Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri P Gupta (Adv.) on 2 May, 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad COURT Appeal No. : ST/176,177/2012-SM Arising out of : OIA No. CS/162-1163/DMN/VAPI-I/2011-12 dtd 23.12.2011. Passed by : The commissioner (A), CE&ST., Daman For approval and signature : Mr. M.V. Ravindran, Hon.'ble Member (Judicial) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Appellant (s) : 1. M/s Dupen Laboratories Pvt Ltd 2. Shri Nadiampally Nagendra Varaprasad Represented by : Shri P Gupta (Adv.) Respondent (s) : CCE&ST., Daman
Represented by : Shri Manoj Kutty (AR) CORAM :
Mr. M.V. Ravindran, Hon.'ble Member (Judicial) Date of Hearing : 04/04/2014 Decision : 02/05/2014 ORDER No. A/10908-10909/2014 dtd 2/5/2014 Per : Mr. M.V. Ravindran;
These appeals are directed against OIA No. CS/162-1163/DMN/ VAPI-I/2011-12 dtd 23.12.2011.
2. Appeal No, SP/176.2012 is filed by the assessee while the appeal No. ST/177/2012 is file by the employee. Since both these appeals are arising out of same impugned order, they are being disposed by a common order.
3. Heard both sides and perused the records. The issue involved the main appellants case is that the main appellant has availed Cenvat Credit of Service Tax paid by the Security Service. During the course of audit and subsequent investigation, it was noticed that the Security Service provider had not paid Service Tax amount, though collected from the main appellant. On being pointed out, the appellant voluntarily paid such Service Tax credit availed on 8.2.2008. Show Cause Notice dated 1.4.2009 was issued for the demand of the amount of the recovery of wrongly availed Cenvat Credit, alongwith interest and for imposition of penalties on the main appellant as well as on the employee. The Adjudicating Authority after following the due process of law confirmed demands raised alongwith interest and imposed equivalent amount of penalty and also imposed penalty on the individual appellant. On appeal preferred against such order, First Appellate Authority rejected the appeal filed by both appellant, but reduced penalty on the individual.
4. The main argument of the Learned Counsel for the appellants is that the appellants were not aware that the service provider was not paying any Service Tax. It is his submission that the main appellant was of the impression that the Service Tax collected by the service provider be paid by them. On being informed that the service provider has not deposited the amount of Service Tax with the Department, they filed FIR against the service provider on 12.12.2007. It is also his submission that they have obtained the photo copy of the Service Tax Registration that provide the service and hence they were under bonafide belief that the service provider has deposited the amounts in the government treasury. It is his submission that they have availed Cenvat Credit on proper duty paying document they cannot be saddled with the confirmation of the demand. He would rely upon the following decision for this proportion:
1. M/s Transpek Industries Ltd vs CCE, Vadodara 2010(249)ELT.91 (Tri.- Ahmd)
2. CCE Chennai III vs Indian Steel & Allied Products 2009(238)ELT.526 (Tri.-Chennai)
3. CC&CE., Meerut II vs Muzaffarnagar Pipe Industries P Ltd 2011(265)ELT.182 (All)
4. CCE East Singhbhum vs Tata Motors Ltd 2013(294)ELT.394 (Jhar.)
5. It is also his submission that the invokation of extended period is also incorrect.
6. Learned DR on the other hand would submit that it is his duty of the person availing cenvat credit to establish that Service Tax liability is discharged. He would submit that the invoices on which credit was availed, though issued by the service provider registered with Department, the Service Tax liability was not discharged. He would submit that on an identical issue in respect of the very same service provider, this Bench had an occasion to consider whether the service recipient is eligible for cenvat credit or not in the case of Latco Cosmetics (Vapi) Pvt Ltd., vs, CCE., Daman - 2012.TIOL.1281.CESTAT, Ahm. He would rely upon the findings recorded in Para 9 of the said order.
6. I have considered the submissions made at length by both sides and perused records. At the outset, on perusal of records, it is noticed that the service provider had not deposited the Service Tax in the treasury of Govt of India. This can be ascertained from the FIR lodged by the main appellant with police authority. Learned DR was correct in brining to my notice that an identical issue and in respect of very same service provider, this Bench has taken a view in case of M/s Lacto Cosmetics (Vapi) Pvt Ltd (Supra). I find that in Para 9, this Bench has recorded as under:
I have considered the submissions made by both the sides. As regards the credit availed in respect of security service and manpower service, as admitted by Shri Javed Shaikh, the production officer, the applicants were aware of the disappearance of the service provider after January07. They did not effort to find out even at that stage a to whether the service providers were in existence and whether they had paid service tax collected from them to the government. It is strange that the appellants received, services from a service provider whose existence they knew only because he used to come to collect the cheque and they did not observed by the Commissioner (Appeals), the fact that the service provider was located in Vapi itself would also go against the appellants since it cannot even be their case that ascertaining the existence or otherwise of the service provider was a difficult task. After the whereabouts of service provider and if it was found that they had not paid the tax, appellant would have reversed the credit in which case they would not be liable to penal action at all. The fact that appellant did not make any efforts to locate the service provider nor did they make any effort to intimate the department nor did they debit the amount of credit taken goes against the appellants and therefore it has to be held that the invocation of extended time limit for demand in this case is sustainable. Further, for the same reasons, the first appellant is liable to penalty also.
7. It could be seen from the above reproduced paragraph that the issue is settled in favour of the Revenue.
8. Since the issue involved in the case in hand and in the case of M/s Lacto Cosmetics (Vapi) Pvt Ltd, are identical and in respect of the same service provider, I find no reason to deviate from such a view already taken. Accordingly, the appeal filed by the main appellant in this case i.e.., M/s Dupen Laboratories Pvt Ltd., is rejected as devoid of merits.
9. As regards the personal penalty imposed on individual Shri N N Prasad, individual will not benefit in any way by availing cenvat credit by the company and the ratio of M/s Lacto Cosmetics (Vapi) Pvt Ltd., will apply, in the case of M/s Lacto Cosmetics (Vapi) Pvt Ltd., Bench has set aside the penalties imposed on the employee. Following the same ratio, I set aside the penalty imposed on Shri N N Varaprasad the appellant herein in Appeal No. ST/177/2012.
10. Both appeals are disposed of as indicated herein above.
(Pronounced in the Court on 2.5.2014) (M.V. Ravindran) Member (Judicial) swami ??
??
??
??
2