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Vandana Global Ltd. Vs. Commissioner of Central Excise and Service Tax - (Customs, Excise and Service Tax Appellate Tribunal) (10 Jun 2022)

Once there is no suppression of facts, question of imposition of penalty does not arise


Service Tax

The Appellants in the present case are engaged in the manufacture of Sponge Iron, Ingot, Billet, Silico Manganese etc. They are also availing the Cenvat credit of duty paid on inputs, capital goods and service tax paid on input services in terms of Cenvat Credit Rules, 2004 (CCR, 2004). The department while scrutinizing the ER-1 returns of the Appellants noticed that, the Appellants while manufacturing the above mentioned excisable goods are simultaneously engaged in generation of electricity which was captively used but some part thereof was also sold by them. Electricity was considered to be an exempted goods by the department and the department further observed that during the period from April' 14 to March' 15, the Appellants have availed the Cenvat credit of duty paid on input and input services as that of GTA Coal, cargo handling service on Coal, Security Service, Repair & Maintenance service and Manpower Recruitment services. The coal was common input as was used also for generation of electricity, the exempted goods.

The department formed an opinion that, Appellants were required to pay an amount equal to Cenvat credit in terms of Rule 6(1), 6(2), 6(3A), 6(3D) of CCR, 2004. Accordingly, Show Cause Notice was served upon the Appellants proposing the confirmation and appropriation of the demand for an amount of Rs.22,96,788 along with appropriate interest and the proportionate penalty. The said proposal was initially confirmed vide Order-in-Original. The appeal thereof has been rejected vide Order-in-Appeal. Being aggrieved of the said order the Appellants are before this Tribunal.

In the present case, Cenvat credit has been taken on the inputs used, however, suo moto proportionately reversed for the electricity which has been sold out. Further, the Rule 6 of CCR, 2004 gives three separate options to the assessee as mentioned under sub rule (1), (2) and (3) thereof and to exercise any one of these options is the prerogative of assessee. The department cannot compel the assessee to opt for a particular option. Further, w.e.f. 1st April, 2008, Rule 6 (3A) has been introduced, according to which the assessee is eligible to reverse proportionate credit on inputs and input services used in manufacture of exempted goods. The case of Gularia Chini Mills Vs. Union of India has already settled that electricity generated out of waste, provisions of Rule 6 (3) of CCR, 2004 are not applicable.

There is no denial for the fact that similar show cause notices have already been served upon the appellants for the previous years. Suppression of facts in those circumstances cannot be alleged. The decision of Hon'ble Apex Court in Nizam Sugar Factory Vs. Collector of Central excise is absolutely clear that when all relevant facts were in knowledge of authorities at the time of first show cause notice, while issuing subsequent show cause notices on same/similar facts, suppression of facts on part of assesse cannot at all be alleged. In view of this, it is held that invocation of extended period of limitation has also been wrongly confirmed. Once there was no suppression, question of imposition of penalty does not at all arise. The order under challenge is set aside. Appeal allowed.


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