Custom, Excise & Service Tax Tribunal
M/S. Komet Precision Tools India ... vs Commissioner Of Central Excise, ... on 29 January, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 20106 / 2014 Application(s) Involved: E/Stay/28630/2013 in E/28010/2013-SM Appeal(s) Involved: E/28010/2013-SM [Arising out of Order in Appeal No.388/2013 dated 8.8.2013 passed by Commissioner of Central Excise (Appeals - I), Bangalore.] M/s. Komet Precision Tools India Private Limited No. 16J, Attibele Industrial Area, BANGALORE - 562107 KARNATAKA Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax - Bangalore-I POST BOX NO 5400, CR BUILDINGS, BANGALORE 560 001 KARNATAKA Respondent(s)
Appearance:
Mr. Rajesh Kumar, CA HIRAGANGE & ASSOCIATES #1010, 1st floor(Above Corp. Bank) 26th Main, 4th T Block, Jayanagar, Bangalore 560041 Karnataka For the Appellant Mr. Ganesh Havannur, Addl. Commissioner (AR) For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER Date of Hearing: 29/01/2014 Date of Decision: 29/01/2014 Order Per : B.S.V MURTHY The appellants are manufacturer of reamers, boring bars, cutting rings falling under Chapter Head 82 of the First Schedule of Central Excise Tariff Act, 1985. The appellants imported tools and inserts and such tools and inserts so imported were used for both manufacture and sale as replacement of worn out parts to their customers. Appellant had availed CENVAT credit of service tax paid on CHA services for importing the goods and commission agent services for selling the goods. Taking a view that import of such finished products and selling them as such is a trading activity and therefore the benefit of credit of service tax paid on CHA service and commission agent service is not admissible, proceedings were initiated which has culminated in demand of service tax amounting to Rs.1,77,594/- with interest during the period from November 2009 to August 2010. A penalty of Rs.45,000/- has also been imposed on the appellant.
2. Heard both sides in great detail and after considering the submissions of both sides and going through the records, I find that the issue is squarely covered by the decision of the Honble High Court of Punjab and Haryana in the case of Punjab Steels: 2010 (260) E.L.T. 521 (P & H). Therefore, since the issue is no longer res integra and has been heard in sufficient details, the requirement of pre-deposit is waived and appeal itself is taken up for final decision.
3. The issue involved in this case is whether the appellant is required to reverse CENVAT credit of service tax paid on CHA service and commission agent service attributable to the imported products which were sold as such by the appellant as replacement for worn out parts in the market. Exactly similar issue was before the Honble High Court of Punjab and Haryana and Honble High Court reproduced the decision of the Tribunal in the case of Chitrakoot Steel & Power Pvt. Ltd.: 2008 (10) S.T.R. 118 (Tri.-Chennai) which reads as under:
8. The Tribunal reversed the orders passed by the lower authorities with the following observations and relying upon its earlier order passed in Chitrakoot Steel & Power Pvt. Ltd. v. Commissioner of Central Excise :
I have carefully considered the submissions from both the sides and perused the records. The appellant had received certain inputs and for transporting those inputs to the factory, had availed GTA service in respect of which service tax paid was Rs. 275684/- and the credit of this service tax on GTA service had also been taken. Subsequently, when the appellant removed those inputs as such, he reversed only the credit of excise duty paid on inputs. The Department's contention is that on the removal of the goods as such, in addition to the credit of Central Excise Duty, the GTA service tax credit availed in respect of those inputs should also have been reversed. I find that on this very issue, the Tribunal in the case of Chitrakoot Steel & Power Ltd. Vs. CCE, Chennai (supra) has held that when the Cenvat availed inputs or capital goods are removed from the factory of the assessee as such, sub rule 3(5) provides for recovery of the amount of the Cenvat credit availed in respect of such inputs or capital goods and there is no provision to reverse the credit of service tax availed in respect of such goods or capital goods. Following the judgment of the Tribunal, I hold that the impugned order is not sustainable. The same is set aside. The appeal is allowed.
4. After taking note of the fact that no appeal has been filed by the Revenue on this issue, the Honble High Court considering the issue on merits and came to the conclusion that in view of the statutory provisions, there was requirement to reverse credit of service tax paid. The observation of the Honble High Court are in para 10 which is reproduced below:
10. Be that as it may, however, still even on merits, this court finds that the view as expressed by the Tribunal is strictly in conformity with the Rules. Rule 2(k) of the Rules defines `input', whereas Rule 2(1) defines `input service', meaning thereby both the terms have been defined independently. Rule 3 defines the term `cenvat credit', which includes duty paid under various enactments and also the service tax leviable under Section 66 of the Finance Act, 1994. Rule 3(5) of the Rules only talks about the cenvat credit taken on inputs or capital goods. It does not refer to the cenvat on input service, whereas Rule 5, on which reliance is sought to be placed by the Revenue, specifically talks about the cenvat credit on any input or input service used in the manufacture of final product. This rule pertains to refund in case of exports, which stands altogether on different footings. Once the rule-making authority has defined the terms specifically and used the same in different provisions consciously, the argument of learned counsel for the Revenue that merely by analogy even if in one provision both the terms have been used, the same should be read in the other provision as well, where it has not been specifically mentioned, has no legs to stand, as the tax cannot be levied merely by inference or presumption. It is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. Words cannot be added or substituted so as to give a particular meaning. Reference can be made to the observations of a Constitution Bench of Hon'ble the Supreme Court in Mathuram Agarwal v. State of Madhya Pradesh, (1999) 8 SCC 667 :
The intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature. The statute should clearly and unambiguously convey the three components of the tax law i.e. The subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients in a taxation statute then there is no tax in law. Then it is for the legislature to do the needful in the matter.
5. From the above, in my opinion, the issue is squarely covered by the said decision and therefore appeal is required to be allowed. In view of the above, appeal is allowed with consequential relief, if any, to the appellants.
(Order dictated and pronounced in open court) B.S.V MURTHY TECHNICAL MEMBER rv 4