Custom, Excise & Service Tax Tribunal
M/S. Vlcc Healthcare Ltd vs Commissioner Of Central Excise on 1 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. II
ST Appeal No. 54198 of 2014 - ST (SM)
[Arising out of Order-In-Appeal No. CHD-EXCUS-000-APP-180-14-15 dated 03.06.2014 passed by Commissioner of Customs & Central Excise (Appeals), Chandigarh]
For approval and signature:
Honble Mr Ashok Jindal, Member (Judicial)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s. VLCC Healthcare Ltd. Appellants
Vs.
Commissioner of Central Excise . Respondent
Chandigarh Appearance:
Shri Hemant Bajaj, Advocate for the Appellants Shri V P Batra, AR for the Respondent CORAM:
Hon'ble Shri Ashok Jindal, Member (Judicial) Date of Hearing /decision: 01.1.2015 FINAL ORDER NOS. A/ 50045/2015-ST(SM) Per Ashok Jindal :
The appellant is in appeal against the impugned order wherein inputs service credit attributable to taxable as well as exempted services has been denied to the appellant.
2. Brief facts of the case are that appellant is a output service provider as well as engaged in the activity of trading during the period April, 2005 to March, 2010. Audit took place in the premises of appellant and audit objections were raised on 14.9.2010. As per audit objection that appellant has taken inputs service credit on common services which were used by the appellant in trading as well as providing output service to the tune of Rs. 4,10,320/- for which appellant is not entitled to Cenvat credit. Therefore, a show cause notice was issued on 5.10.2010 to deny input service credit for the above services. Adjudication took place and demand of Rs. 4,10,320/- was confirmed along with interest and equivalent amount of penalty was imposed under section 78 of the Finance Act, 1994. Commissioner (Appeals) also confirmed the adjudication order on this issue. Aggrieved from the said order appellant is before me.
3. Learned Counsel for the appellant submits that the explanation came on 1.4.2011 and as per explanation trading activity was treated as exempted services. As prior to 1.4.2011, the trading activity was not exempted service, therefore, appellant was under bonafide belief that they are entitled to take Cenvat credit in full, therefore they have taken the credit of Rs. 4,10,320/-. He further submits that if at all Cenvat credit is to be denied that is to be denied in proportion as held by this Tribunal in the case of Orion Appliances Ltd. vs. CST, Ahmedabad [2010 (19) STR 205 (Tri-Ahmd)]. Therefore the proportionate credit is denied for Cenvat credit attributable to trading activity works out only to Rs.17,718/-. Therefore, he prayed that impugned order is required to be set aside for confirming the entire demand of Service tax of Rs.4,10.320/- instead of Rs.17,718/-. He also prayed that in these circumstances penalty is also not imposable.
4. On the other hand learned AR submits that although the appellant is entitled to take proportionate Cenvat credit as held by this Tribunal in the case of Orion Appliances Ltd. (supra), but both the lower authorities have after due consideration held that appellant is required to reverse the Cenvat credit to the tune of Rs.4,10,320/-. If at all there is any calculation mistake, the matter may be remanded back to the adjudicating authority.
5. Heard the parties. Considered the submissions.
6. On merits, there is no dispute between parties as both are relying on the decision of Orion Appliances Ltd. (supra). Therefore I hold that appellant is not entitled to take Cenvat credit of the common services used by them attributable to trading activity. Annexure B of the show cause notice works out the quantum of trading activity and the total Cenvat credit taken by the appellant. Annexure B is reproduced hereinbelow:-
7. Further, I have gone through the audit objection. In the audit objection, the amount involved for denial of input service credit is to the tune of Rs.2,03,160/- out of which Rs. 1,85,442/- was allowed by the lower authorities. If the audit objection is considered, then the Cenvat credit attributable to trading activity works out to Rs.17,718/- and after considering the annexure to show cause notice, the Cenvat credit on input service availed by the appellant is Rs.4,10,320/-, if it is to be denied for trading activity, then it is only in proportion to the trading activity to be denied and if calculation is done to annexure B above, the amount works to Rs.17,718/-. Therefore, I hold that appellant is not entitled to take Cenvat credit to the tune of Rs.17,718/- attributable to trading activity. Further, I find that the appellant were under bonafide belief that prior to 1.4.2011, trading activity was not an exempted services. Therefore, penalty on the appellant is not imposable. In these circumstances, penalty imposed on the appellant is set aside. With these terms, appeal is disposed of.
(dictated and pronounced in the open court )
( Ashok Jindal ) Member(Judicial)
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