Custom, Excise & Service Tax Tribunal
M/S. Thomas Cook (India) Ltd vs Commissioner Of Service Tax, Chennai on 26 February, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. ST/63 & 64/2011
(Arising out of Order-in-Appeal No. 200 & 201/2010 (MST) dated 10.11.2010 passed by the Commissioner of Central Excise (Appeals), Chennai)
M/s. Thomas Cook (India) Ltd. Appellant
Vs.
Commissioner of Service Tax, Chennai Respondent
Appearance Shri R. Sai Prashanth, Advocate for the Appellant Shri R.Subramaniyan, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing / Decision: 26.02.2018 Final Order Nos. 40460-40461 / 2018 Per Bench Brief facts are that the appellants are engaged in providing services such as air travel agent, railway travel agent, BAS etc. and have centralized registration for eleven branches located in different places. The appellant was availing abatement benefit of Notification No.1/2006-ST dated 1.3.2006 in the case of various services. One of the conditions of the notification is that to avail abatement the assessee should not avail CENVAT credit facility. The appellant though availed abatement of notification availed CENVAT on duty paid inputs / capital goods / input services. On being pointed out, the appellant reversed the credit immediately before utilization. However, they did not reverse the interest while reversing the credit. Show cause notice was issued alleging wrong availment of abatement in terms of Notification No.1/2006 stating that though appellant has reversed the credit but the credit was not reversed along with interest, the appellant is not eligible for the benefit of the notification. After due process of law, the original authority confirmed the demand of Rs.2,98,567/- for the period April 2006 to June 2007 and Rs.3,24,261/- for the period October 2007 to March 2009 along with interest and also imposed penalty under section 78 of the Finance Act, 1994. In appeal, Commissioner (Appeals) upheld the same. Hence these appeals.
2. On behalf of the appellant, ld. counsel Shri R. Sai Prashanth, submitted that during the impugned period, the appellant availed abatement under Sl. No. 2 of Notification 1/2006 in relation to tour operator service. As per the Notification, the abatement is subject to the condition that no CENVAT credit is availed on the duty paid on inputs / capital goods / input services. The appellant had initially availed CENVAT credit on certain input services such as telephone services which were used for providing tour operator service. Subsequently, the appellant reversed the CENVAT credit attributable to such services. When the appellant has reversed the wrongly availed credit, there is no liability to pay interest and such reversal is fully in order and it amounts to non-availment of credit. Therefore, the appellant is eligible for abatement as per the notification. He relied on the following decisions:-
a. CCE Vs. Sanjay Engineering Industries 2016 (43) STR 354 (Raj.) b. Punj Lloyd Ltd. Vs. CCE 2015 (40) STR 1028 c. Tree House Hotel Club and Spa Vs. CCE 2017 (4) GSTL 39
3. To canvass the argument that the appellant is not liable to pay interest and the credit which was reversed before utilization, he relied upon the following decisions:-
a. CCE Vs. Stretegic Engineering P. Ltd. 2014 (310) ELT 599 (Mad.) b. CCE Vs. Bill Forge P. Ltd. 2012 (26) STR 204 (Kar.) c. Rashtriya Ispat Nigam Ltd. Vs. CCE 2016 (44) STR 136
4. The ld. AR Shri R. Subramanian reiterated the findings in the impugned order. He submitted that the appellant though reversed the credit has not reversed along with interest. When the credit has not been reversed along with interest, it cannot be considered as proper reversal of the credit and therefore the appellant is not eligible for the abatement as per the notification.
5. Heard both sides.
6. The issue that poses for consideration is whether the appellant is eligible for the abatement under Notification No.1/2006 when they have reversed the credit and has not paid the interest for the delayed reversal of credit. The Honble jurisdictional High Court in the case of Stretegic Engineering P. Ltd. (supra) has held that no interest is liable to be paid when the credit is reversed before utilization. The decisions in the cases of Sanjay Engineering Industries (supra) as well as Punj Lloyd Ltd. (supra) has held that when the credit has been reversed the condition that the assessee should not avail credit is satisfied and that the assessee would be eligible for the benefit of notification.
7. Following the said decisions, we are of the considered opinion that the disallowance of abatement under the Notification is unjustified. The impugned order is set aside and the appeals are allowed with consequential relief if any.
(Operative portion of the order was
pronounced in open court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Rex
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