Custom, Excise & Service Tax Tribunal
Cce, C & St, Visakhapatnam-I vs M/S. Hindustan Petroleum Corporation ... on 14 December, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Bench SMB
Court I
Appeal No. E/395/2009
(Arising out of Order-in-Appeal No. 144/2008 (V-I) CE dated 30.12.2008 passed by CC & CE (Appeals), Visakhapatnam)
For approval and signature:
Honble Ms. Sulekha Beevi, C.S., 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 Lordship wish to see the fair copy of the Order?
4.
Whether Order is to be circulated to the Departmental authorities?
CCE, C & ST, Visakhapatnam-I
..Appellant(s)
Vs.
M/s. Hindustan Petroleum Corporation Ltd.,
..Respondent(s)
Appearance Shri. P.S. Reddy, Assistant Commissioner (AR) for the Appellant.
Shri. Karan Talwar, Advocate for the Respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member (Judicial) Date of hearing: 14/12/2016 Date of decision: 14/12/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The above appeal is filed by the Department against the order passed by Commissioner (Appeals) who allowed the credit on input services availed by the respondent.
2. The respondents are engaged in the business of manufacture of various petroleum products and are availing the benefit of CENVAT credit on inputs, input services and capital goods. After verification of records the respondent was issued with the Show Cause Notice for recovery of CENVAT credit of Rs. 28,99,489/- availed on health insurance services and also for recovery of Rs. 5,08,000/- availed on invoice dated 07.05.2004, on the ground that the service is received prior to 10.09.2004. After adjudication the original authority confirmed the demand interest and imposed penalty. The respondent filed appeal before the Commissioner (Appeals) who allowed the credit. Aggrieved by the order of Commissioner (Appeals) the department has filed the present appeal.
3. On behalf of the appellant, the Ld. AR, Shri. P.S. Reddy reiterated the grounds of appeal. He submitted that the period involved is prior to 01.04.2011. The Ld. AR, argued that the credit availed on invoice dated 07.05.2004 on input services is irregular for the reason that the services are received prior to 10.09.2004. That the respondent is eligible for credit on service availed w.e.f. 10.09.2004 only. That the invoice being prior to this date, the Commissioner (Appeals), has erred in allowing the credit.
4. Against this, the Ld. Counsel Shri. Karan Talwar, on behalf of the respondent explained that though the invoice pertaining to the said service is dated 07.05.2004 the service was received by the appellant after 10.09.2004. He submitted that the payment for the said service is made 16.12.2004 and as per law the respondent is eligible for credit of service received after 10.09.2004. That this has been considered in detail by the Commissioner (Appeals) and has rightly allowed the credit. He also pointed out the period involved is prior to 01.04.2011, when the definition of input service had a wide ambit and therefore the credit availed on insurance services is eligible. The Counsel relied upon the decisions in the case of Kelly Services India Pvt. Ltd., Vs. CCE & ST, Gurgaon-II reported in [2016 (42) STR 748 (Tri. Del.)].
5. I have heard both sides. The main dispute put forward is with regard to the service tax credit of Rs. 5,08,000/- availed by the appellant on invoice dated 07.05.2004. It is that case of department that the invoice being prior to 10.09.2004 the credit is not admissible. The Ld. Counsel respondent has adverted to the reply to the Show Cause Notice issued by the respondent. It is seen from this reply that the respondent has availed input services namely engineering services which was a composite service. He submitted that though the invoice was dated 07.05.2004, the respondent has not paid on that date and that the services were received only after 10.09.2004. The relevant portion of reply notice reads as under:
In the instant case, we are enclosing herewith copy of Purchase Order No. 6734/VRCFP/09 dated 15.10.2003 (Refer Attachment No.1) wherein as per the payment terms, 25% will be paid on submission of draft utility package. The payments made to M/s. EIL are for preparations of process package for non licensing units of Visakh Refinery Clean Fuels Project (VRCFP). M/s. EIL has provided services only when the process package is actually being made which event has taken place on or after 10.09.2004. Preparation of draft utility package is only one of the primary step in the formulation of process package and part payment as per the Purchase Order terms has to be made on preparation of draft utility package which is only a mode of payment as per the terms of agreement with the vendor and the draft proposed is subjected to serious negotiations with the management for the actual utility package to be used by HPCL Management and does not mean that the services have been rendered. As can be seen from the Purchase Order itself that the final basic engineering package to be submitted only after the receipt of HPCLs comments on the draft basic engineering package which denotes that the actual services shall be after vetting the draft utility package and the services shall be deemed to have been rendered after the initial comments are made and the package is modified based on the HPCLs comments only. As can be seen from the Purchase Order that as the payment terms that the balance 25% shall be paid only on submission of draft site package and 10% on the submission of final basic engineering package. Since the bill in question only shows the modus operandi of the payment terms as per the Purchase Order which itself was paid o 16.12.2004 i.e., on or after 10.09.2004 there is no justification for assuming that the services were received prior to 10.09.2004 and hence the Show Cause Notice needs to be dropped for this item altogether.
From the above explanation given by the respondent it is seen that the services were composite services and the services were received after 10.09.2004 and the payment for the said service is made on 16.12.2004 and thereafter. Therefore, the contention of the department that the appellants received the service prior to 10.09.2004 is baseless. On appreciating the facts and the evidence I am convinced that the respondent has received the service after 10.09.2004. Therefore the Commissioner (Appeals) has rightly allowed the credit on this count. The issue whether the credit availed on health insurance services prior to 01.04.2011 is covered, by the various judgments. From the above, I do not find any infirmity in the order by the Commissioner (Appeals). The appeal is dismissed.
(Pronounced & dictated in open court) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Lakshmi.5