Punjab and Haryana High Court
Case BriefsHigh Courts

Punjab and Haryana High Court: The Division Bench of Ajay Tewari and Pankaj Jain, JJ., contemplated the appeal where the interest on refund of excise duty was rejected by the authorities. The main question before the Court was whether the assessee was entitled to interest.

Factual Matrix of the case:

  • The assessee had registered office in Sonepat and applied for central excise duty along with interest before Deputy Commissioner, Central Excise, (Panipat) in 2017, eventually, the refund was sanctioned however claim w.r.t. interest was rejected.
  • An appeal was filed before the Commissioner of Central Excise, (Panchkula) against the rejection of interest, which was dismissed in 2018.
  • Again an appeal was filed before CESTAT, (Chandigarh), the decision of CESTAT was in favour of the assessee and he was entitled to interest on delayed refund from the date of deposit till its realization. An application was forwarded regarding the said claim.
  • While the application of the Assessee was pending before the authorities, the Commissioner of CGST and Central Excise, (Panchkula) filed rectification of mistakes application before the CESTAT.
  • The rectification application was dismissed in 2021.
  • Hence, the present appeal is filed by the Revenue i.e. Commissioner of Central Excise (Panchkula) against the orders passed by CESTAT, (Chandigarh).

Submissions:

Revenue Authority questioned the change of jurisdiction of the Authorities after the new CGST regime. It was contended that the assessee has impleaded wrong authorities for the claim of refund and interest as after the new regime from June 2017, division Sonepat was brought within the jurisdiction of Rohtak Commissionerate. Hence the proper authority would have been Rohtak.

Another contention of the Revenue Authority was that the tribunal has erred in granting interest as per the amended provisions of Section 35FF of the Central Excise Act, 1944.

Findings:

The Court rejected the contention of the Revenue Authority in the light of Section 142 of CGST Act, 2017. The Court held that, “Section 142 of the Act when read with Section 2(48) of the Act is a complete answer to the plea raised by the appellant qua the issue of jurisdiction.” The Court observed that the Sec explicitly provides that every claim of refund shall be dealt under the existing law i.e. Central Excise Act, 1944 and not by the provisions of the Act. Thus the plea of transfer of jurisdiction due to GST regime is not available to the appellant.

Further adjudicating whether the claim of interest was justified, the Court relied upon the judgment of Supreme Court in Sandvik Asia Ltd v. CIT, (2006) 2 SCC 508, where the Supreme Court answered that the Act provided for payment of compensation for delayed payment of amounts due to an assessee in case where the amounts included the interest and the appellant was entitled to interest u/Ss. 244 and 244-A of the Income Tax Act, 1961.

The Court applied the law laid down in Sandvik Asia Ltd in the case of the present assessee and dismissed the instant appeal.  [Commissioner of Central Excise, Panchkula v. Rabi Textiles Ltd. CEA No.8 of 2022 (O&M), decided on 14-03-2022]


Appearances:

Mr. Sourah Goel, Senior Standing Counsel and Mr. Tej Bahadur, Advocate for the appellant.


Aastha Sharma, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Rachna Gupta (Judicial Member) allowed an appeal which was filed aggrieved by the order-in-original asking the appellants for recovery of Central Excise Duty amounting to Rs 16,22,501 along with the appropriate interest and proportionate penalty.

The appellant was engaged in the manufacture of organic compound and enzymes. During the course of audit, the Department observed that the appellant had sent 1,41,396.180 litres of chemical for job work under job work Challan for processing. They had received only 90620.290 litres of chemicals. The chemical not received by the appellant i.e. 50775.890 litres was alleged to have the value of Rs. 1,01,15,903/- involving Central Excise duty of Rs.16,22,501/- from their job worker. The said amount of excise duty during the period from 1-3-2003 to 31-3-2005 has accordingly been alleged to have not been paid in contravention to the provisions of Rule 4(5) of CENVAT Credit Rules, 2002.

The appellant submitted that in the manufacture of organic compound into antibiotics and enzymes, the appellant has used Hexa methyl Di-Silioxane (HMDS). After the manufacture of said antibiotic, there remain a by-product namely, (Hexa-Methyl Di-Silixane) HMDSO which contains 75% of HMDS, the raw material for the appellant’s final product and about 25% Toluene. They did not have recovery plant in their factory premises to recover said 75% of HMDS from the said by-product HMDSO. Accordingly, the said product was given to the job worker with an agreement that the yield returnable product would be 90% calculated on 100% basis of HMDS in case the purity is more than 80%. However, if the purity was less than 80%, the yield returnable would be 85%. It was submitted that it is because of that difference in yield returnable that quantity of HMDS received back by the appellant from the job worker was less by about 32-36% of total quantity of HMDSO.

The main issue deduced by the tribunal was that whether Rule 4(5) of CCR was applicable to the given facts and circumstances. The Tribunal perused Rule 4 (5) and explained that:

  • where the manufacturer need to sent those inputs for any kind of processing either inputs as such or after partially processing those inputs, then also those inputs shall be eligible for Cenvat Credit to the extent of duty paid on those inputs provided job workers returned the reprocessed inputs within one hundred eighty days, else the manufacturer shall be liable to pay the amount equivalent to the Cenvat Credit attributable to such inputs by debiting the Cenvat Credit or otherwise.
  • It also stand, abundantly clear from this provisions that this Rule applies to such inputs which have been sent to the job worker before the manufacturer is able to manufacture its final product.
  • This provision applies Thus to a situation where final product cannot be manufactured unless and until the inputs has to undergo such further processing, testing, repairing, reconditioning or any other such treatment which is not available with the manufacturer himself and it has to be got down from the job worker that Rule 4(5) of CCR is invokable. That too in case when Job worker fails to return the processed input within 180 days of receipt thereof.

The Tribunal was of the opinion that there was no denial of the fact that the by-product / waste (HMDSO) which has emerged with the final product (anti-biotic/ organic compound ) of the appellant from the inputs HMDS is sent to the job worker for the reason that this by-product has a potential of releasing the inputs i.e. HMDS by further recovery process as 75% of such HMDS is still contained in the said by-product i.e. HMDSO and this was sufficient to hold that Rule 4(5) of Cenvat Credit Rules is not applicable to the given facts and circumstances. The Tribunal held that what was given to the job worker was the waste which emerged along with final product and not the inputs as such, used by the appellant for manufacturing anti-biotic as a final product. The Tribunal relied on the rulings of Rocket Engineering Corporation Pvt. Ltd. v. CC Pune, 2005 (191) ELT 483 which has been based upon the earlier decision of this Tribunal in the case of Preetam Enterprises v. CCE, 2004 (173) ELT 26. It was held in these decisions that Rule 4(5)(a) of the Cenvat Credit Rules, 2002 does not cover the return of waste and scraps.

The Tribunal further stated that the Commissioner (Appeals) had rejected the appeal solely on the ground that Rule 4(5) does not differentiate between product and by-product however findings are apparently wrong on the face of it.

The Tribunal allowed the appeal and set aside the order-in-original canceling the recovery of Central Excise duty along with interest and penalty.[Dalas Biotech Ltd. v. Commr. Of CE & CGST,  2021 SCC OnLine CESTAT 2523, decided on 03-08-2021]


Suchita Shukla, Editorial Assistant has reported this brief.


Counsel appearing for the Appellant: Ms Jwaria Kainath

Authorised Representative appearing for the Department: Shri Yashbir Singh

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of P.K. Choudhary (Judicial Member) and P. Anjani Kumar (Technical Member) allowed an appeal filed by the assessee against the demand of Central Excise duty of Rs 5,25,70,268 along with equal penalty and applicable interest confirmed by the Commissioner, Central Excise.

The appellant in this case was engaged in the manufacture of Caustic Soda Lye, Liquid Chlorine and allied goods on which central excise duty was being paid. Dispute was raised by the Central Excise Department on the ground that the appellant’s contracts with its buyers were at FOR prices and the possession of goods after clearance from the factory was given to buyers only at the destination and that sale in such cases had taken place when the delivery was given at destination and, therefore, destination was the ‘place of removal’.

The issue before the Tribunal was whether the appellant could claim the exclusion of the freight amount from arriving at the assessable value for the purpose of payment of central excise duty. The Tribunal perused the judgments of the Supreme Court referred to by the counsel of both the parties. The Tribunal observed that the Supreme Court in the judgment of CCE v. Ispat Industries Ltd., (2015) 14 SCC 712 taking note of its earlier decisions in Roofit Industries as well as Escots JCB, and the various amendments introduced in Section 4 of the Act from time to time, has categorically observed that the buyer’s premises can never be the “place of removal” as has been defined in Section 4 of the Act. The Hon’ble Court also made a very important observation that the words used in Section “place or premises from excisable goods are to be sold” can only be the manufacturer’s premise and if the contention of the Revenue is accepted, the said words will have to be substituted by the words “have been sold” which would only then have possibly have reference to the buyer’s premises.

The Tribunal while allowing the appeal concluded that place of removal would necessarily be the manufacturer’s factory, depots or warehouse belonging to the manufacturer from where the excisable goods are to be sold which is not the case herein. The buyer’s premises can never be the place of removal so as to merit inclusion of the freight amount incurred for delivery of goods from the factory to buyer’s premises. It further held that the contention of the Department to include the freight amount in the assessable value does not meet the test of law and hence was not legally sustainable.[Aditya Birla Chemicals (India) Ltd. v. C.C.E. & S.T., 2021 SCC OnLine CESTAT 13 , decided on 19-01-2021]


Suchita Shukla, Editorial Assistant has put this story together