Custom, Excise & Service Tax Tribunal
M/S. Cae India Pvt. Ltd vs Cst, Bangalore on 9 August, 2012
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing:09/08/2012
Date of decision:09/08/2012
Application No.ST/Stay/1808/2011
Appeal No.ST/2909/2011
(Arising out of Order-in-original No.148/2011 dt. 30/08/2011
passed by CST, Bangalore )
For approval and signature:
Honble Mr. P.G. Chacko, Member(Judicial)
Honble Mr. M. Veeraiyan, Member(Technical)
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?
M/s. CAE India Pvt. Ltd.
..Appellant(s)
Vs.
CST, Bangalore
..Respondent(s)
Appearance
Mr. Rajesh Kumar, Chartered Accountant for the appellant.
Mr. Ganesh Haavanur, Addl. Commissioner(AR) for the respondent.
Coram:
Honble Mr. P.G. Chacko, Member(Judicial)
Honble Mr. M. Veeraiyan, Member(Technical)
FINAL ORDER No._______________________
[Order per: P.G. Chacko] This application filed by the appellant seeks waiver and stay in respect of the adjudged dues. On a perusal of the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of at this stage. Accordingly, after dispensing with predeposit, we take up the appeal.
2. In a show-cause notice dt. 23/08/2010 issued to the appellant, the Department had alleged that they were manufacturing and clearing both dutiable goods and exempted goods and were also providing taxable output services during the material period, that certain input services received by them were used both in the manufacture of exempted goods and for providing the output services, that the credit of service tax paid on such input services were utilized for payment of service tax on the output services, that separate accounts were not maintained for receipt, consumption and utilization of input services in the manufacture of exempted goods and for providing output services, that the appellant thereby contravened the provisions of Rule 6(3) of the CENVAT Credit Rules(CCR), 2004 and that consequently they were liable to pay an amount equivalent to 10% of the value of the exempted goods. The show-cause notice accordingly demanded Rs.5,03,38,740/- from the appellant for the period from 2006-07 to 2009-10 under Rule 14 of the CCR read with the proviso to Section 73(1) of the Finance Act, 1994 and also demanded interest thereon under Rule 14 read with Section 75 and also proposed penalties under Sections 77 and 78 of the Act. The extended period of limitation prescribed under the proviso to Section 73(1) of the Act was invoked on the alleged ground that the appellant had suppressed the factum of having erroneously availed and utilized CENVAT credit, with intention to evade payment of service tax. In their reply to the show-cause notice, the party, inter alia, referred to sub-rule 7 of Rule 6 of the CCR and claimed the benefit of this sub-rule which had been introduced by the Finance Act, 2010 with retrospective effect from 10/09/2004. They submitted that they had already computed the proportionate amount of service tax credit attributable to the exempted final products and had paid the same with interest @ 24% and, therefore, the proposals in the show-cause notice were liable to be dropped. A statement of computation was also produced with a copy of the challan as evidence of payment. Reliance was also placed on the Honble High Courts judgment in the case of CCE vs. E.T.A. Technology Pvt. Ltd. [2010-TIOL-569-HC-CX]. The impugned order was passed by the Commissioner of Service Tax in adjudication of this dispute.
3. When this matter came up before us on the last occasion, submissions were made from both sides with reference to paragraphs 48 to 51 of the Commissioners order, reproduced below:
48. The Finance Act, 2010 has made amendments of Rule 6 of Cenvat Credit Rules, 2004 and the same is amended retrospectively. As per the said amendment the person who opts to pay the amount in accordance with the provisions as amended shall pay the amount along with interest specified and make application to the Commissioner of Central Excise along with documentary evidence and a certificate from a chartered accountant or a cost accountant, certifying the amount of inputs/input service credit attributable to the inputs/input service used in or in relation to the manufacture of exempted goods, within a period of six months from the date on which the Finance Bill 2010 receives the assent of the President.
49. This is the conditional provision/rule, the enforcement of this is made dependent upon the fulfillment of a condition, and what is delegated to the competent authority is the authority to determine by exercising judgment, whether or not the condition has been fulfilled. Thus, in conditional provision/rule, the provision/rule is there but its taking effect is made to depend upon determination of some fact or condition by the competent authority.
50. I find from the records placed before me that, the Noticee has filed application on 09.11.2010 (the official seal is dated: 09.11.2010) the noticee has mentioned the date as 02.11.2010 on the application enclosing the chartered accountants certificate Dated: 03.11.2010; the Finance Bill 2010 has received the Presidents assent on 08.05.2010. The Noticee should have filed the application on 07.11.2010, as 07.11.2010 was Sunday they should have filed on next working day i.e. 08.11.2010, as the Noticee has filed the application on 09.11.2010; they have failed to fulfill the condition stipulated.
.
51. In view of my foregoing findings on the facts and circumstances of the case, the demand of irregularly availed cenvat credit of Rs.5,03,38,740/- under proviso to Section 73(1) of the Finance Act, 1994 read with Rule 14 of cenvat credit rules, 2004 merits confirmation.
4. The learned consultant for the appellant had vehemently contested the findings recorded in para 50 ibid. Ground No.4 of the appeal was pressed before us. This ground reads thus:
4. The appellant submits that they had already filed application in terms of Finance Act, 2010 before the Commissioner of Central Excise as well as Commissioner of Service Tax after payment of proportionate amount of CENVAT Credit along with interest seeking to drop the proceedings initiated under Rule 6 of CENVAT Credit Rules, 2004 on 04.11.2010. However the impugned order considered the date of filing an application as 09.11.2010, instead of 04.11.2010, which was factually wrong. Further in this regard the appellant had also enclosed the application to prove that the date of application was filed on 04.11.2010, itself. The one and only ground on which the demand is confirmed without examining any of the submissions made by the appellant was this fact. Therefore the impugned order confirming the demand on incorrect facts is not sustainable and requires to be set aside. In view of the above, we had directed the respondent to produce the original records from the Commissionerates of Central Excise and Service Tax and to confirm the date of filing of the application referred to in ground 4 ibid. The matter was adjourned to 09/08/2012 for such records and report.
5. Today the learned Commissioner(AR) produces copies of the correspondence between him and the two Commissionerates. Another document produced by him is a copy of letter dt. 30/07/2012 of the Administrative Officer(Admn.), Service Tax Commissionerate, Bangalore to the Additional Commissioner(Audit) of the same Commissionerate. This letter reads thus:
With reference to the captioned subject, this is to inform that the letter addressed to the Commissioner of Service Tax, dated 02nd November 2010 from M/s. CAE India Private Limited was received by the Tappal wing of the Administration Section on 04/11/2010, acknowledged by the I.C. Clerk authorized to receive incoming Tappals.
Further, after making entries in the I.C. Register (Commissioners Paper) it was handed over to the Commissioners Office. As per their Tappal register, the said letter number 1478 was handed over to the Superintendent, Adjudication Section on 09/11/2010.
A copy of the Commissioners register dated 09/11/2010 projecting the said letter is enclosed herewith for kind reference and necessary action. The above letter confirms that the appellants application referred to in ground 4 ibid was received in the Commissionerate of Service Tax on 04/11/2010. The learned Commissioner(AR) also fairly concedes the position.
6. Sub-rule 7 of Rule 6 of the CCR, 2004, the benefit of which is being claimed by the appellant, reads as follows:-
(7). Where a dispute relating to adjustment of credit on inputs or input services used in or in relation to exempted final products relating to the period beginning on the 10th day of September, 2004 and ending with the 31st day of March, 2008 (both days inclusive) is pending on the date on which the Finance Bill, 2010 receives the assent of the President, then, notwithstanding anything contained in sub-rules (1) and (2), and clauses (a) and (b) of sub-rule (3), a manufacturer availing CENVAT credit in respect of any inputs or input services and manufacturing final products which are chargeable to duty and also other final products which are exempted goods, may pay an amount equivalent to CENVAT credit attributable to the inputs or input services used in, or in relation to the manufacture of, exempted goods before or after the clearance of such goods:
Provided that the manufacturer shall pay interest at the rate of twenty-four per cent, per annum from the due date till the date of payment of the said amount.
Explanation, For the purpose of this sub-rule, due date means the 5th day of the month following the month in which goods have been cleared from the factory.
7. As rightly noted by the adjudicating authority in para-48 of the impugned order, a person seeking the benefit of the above sub-rule (which has retrospective effect from 10/09/2004) should make an application to the Commissioner of Central Excise within a period of 6 months from the date on which the Finance Bill, 2010 receives the assent of the President. The Finance Bill, 2010 received the Presidents assent on 08/05/2010. According to the adjudicating authority, the appellant should have filed the application on or before 08/11/2010, regarding which there is no dispute. However, the finding of the adjudicating authority that the appellant filed the application on 09/11/2010 is under challenge. We note that this challenge is bound to succeed in the light of the report of the learned Commissioner(AR). The appellant had in fact filed their application with the Commissioner of Service Tax on 04/11/2010 within the prescribed period of 6 months. Had it been transmitted at once to the Commissioner of Central Excise, it would probably have been received at his end also within the said period. In any case, the purpose of the beneficial provisions of Rule 6(7) ibid should not be defeated on the hypertechnical ground that the partys application, though received by the department within the prescribed period, reached the Commissioner of Central Excise a day or two after such period. For the ends of justice, the application can be considered to have been received by the Commissioner of Central Excise on 04/11/2010. It would follow that the appellant had fulfilled the condition for claiming the benefit of sub-rule (7) of Rule 6 of the CCR, 2004.
8. As the above benefit was denied to the party solely on the ground of delay of application despite the absence of any delay, we are constrained to set aside the impugned order and remand the case to the Commissioner for de novo adjudication of the dispute. Accordingly, the impugned order is set aside and this appeal is allowed by way of remand with a request to the Commissioner to consider on merits the claim of the assessee for the benefit of sub-rule (7) of Rule 6 of the CCR, 2004 and pass a speaking order on all relevant issues in accordance with law after giving the party a reasonable opportunity of being heard.
9. The stay application also stands disposed of.
(Operative part of this order was pronounced on conclusion of the hearing) (M. VEERAIYAN) MEMBER (TECHNICAL) ( P.G. CHACKO ) MEMBER (JUDICIAL) Nr 9