Commissioner Central Excise, Commissionerate, Rohtak vs. Bharat Sanchar Nigam Limited

Held

The Court did not decide the substantial questions of law on merits. At the time of hearing, the learned counsel for the appellant admitted that in view of instructions dated 22.08.2019 issued by the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (Judicial Cell), the appeal would not be maintainable before the High Court as the demand amount of Rs. 94,57,161/- was below the monetary limit of Rs. 1 Crore. Consequently, the learned counsel for the appellant prayed for withdrawal of the instant appeal. The Court, in view of the instructions and the appellant's prayer, dismissed the appeal as withdrawn, with the liberty that the question of law raised would remain open. No orders were required to be passed on the applications seeking condonation of delay as the appeal was dismissed as withdrawn.

Facts

The respondent, M/s Bharat Sanchar Nigam Limited (BSNL), engaged in providing telephone services, allegedly failed to maintain separate accounts for CENVAT credit on input services and capital goods used for taxable and non-taxable services, contrary to Rule 6 of the CENVAT Credit Rules, 2004. BSNL utilized CENVAT credit up to 100% of the service tax payable, exceeding the permissible limit of 20% under Rule 6(3)(c). This resulted in an alleged excess utilization of CENVAT credit amounting to Rs. 94,57,161/- for specific periods in 2005 and 2006. The Department issued a show cause notice, and the Adjudicating Authority confirmed the demand, levied interest, and imposed a penalty equivalent to the demand. BSNL appealed to the CESTAT, which allowed the appeal. The Commissioner of Central Excise, Rohtak, filed the present appeal before the High Court.

Key Issues

1. Whether the Appellate Authority (CESTAT) was correct in allowing the appeal filed by the respondent without appreciating the facts and circumstances and findings in the case of Idea Cellular (2009(16)STR 712)? (Question of law) 2. Whether the Adjudicating Authority was correct in not confirming the re-quantified demand along with interest and not imposing penalty under Section 78 of the Finance Act, 1994 for suppression of facts with malafide intention? (Question of mixed law and fact) 3. Whether the Tribunal committed a grave error in relying upon the order in the case of Idea Cellular, where the case was remanded back to the adjudicating authority for de novo adjudication? (Question of law) Contentions: Petitioner (Commissioner of Central Excise, Rohtak): Argued that the CESTAT's order was passed mechanically without proper application of mind. Relied on the findings of the Adjudicating Authority and the alleged suppression of facts by the respondent. The petitioner sought to invoke the extended period of limitation under Section 73(1) and 73(2) of the Act and impose penalty under Rule 15 of 2004 Rules read with Section 78 of the Act. Respondent (M/s Bharat Sanchar Nigam Limited): The judgment records that the respondent's authorized representative admitted to providing both taxable and non-taxable services, availing common input services/capital goods credit, not maintaining separate accounts, and being unaware of the 2004 Rules. They also stated that the amount was deposited on 19.12.2006 after being pointed out by the Department. The respondent's arguments before the High Court are not explicitly recorded, but their appeal was allowed by the CESTAT.