The Central Board of Excise and Customs (the Board) vide Instruction F. No. 207/07/2014-CX-6 dated January 20, 2015 has issued an instruction in respect of issuance of summons in the Central Excise and Service tax matters wherein summons have been issued to the officials of the companies to enforce recovery of dues, which are under dispute.
CBEC to curb practice of its officers of issuing Excise/ST summons in casual manner
Posted by CA Sandeep Kanoi
The Central Board of Excise and Customs (the Board) vide Instruction F. No. 207/07/2014-CX-6 dated January 20, 2015 has issued an instruction in respect of issuance of summons in the Central Excise and Service tax matters wherein summons have been issued to the officials of the companies to enforce recovery of dues, which are under dispute.
The Board has emphasized that the summons need not to be issued always when a simple letter, politely worded, can also serve the purpose of securing documents relevant to investigation.
The Board has issued the following guidelines regarding summons matters:
- Summons should be issued by the Superintendents with the prior approval of the officer not below the rank of Assistant Commissioner with the reasons recorded in writing;
- Where for operational reasons, it is not possible to obtain such prior written,oral or telephonic permission may be obtained from such officer and the same should be reduced to writing and intimated to the officer at the earliest opportunity;
- The officer issuing summons should submit a report or should record a brief of the proceedings in the case file and submit the same to the officer who authorised the issue of summons.
- Senior management officials such as CEO, CFO, General Managers of a large company or a PSU should not generally be issued summons at the first instance unless there are indications of their involvement in the decision making process which led to loss of revenue.
Our Comments: The Board wants strict compliance by the field officers. Non observance of the instructions will be viewed seriously butit is not a new Instruction as there are other instructions also issued around 25 years ago vide Circular F.No 208/122/89-CX.6 dated October 13, 1989, which states that:
"Complaints have been received from the trade that in some of the Collectorates summons under Section 14 of the Central Excises and Salt Act, 1944 are being issued to the Managing Directors and other high officers with a view to enforce recovery of dues which are under dispute. Action under this section is to be taken only as a last resort in cases where assessees are not cooperating or investigations are to be completed expeditiously. This section should not be used for harassing the top management for forcing them to pay up demands which are disputed by them. For recovery of demands normal procedure under the law should be followed.
If any instance of issue of summons to Managing Directors and other Directors without justification is noticed, a serious view will be taken by the Board. Collectors will be held personally responsible for enforcing these instructions in their charges."
Even 8 years ago vide F. No. 137/39/2007-CX.4 dated February 26, 2007, the Board issued some instructions on summons and firmly declared, Non-observance of these instructions would be viewed seriously.
Let's pray these instructions are religiously followed by the Revenue Officers.
Foam Techniques MFG (I) Pvt. Ltd. Vs. CCE, THANE-I [2015-TIOL-156-CESTAT-MUM] The Appellant was engaged in the business of manufacture of P.U. foam sheets and availing the benefit of Cenvat credit. The Appellant had procured blocks of P.U. foam covered under Chapter Heading No. 3920 or 3921 and cut them into different sizes &shapes and the […]
Cenvat credit cannot be denied by holding that activity is not 'manufacture' when Department had accepted Excise duty liability on final products
Foam Techniques MFG (I) Pvt. Ltd. Vs. CCE, THANE-I [2015-TIOL-156-CESTAT-MUM]
The Appellant was engaged in the business of manufacture of P.U. foam sheets and availing the benefit of Cenvat credit. The Appellant had procured blocks of P.U. foam covered under Chapter Heading No. 3920 or 3921 and cut them into different sizes &shapes and the final product P.U. foam sheet covered under Chapter Heading 3926 was cleared to the customer after the payment of Excise duty (the activity).
The Department had taken a view that the activity undertaken by the Appellant does not amount to 'manufacture' andhence the availment of Cenvat credit on P.U. foam blocks was irregular. Later the Adjudicating Authority and the Commissioner (Appeals) confirmed the demand for recovery of the Cenvat credit irregularly availed along with imposition of interest and penalty.
Being aggrieved, the Appellant preferred an appeal before the Hon'ble CESTAT, Mumbai.
The Hon'ble CESTAT, Mumbai relied upon the following case laws:
- CCE Surat-III Vs. Creative Enterprises [2009 (235) ELT 0785 (Guj.)]further, upheld by the Hon'ble Supreme Court [2009 (243) ELT A 120 (SC)]
- CCE, Pune-III Vs. Ajinkya Enterprises [2013 (294) ELT 0203 (Bom.)]
and held the following:
- Neither the Adjudication Authority nor the Appellate Authority had disputed the classification of goods during the whole process. It shows that the original inputs i.e. P.U. foam block were converted into P.U. foam sheet, indicating that the original inputs, P.U. foam block, has undergone change and is now a product other than the inputs which were procured by the Appellant;
- Since the Appellant had discharged his duty liability on the final products which they had considered as manufactured product and the Department hadalso accepted the same,the Appellant is rightfully entitled to avail credit.
Therefore, the Hon'ble Tribunal allowed the Cenvat credit availed by the Appellant.
Cenvat credit on Input services is available to jobworker clearing the intermediate goods without payment of Excise duty in terms of Notification No. 214/86-CE dated March 25, 1986 JBF Industries Vs. Commissioner of Central Excise & Service Tax, Vapi [(2014) 52 taxmann.com 432 (Ahmedabad - CESTAT)] JBF Industries (the Appellant) was engaged in the manufacture […]
Cenvat credit on Input services to jobworker clearing intermediate goods
Cenvat credit on Input services is available to jobworker clearing the intermediate goods without payment of Excise duty in terms of Notification No. 214/86-CE dated March 25, 1986
JBF Industries Vs. Commissioner of Central Excise & Service Tax, Vapi [(2014) 52 taxmann.com 432 (Ahmedabad – CESTAT)]
JBF Industries (the Appellant) was engaged in the manufacture of Polyester Chips, Lump Waste, and Polymer Waste falling under Chapter 39 of the Central Excise Tariff Act, 1985 and was availing Cenvat Credit on Inputs, Capital goods and Input services in terms of the Cenvat Credit Rules, 2004 (Credit Rules). The Appellant along with manufacturing activity was also doing job work activity on the raw materials received from their
own factory, located at Silvasa. In respect of job work activity, the Appellant was availing the benefit of the Notification No. 214/86-CE dated March 25, 1986 (Notification No. 214/86) and cleared the intermediates goods, without payment of Excise duty.
The Department took a view that the Cenvat credit of Service tax paid on Input services, used by the Appellant in the manufacture of goods on job work basis, exempted under Notification No. 214/86 was not admissible to the Appellant in terms of the provisions of Rule 6(1) of the Credit Rules.
Further, the Department also took a view that the Appellant had rendered Business Auxiliary Service to his own factory which was exempted under Notification No. 8/2005-ST dated March 1, 2005 and in terms of the Credit Rules, Cenvat credit on Input services used for provisioning of exempted Business Auxiliary Service was not admissible to the Appellant.
Accordingly, the Department confirmed the demand of wrongly availed Cenvat credit in respect of job work done, which was further upheld by the Adjudicating Authority. Being aggrieved, the Appellant preferred an appeal beforethe Hon'ble CESTAT, Ahmadabad.
The Hon'ble CESTAT, Ahmadabad relied upon the following case laws:
- Sterlite Industries (I) Ltd. Vs. CCE [Order No. A/1787/2004-WZB/C-I, dated 17-12-2004]
- Jindal Polymers Vs. CCE [(2001) taxmann.com 1302 (CEGAT – New Delhi)]
- Bajaj Tempo Ltd Vs. Collector of Central Excise [(1993) taxmann.com 475 (Mum. – CEGAT)]
- Polycab Industries Vs. CCE [(2011) 33 STT 268/14 taxmann.com 175 (Ahd. – CESTAT) ("Polycab Industries")
- Laakoonaa Reactions Vs. CCE [(2010) 3 taxmann.com 400 (Ahd.–CESTAT)] ("Laakoonaa Reactions")
- Polyfab Industries CCE&C [Final Order No.A/302/WBZ/AHD/2009 dated January 22, 2009]
And held that Rule 6(1) of the Credit Rules cannot be invoked for denying Cenvat credit on input services availed by the Appellant for manufacturing of job work goods cleared under Notification No. 214/86.
It was further held that the job work activity of the Appellant is amounting to manufacture and is cannot be treated as service. The Appellant cannot be a manufacturer and a service provider at the same time in relation to a particular activity. It is settled proposition in the Central Excise matters that a job worker is a 'manufacturer'.
Accordingly,the Hon'ble Tribunal set aside the order of the Adjudicating Authority and allowed the Cenvat credit availed by the Appellant in relation to job work activities.
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