Custom, Excise & Service Tax Tribunal
M/S. Sri Krishna Pharmaceuticals Ltd vs Commissioner Of Central Excise, ... on 20 January, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 20051 / 2014 Appeal(s) Involved: E/2284/2012-SM [Arising out of Order in Appeal No. 31/2012 (H-III) CE dated 12/05/2012 passed by the Commissioner of Customs, Central Excise and Service Tax (Appeals I & III), Hyderabad.] M/s. SRI KRISHNA PHARMACEUTICALS LTD. C-4, INDUSTRIAL ESTATE, UPPAL, HYDERABAD - 500 039 AP Appellant(s) Versus Commissioner of Central Excise, Customs And Service Tax - HYDERABAD-III OPP LB STADIUM ROAD, BASHEERBAGH, HYDERABAD - 500004 ANDHRA PRADESH Respondent(s)
Appearance:
Mr. M. S. Nagaraja, Advocate T. Rajeswara Sastry & Associates No.48, 11th Main, Banashankari 2nd Stage Bangalore - 560 070.
For the Appellant Mr. N. Jagdish, Superintendent (AR) For the Respondent CORAM:
SHRI B.S.V. MURTHY, HONBLE MEMBER (TECHNICAL) Date of Hearing: 20/01/2014 Date of Decision: 20/01/2014 Order Per : B.S.V. Murthy, During the course of audit of the accounts of the appellant ranging for the period from 08/2009 to 09/2010 the internal audit party observed that the appellant have taken service tax credit of their another unit namely Unit-III located at Nacharam in respect of the service tax paid towards rent for the period from April 2008 to March 2009 for the premises of Unit-III. As such it appears that the appellant have irregularly availed service tax credit of Rs.2,19,390/- in Unit-I which requires to be recovered from the appellant/Unit-I along with interest. Thereafter, proceedings were initiated for recovery of the CENVAT credit on the ground that it was wrongly availed which has accumulated in the confirmation of the demand of the amount with interest and penalty also has been imposed under Section 11AC of Central Excise Act, 1944.
2. Heard both the sides. Learned counsel for the appellant relies upon the decision in the case of Doshion Ltd.: 2013 (288) E.L.T. 291 (Tri.-Ahmd.) to submit that as held in that case, the credit could have been taken in Unit-1 and therefore, the procedure followed by them was correct. Further, he also submits that credit was taken during the period from April 2008 to March 2009 whereas the show-cause notice was issued on 30.8.2011. In the absence of any motive or intention to suppress or misdeclaration on the part of the assessee to evade payment of tax to avail CENVAT credit wrongly, extended period should not have been invoked and since the entire demand is time barred, no case can be made against the appellant.
3. The learned AR would rely upon the decision of the Tribunal in the case of Mahindra & Mahindra Ltd.: 2013 (31) S.T.R. 667 (Tri.-Mum.) to submit that in that case, it was held that there has to be a nexus between the service and the activity undertaken in the unit in which credit has been taken.
4. I have considered the submissions made by both the sides. I find that the decision of the Tribunal in the case of Doshion Ltd. (supra) wherein the order was drafted myself, squarely covers the issue in this case. Paragraph 5 is relevant and for better appreciation, the same is reproduced.
5. We have considered the submissions made by both sides. We find considerable force in the arguments advanced by the learned counsel. The registered office and Vatva office both are located in the same place and appellant has simply utilized the credit at Vatva instead of distributing it to various units. As submitted by the learned counsel, during the relevant period, there was no restriction for utilization of such credit without allocating proportionately to various units. The omission to take registration as an Input Service Distributor can at best be considered as procedural irregularity and in view of the decisions cited, has to be considered sympathetically. Further, it is also noticed that appellant has not got any extra benefit by doing this. In fact from the statement of Shri Chandresh C. Shah, as explained that above Cenvat credit available to them, 20% of service tax payable only was paid and balance was paid in cash. In fact, proper distribution would have enabled them to utilize full credit. It would show that the exercise is totally Revenue neutral and no loss has been caused to the Revenue (in fact Revenue has gained). In the absence of any legal requirement to avail credit based on the services received during the relevant time and in the light of the decision cited by the learned counsel, the procedural irregularity has to be ignored and the demand confirmed has to be set aside on this ground. In the result, demand for Cenvat credit of Rs.1,07,07,142/- with interest and penalty equal to the same imposed under Section 11AC of Central Excise Act, 1944 are set aside. 4.1 As regards decision in Mahindra and Mahindra Ltd., it is only a decision while hearing the stay application and for considering the requirement of pre-deposit. It is well settled law that such decisions do not result in binding precedent. Therefore that decision would not be applicable. At this stage, the learned AR submitted that in the case of Gujarat Heavy Chemicals Ltd.: 2011 (22) S.T.R. 610 (Guj.), the Honble High Court of Gujarat also have taken a view which was against the assessee. On going through the decision of the Honble High Court of Gujarat in the case of Gujarat Heavy Chemicals Ltd., I find that in that case the Honble High Court took the view that availment of CENVAT credit of service tax paid on security services received for maintaining security of residential quarters of the employees would not be admissible. In this case, it is not the case of the department that the credit was not at all admissible. The case of the department is that the credit is admissible but should have been taken in Unit-3. This issue as submitted by the learned counsel was under consideration of the Tribunal in Doshion Ltd. (supra). Therefore, I find in view of the precedent decision of the Tribunal, the appellant has made out a case in their favour. In the result, the appeal is allowed with consequential relief, if any, to the appellant.
(Order dictated and pronounced in open court) (B.S.V. MURTHY) MEMBER TECHNICAL RV 3