Custom, Excise & Service Tax Tribunal
M/S. F.L. Smidth Pvt. Ltd vs Cce, Trichy on 28 April, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/Misc/40922/2014 & E/94/2009
(Arising out of Order-in-Appeal No. 29/2008 dated 28.10.2008 passed by the Commissioner of Central Excise (Appeals), Trichy)
For approval and signature:
Honble Shri P.K. Das, Judicial Member
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 the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
M/s. F.L. Smidth Pvt. Ltd. Appellant
Vs.
CCE, Trichy Respondent
Appearance Shri V.S. Manoj, Advocate, for the Appellant Shri Parmod Kumar, JC (AR) for the Respondent CORAM Honble Shri P.K. Das, Judicial Member Date of Hearing: 28.04.2014 Date of Decision: 28.04.2014 Final Order No. 40293/2014 The appellants are engaged in the manufacture of parts of pre-heater and cleared the same to M/s. Dalmia Cements (Bharat) Ltd. on the basis of contract. They are also undertaking trading activities. They availed input service credit paid on commission in respect of procurement of orders. A show-cause notice dated 28.11.2006 was issued proposing to deny input service credit of Rs.17,21,791/- being the amounts of wrong availment on service tax credit taken on the service tax paid on the materials procured and supplied under trading activities in the month of February 2005. It has also proposed demand of interest along with penalty. The adjudicating authority confirmed the demand of tax along with interest and also imposed penalty of Rs.10,000/- and the Commissioner (Appeals) upheld the adjudication order.
2. The learned counsel on behalf of the appellant submits that the appellant used the credit in respect of business activities. He submits that the definition of input service under Rule 2(l) of the CENVAT Credit Rules includes the activities in relation to the business. He further submits that the Honble Bombay High Court in the case of CCE Vs. Ultra Tech Cement 2010 (260) ELT 369 (Bom.) and other High Courts consistently held that CENVAT credit would be eligible in relation to the business activities. He further submits that the demand of duty is barred by limitation as the issue involved is the subject-matter of interpretation of law which is decided by the decisions the Honble High Courts. He further submits that the definition of input service was amended on 1.4.2011 insofar as trading became an exempted service.
3. On the other hand, the learned AR on behalf of Revenue drew the attention of the Bench the definition of input service under Rule 2(l) of the CENVAT Credit Rules. He submits that the Tribunal consistently viewed that credit is not eligible in respect of trading services. He relied upon the following decisions:-
(a) Metro Shoes Pvt. Ltd. Vs. CCE 2008 (10) STR 382
(b) Loreal India Private Ltd. Vs. CCE 2012 (28) STR 443
(c) Lacto Cosmetics (Vapi) Pvt. Ltd. Vs. CCE 2013 (30) STR 107
(d) Orion Appliances Ltd. Vs. CST 2010 (19) STR 205 He further submits that the appellant had not disclosed their trading activities to the Department. During investigation and after examining the books of accounts it was found that the appellant availed credit on the trading activity and therefore it is a clear case of suppression of fact with intent to evade payment of tax.
5. After hearing both sides and on perusal of the records, I find that there is no dispute that the appellant availed input service credit on commission for procurement of orders. On perusal of the impugned order, it is seen that the input service credit in respect of manufacturing activity, service tax on commission was allowed. Credit was denied in respect of that portion of service tax relating to the commission paid on the trading goods. The definition of input service under Rule 2(l) of the CENVAT Credit Rules means any service used by a manufacturer whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products. In the present case, there is no dispute that the appellant availed credit on commission in respect of trading goods, which are not in or in relation to the manufacture of final products and therefore there are not eligible to avail credit on the commission paid on trading goods.
6. The learned counsel submitted that the appellant had not taken any CENVAT credit on input service attributable to trading. I do not find any merit in this submission insofar as it is admitted position that the appellant had taken CENVAT credit on that portion of service tax relating to the commission paid on the trading goods. The case laws relied upon by the learned Advocate, perhaps, would support the case of the Revenue. In the case of Ultratech Cement Ltd. (supra), it has been held that activities not integrally connected into business of manufacture of final products would not qualify as input service under Rule 2(l) of CENVAT Credit Rules. In the present case, input service credit is not related to business of manufacture of final product and therefore, credit was rightly denied.
7. Regarding the submission of the learned counsel that the demand is barred by limitation, I find from the adjudication order that the appellant had not disclosed the availment of input service credit on commission in respect of trading activities. These facts came to the knowledge of the Department only on verification of the documents such as contract agreements, commission agreements etc. So there is no merit in the submission of the learned counsel on limitation.
8. In view of the above discussion, I do not find any reason to interfere with the order of the Commissioner (Appeals). Accordingly, the appeal filed by the appellant is rejected.
9. The miscellaneous application filed by the appellant for extension of stay is dismissed as infructuous as the appeal has been disposed of.
(Dictated and pronounced in open court) (P.K. Das) Judicial Member Rex 2