Custom, Excise & Service Tax Tribunal
Mangalore Refinery And Petrochemicals ... vs Commissioner Of Central Excise And ... on 19 June, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/407/2012-SM, E/408/2012-SM [Arising out of Order-in-Appeal No. 151/2011 dated 17/11/2011 passed by the Commissioner of Central Excise (Appeals), Mangalore.] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, 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? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes MANGALORE REFINERY AND PETROCHEMICALS LTD KUTHETHOOR P.O.VIA KATIPALLA, MANGALORE 575030 Appellant(s) Versus Commissioner of Central Excise and Service Tax MANGALORE 7TH FLOOR, TRADE CENTRE, BUNTS HOSTEL RD., MANGALORE 575 003. KARNATAKA Respondent(s)
Appearance:
Mr. T.V. Ajayan, Advocate RAVISHANKAR & CHANDER KUMAR ADVS #504, 4TH FLOOR, OXFORD TOWERS, 139 OLD AIRPORT ROAD, KODIHALLI, BANGALORE - 560008 KARNATAKA For the Appellant Mr. S. Teli, Dy. Commissioner (AR) For the Respondent Date of Hearing: 19/06/2015 Date of Decision: 19/06/2015 CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER Final Order No. 21411-21412 / 2015 Per : ARCHANA WADHWA The appellant is engaged in refining of petroleum crude oil and manufacture of various petroleum products classifiable under Chapter 27 of the Schedule to the Central Excise Tariff Act, 1985.
2. The appellant received works contract services for the purpose of construction of first floor building of Kalavar Higher Primary School as also for construction of houses of Scheduled Caste (SC) and Scheduled Tribe (ST) colony in Madhya Village. The service tax paid on the services so received by them was taken as credit during the period December 2007 to February 2009 as also during the period March 2009 to February 2010.
2.1 They were issued two different show-cause notices. One dated 4.3.2010 for the first period, thus invoking the longer period of limitation and the second show-cause notice dated 29.3.2010, for the normal period of limitation. The said notices proposed denial of CENVAT credit of service tax paid by the appellant on the ground that construction of primary school as also ST/SC colony has no nexus with the appellants activities of manufacture of petroleum products. As such, the same cannot be considered to be covered by the definition of input service.
2.2 The said show-cause notices culminated into an order passed by the original adjudicating authority and upheld by Commissioner (A). Hence the present two appeals.
3. After hearing both the sides duly represented by Shri T.V. Ajayan, Advocate for the appellants and Shri S. Teli, Dy. Commissioner (AR) for the Revenue, I find that the dispute in the present appeal relates to payment of service tax in respect of services of construction of school and SC/ST colony availed by the assessee. Learned advocate submits that such activities of the appellant are connected with community development services and should be treated as activities relating to business. Accordingly, he submits that the same are covered by the definition of input services. He also assailed the first order on the point of limitation.
3.1 Though it is well settled that the definition of input services is too broad and the expression relating to business, as appearing in the said definition has to take into its ambit the services which are even remotely connected with the appellants business. The reference can be made to Honble Karnataka High Court decision in the case of CCE, Bangalore vs. Millipore India Pvt. Ltd.: 2012 (26) STR 514 (Kar.) wherein the canteen services provided to the staff were held to be input services. However, I find that for any service received by an assessee, it has to have nexus howsoever remote, with his business activities. In the present case, the appellant is engaged in the manufacture of petroleum products. The construction of the first floor of a school and the construction of colony for the SC/ST cannot be said to be having any nexus, whatsoever, with the manufacturing activity of the appellant. Even if the said construction activities, which are in the nature of community developments, were not taken by the appellants, the appellants activity of manufacture and sale of excisable goods would have continued. Similarly the said construction activity has no connection with the appellants business of manufacture and sale of their final product. The definition of input services cannot be stretched to such an extent that it is becomes practically illogical. If such an extended meaning is given to the said definition so as to include all the activities of the appellants, whether or not relatable to his business, the definition would lose its meaning, intended to be given by the legislation. I find no justifiable reasons to interfere in the impugned order of the lower authorities holding the said activities as non-cenvatable services.
3.2 However, I find favour in the appellants contention of the first demand being barred by limitation. Admittedly the entire credit was availed by the appellant by reflecting the same in the statutory records as also in the monthly returns filed by them. Otherwise also, I find that the appellant is a public sector undertaking and there can be no mala fide intent on their part to avail the irregular and non-available credit. There being no positive evidence on the part of the assessee to show that there was any suppression or mis-statement with any mala fide intent, I hold the first demand to be barred by limitation. For the same reasons, the penalty imposed upon the appellant is also set aside along with setting aside the demand raised and confirmed in respect of show-cause notice dated 4.3.2010.
3.3 As regards the demands relatable to the second show-cause notice dated 29.3.2010, the entire period falls within the limitation. The same is accordingly confirmed. However, no penalty is imposable on account of absence of any mala fide.
In view of the above, both the appeals are disposed of in above terms.
(Order pronounced in open court on..) ARCHANA WADHWA JUDICIAL MEMBER rv 2