Custom, Excise & Service Tax Tribunal
M/S Abb Ltd vs The Commissioner Of Central Excise on 23 November, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH
BANGALORE
Appeal (s) involved :
ST/26822/2013 & ST/26824 to 26830/2013
[Arising out of the Order-in-Appeal Nos. 53 to 59/2013 dated 07.3.2013, passed by the Commissioner (Appeals), LTU, Bangalore]
M/s ABB Ltd. - Appellants
Plot No. 5 & 6, II Phase,
Peenya Industrial Area,
Bangalore 560027.
Versus
The Commissioner of Central Excise - Respondent
and Service Tax, LTU, JSS Towers, 100 Feet Ring Road, Banshankari III Stage, Bangalore 560 085.
Appearance :
Mr. Karthikeyan L.S., Advocate For For te Appellants Mr. Mohammed Yusuf, A.R. For Respondent Date of Hearing: 16/11/2016 Date of Decision: 23/11/2016 CORAM : HON'BLE SHRI S.S GARG, JUDICIAL MEMBER FINAL ORDER Nos. 21286 to 21293/2016 PER : S.S. GARG
The appellants have filed eight appeals against the impugned order dated 7.3.2013 passed by the Commissioner (Appeals) vide which he disposed of all the eight appeals by a common order. The issue in all these appeals is identical and, therefore, all the eight appeals are being disposed of by this common order.
2. A statement showing the details of appeal-wise period involved, amounts of Cenvat credit and penalty is appended below :
S. No. Appeal No. Period involved Demand of credit (Rs.) Penalty u/s 78
1. ST/26822/2013 2005 - 2009 2,53,476/- 2,53,476/-
2. ST/26824/2013 2005 - 2009 12,74,632/- 12,74,632/-
3. ST/26825/2013 2005 - 2009 2,59,266/- 2,59,266/-
4. St/26826/2013 2005 - 2009 4,00,755/- 4,00,755/-
5. ST/26827/2013 2005 - 2009 46,673/- 46,673/-
6. ST/26828/2013 2005 - 2009 2,52,815/- 2,52,815/-
7. ST/26829/2013 2005 2009 1,21,975/- 1,21,975/-
8. ST/26830/2013 2005 - 2009 81,017/- 81,017/-
TOTAL 26,09,609/- 26,09,609/-
3. Briefly the facts of the present case are that the appellant is engaged in the manufacture and clearance of excisable goods falling under Chapter 85 of Central Excise Tariff Act, 1985. They are also providing various taxable output services defined under Section 65(105) of the Finance Act, 1994. The appellants are mainly engaged in supply, erection and installation of electrical equipment of various agencies like State Electricity Boards, National Thermal Power Corporations, Delhi Metro Rail Corporation, Damodar Valley Corporation, Reliance Infrastructure Ltd., Jindal Power Ltd. and various other agencies. For undertaking the said projects, the appellant used various goods manufactured as well as imported and locally procured. The appellants in the course of their business received various input services like catering service, courier service, event management, house keeping, manpower recruitment etc. and availed Cenvat credit of input services under the provisions of Cenvat Credit Rules, 2004. The Department issued Show-Cause Notice dated 19.10.2010 requiring the appellant to show cause as to why credit availed on input services pertaining to trading will not be available as per Rule 6 of Cenvat Credit Rules, 2004. The appellant filed reply rebutting all allegations in the Show-Cause Notices. The Assistant Commissioner vide various Order-in-Original confirmed the demand relating to input service credit along with applicable interest and imposition of penalty. Aggrieved by the said order, the appellant filed eight appeals before the Commissioner (Appeals) and the Commissioner vide impugned order dated 7.3.2013 upheld the Order-in-Original and rejected the appeals of the appellants. Aggrieved by the said order, the appellant filed the present eight appeals before the Tribunal.
3. Heard both the parties and perused the record.
4. The learned counsel for the appellant submitted that trading activity has been treated as exempted service by amending definition under Rule 2(e) of the Cenvat Credit Rules, 2004, with effect from 1.4.2011 and prior to 1.4.2011, the trading activity was not considered as exempted service at all. He further submitted that amendment is only prospective and not retrospective. He also submitted that the trading activity as exempted service would have effect only with effect from 1.4.2011 and not prior to the said date since during the period of dispute the provisions of Rule 6 of Cenvat Credit Rules are inapplicable to the appellant. He also submitted that the extended period cannot be invoked as the issue relates to interpretation of law and the appellant has given all the details of trading in their Balance Sheet during the relevant period on the basis of which the demand has been raised. He also submitted that the appellant has not suppressed any facts with intent to evade payment of duty. He further submitted that the demand of interest and penalty is not sustainable as the appellant reversed the credit prior to its utilization.
5. On the other hand, the learned A.R. strongly defended the impugned order and submitted that the appellant is not entitled to avail Cenvat credit of input services which are attributable to trading. He further submitted that as per Rule 2(e) of Cenvat Credit Rules, 2004, as it is prior to 1.4.2011, exempted services means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under Section 66 of the Finance Act, 1994. He further submitted that the definition of exempted services was amended with effect from 1.4.2011 wherein it was defined that exempted service means taxable service which are exempt from whole of the service tax leviable thereon and includes services on which no service tax is leviable under Section 66 of the Finance Act, 1994 and taxable service whose part of the value is exempted on the condition that no credit of inputs and input services used for providing such taxable service, shall be taken and an explanation was also inserted to the Rule 2(e) saying that for the removal of doubts, it is hereby clarified that exempted services includes trading. He further submitted that even before 1.4.2011, trading was neither a manufacturing activity nor an output service and this view has been upheld by the Honble High Court of Madras in the case of M/s FLSmidthpvt., Ld. Vs. CCE, reported in 2014-TIOL-2186-HC-MAD-CX wherein the Honble High Court has categorically held that the Cenvat credit of service tax pertaining to common input services attributable to trading activity is not permissible. Earlier also the Tribunal in the case of M/s Orion Appliances Ltd. Vs. CST, Ahmedabad [2010-TIOL-752-CESTAT-AHM] has held that trading activity cannot be called a service and therefore, it cannot be considered as exempted service also.
6. After considering the submission of both the parties and perusal of record and the judgment of Honble High Court of Madras cited supra, I am of the considered view that the issue is squarely covered in favour of the Revenue by the judgment of the Honble Madras High Court. As far as the imposition of interest and penalty is concerned, since the appellant has not declared in their ST3 Return that input service credit was used in relation to trading and this amounts to suppression of facts and, therefore, extended period is correctly invoked as the appellant has followed the self assessment procedure and are taking credit on their own. Therefore keeping in view aforesaid discussion, I find no infirmity in the impugned order and the same is upheld by dismissing all the appeals of the appellant.
(Pronounced in the open court on 23/11/2016) (S. S. GARG) JUDICIAL MEMBER /vc/