Custom, Excise & Service Tax Tribunal
Shanthi Gears Ltd vs Principal Commissioner Of Gst&Amp; ... on 30 August, 2018
1
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.: E/40817/2018
(Arising out of Order-in-Appeal No. CMB-CEX-APP-016-18 dated
16.01.2018 passed by the Commissioner of G.S.T. & Central Excise,
Coimbatore)
M/s. Shanthi Gears Ltd. : Appellant
Vs.
The Commissioner of G.S.T. & Central Excise, : Respondent
Coimbatore Commissionerate Appearance:-
Ms. D. Naveena, Advocate for the Appellant Shri. R. Subramaniyan, AC (AR) for the Respondent CORAM:
Hon'ble Shri P Dinesha, Member (Judicial) Date of Hearing/Decision:30.08.2018 Final Order No. 42509 / 2018 The appellants are manufacturers of gears, gear assembly and accessories and have availed CENVAT Credit of service tax paid on common input services during the period from 2011-12 to 2014-15. They also removed inputs such as spares to their customers on payment of duty on a value higher than the cost price. It was alleged that the said activity tantamounts to "trading" and that the 2 appellants were not eligible for credit on the same. It was further alleged that the assessee ought to have maintained separate accounts for common inputs/input services which have gone into the manufacture of both dutiable goods and exempted services and should have followed any of the three options as envisaged in Rule 6(3) of the CENVAT Credit Rules, 2004. Accordingly, a Show Cause Notice dated 04.04.2016 was issued proposing to demand 5%/6%/7% on the value of the exempted clearances during the said period, thereby invoking the extended period of limitation under Section 11A of the Central Excise Act, 1944. The Deputy Commissioner of Central Excise, Coimbatore-III, vide Order-in-Original dated 23.05.2017 confirmed the demand along with interest and also imposed penalty. Thereafter, the appellant did not meet with success in its first appeal before the Commissioner of G.S.T. & Central Excise (Appeals), Coimbatore, and therefore, is in appeal before this forum.
2. Heard Ms. D. Naveena, Ld. Advocate, appearing on behalf of the appellant and Shri. R. Subramaniyan, Ld. Department Representative (DR) appearing on behalf of the Revenue.
3. During the course of hearing, Ld. Advocate appearing for the appellant submitted that the issue involved in this case is no more 3 res integra since this very issue has been considered by this Bench in the appellant's own case for an earlier period, in Appeal No. E/42615/2017. She further pointed out that in the above case, this Bench of the Tribunal after considering the rival contentions has, in Final Order No. 41747/2018 dated 06.06.2018, ruled as under:
"5. It is seen from the submission made by both sides as well as the records that the appellants have reversed the credit, as under Rule 3(5), when they have cleared the goods as such. In a normal trading activity, the goods which are procured, are sold and there is no question of availing the credit of such goods or clearing them on the payment of duty. In the present case, the appellant has availed credit on the inputs and, in some circumstances, they were not able to use the goods in the manufacture of final products. They have opted to clear the goods as such, under the provision of Rule 3(5) by reversing the credit. The Tribunal, in the case of Suyash Auto Press Components and Assemblies Pvt. Ltd. (supra), had occasioned to consider a similar issue. The tribunal observed as under: -
'2. Shri Prasad Kshirsagar, learned Chartered Accountant appearing on behalf of the appellant submits that they are removing the input as such under Rule 3(5) of the Cenvat Credit Rules, 2004 on payment of excise duty which is equal to the cenvat credit. Therefore, Rule 6(3) should not be applied and accordingly the demand is not sustainable. He placed reliance on the following judgments: -
(i) CCE, Ahmedabad- II vs Inductotherm (I) Pvt. Ltd. - 2013 (1) ECS (26) (Guj-HC); = 2012-TIOL-929-HC-AHM-CX
(ii) AR Casting (P) Ltd. vs. CCE&ST, Chandigarh - (Service Tax Appeal No. 580/2008) (Tri. - Delhi); = 2010-TIOL-245-CESTAT-DEL
(iii) Chitrakoot Steel and Power Pvt. Ltd. vs. CCE - 2008 (125) ECC 188 (Tri. - Chennai)= 2008-TIOL-246-CESTAT-MAD
3. Shri S.J. Sahu, learned Assistant Commissioner (AR) appearing on behalf of the Revenue, reiterates the finding of the impugned order.
He emphasizes on para 6 of the impugned order. He further submits that all the judgements relied upon by the appellant have been dealt with by the learned Commissioner (Appeals) and the same have been distinguished.
4. I have carefully considered the submissions made by both the sides and perused the records. The Revenue has demanded the amount under Rule 6 equal to 5%/6% of the value of the traded goods i.e. steel 4 sheets sold to their vendor. There is no dispute that the said removal is governed by Rule 3(5) of the Cenvat Credit Rules, 2004. It is admitted fact that the appellant has cleared the said steel sheets on payment of duty. The department is considering the said clearances as exempted service being a trading activity. I find that though this removal of steel sheets is indeed a trading activity, but the said clearances were made on payment of excise duty. Therefore, it cannot be considered as an exempted service. Rule 6 applies on the trading activity only in a case when the goods are purchased and sold without taking credit and without payment of duty. Then only such trading will be considered as exempted service. In the present case, removal of input under Rule 3(5) was made admittedly on payment of duty. Therefore, there is no case of trading activity which is an exempted service. Accordingly, there is no application of Rule 6(3) of the Cenvat Credit Rules, 2004. Accordingly, the impugned order is set aside. The appeal is allowed.'
6. Following the same, I am of the view that the demand cannot sustain. The impugned order is set aside. The appeal is allowed, with consequential reliefs, if any."
4. I find that this very issue has been addressed by this Bench in the above case and therefore, going by the stare decisis of the same, I allow the appeal with consequential reliefs, if any.
(Operative part of the order was pronounced in open Court) (P Dinesha) Member (Judicial) Sdd