April, 2013 to June, 2017 under Cenvat Credit Rules read with Section 11A alongwith interest and further penalty was also proposed.
4. This is the second round of litigation. In the first round the Commissioner (Appeals) had remanded the matter to the Assistant Commissioner vide Order-in-appeal dated 14.06.2019, directed to examine the contention of the assessee and to decide the case after following the principles of natural justice. The appellant in reply to the show cause notice had stated that prima-facie they purchase inputs for manufacture of dutiable goods. Sometimes they also remove the inputs as such (by way of trading), and in such case, as required under Rule 3(5) of Cenvat Credit Rules, they reversed the cenvat credit taken on such goods. The appellant had also produced sample invoices, which was annexed to the reply in support of their contention. Accordingly, the provisions of Rule 6(3) are not attracted. The adjudicating authority recorded the finding, that on perusal of sample invoices, it is observed 4 Service Tax Appeal No. 51729 of 2022-SM that 'reversal of credit' is nowhere mentioned in the invoices. It has also been observed that appellant have not produced sufficient documentary evidence in support of their contention. They have produced few sample invoices and on the basis of the same it cannot be ascertained if they have reversed cenvat credit as required under Rule 3(5) of Cenvat Credit Rules, on removal of goods as such (inputs).
5. So far the turnover in respect of high-sea sales is concerned, the appellant has contended that they have not availed any input services or credit of service tax in respect of such high-sea sales, as the goods have admittedly been cleared (pursuant to high-sea sales) by the buyer, and as such there is no cenvat credit taken in respect of high-sea sales. It is also evident from perusal of show cause notice that the demand has been solely raised with respect to the trading turnover of the appellant, and there is no issue of input services taken on any high-sea sales made by them. The appellant had also raised ground of limitation, which the adjudicating authority rejected on the observation that had the audit not taken place such facts would not have come to light and Revenue would have been lost. Accordingly, invocation of extended period of limitation was upheld. Accordingly, proposed demand was confirmed alongwith interest and further equal amount of penalty was imposed under Rule 15 of Cenvat Credit Rules read with 11AC (1)(c) of the Act.
6. Being aggrieved, the appellant preferred appeal before the ld. Commissioner (Appeals) who was pleased to reject the appeal agreeing with the finding of the Assistant Commissioner. 5
Service Tax Appeal No. 51729 of 2022-SM
7. Having considered the rival contentions, I find on perusal of the sample invoices which have been annexed to the appeal paper book, that the appellant have complied with Rule 3(5) of Cenvat Credit Rules and they have reversed the cenvat credit on the inputs removed as such. I further find that the appellant have not cleared any exempt goods nor rendered any exempt services. Under such facts and circumstances, the provisions of Rule 6(3) read with Rule 6(3A) are not attracted. Thus, I find that the show cause notice is misconceived and erroneous at the same time. So far the availment of Cenvat Credit on GTA service is concerned, I find that the appellant had borne the transport charges as is evident from the invoices, that the goods have been cleared on FOR destination. Thus, I hold that the appellant is entitled to avail cenvat credit on GTA service.
8. Accordingly, the impugned order is set aside and the appeal is allowed with consequential benefits, in accordance with law.
(Order dictated and pronounced in open Court).
(Anil Choudhary) Member (Judicial) Pant