Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Salem vs M/S. Sakthi Sugars Ltd on 7 April, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
E/392/2009
[Arising out of Order-in-Appeal No.85/2009-CE(SLM), dated 11.06.2009 passed by the Commissioner of Central Excise (Appeals), Salem]
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 Member wishes to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Commissioner of Central Excise, Salem
Appellant
Versus
M/s. Sakthi Sugars Ltd
Respondent
Appearance:
Shri Parmod Kumar, JC(AR) Shri S.M.V. Raman, Adv.
For the Appellant For the Respondent CORAM:
Honble Shri P.K. Das, Judicial Member Date of hearing : 07.04.2014 Date of decision : 07.04.2014 Final Order No.40399/2014 Revenue filed this appeal against Order-in-Appeal No.85//2009-CE(SLM), dated 11.06.2009 passed by the Commissioner of Central Excise (Appeals), Salem whereby the adjudication order was set aside.
2. The relevant facts of the case in brief, are that the respondents are engaged in the manufacture of Sugar, Molasses etc., and availed Cenvat credit benefit. The respondent received service from the foreign service provider in connection with the issue of Foreign Currency Convertible Bonds (FCCB) under the category of Merchant Banking Services. It was detected by the Central Excise officer of DGCEI that the respondent had not paid the tax. Upon detection, the respondent paid the tax by TR-6 challan, dated 31.05.2007 of Rs.25,54,160/-. The respondent availed input service credit on the basis of the said TR-6 challan. A show-cause notice dated 29.05.2008 was issued to disallow the said credit mainly on the ground that the TR-6 challan evidencing payment of tax as a result of an offence case is not eligible document for availing credit under Rule 9(1)(b) of Cenvat Credit Rules, 2004. Adjudicating authority confirmed the demand of Rs.25,54,160/- along with interest and also imposed a penalty of Rs.5 lakhs. Commissioner (Appeals) set aside the adjudication order. Hence, the Revenue filed this appeal before the Tribunal as to whether or not TR-6 challan evidencing payment of tax after detection of offence case is eligible document for availing Cenvat credit under Rule 9 (1)(b) of the Rules, 2004.
3. The learned Authorised Representative on behalf of the Revenue reiterates the grounds of appeal. It is submitted that the respondent paid the service tax upon detection by the DGCEI. He submits that Rule 9(1)(b) would restrict the eligibility of Cenvat credit in respect of supplementary invoices, on account of any short levy or non-levy by reason of fraud, collusion or willful mis-statement, which will be applicable in the present case. He also submits that Rule 4A of the Service Tax Rules, 1994 provides that every person shall issue invoice or a challan, not later than 14 days from the date of completion of such taxable services. In the present case, the respondent issued TR-6 challan evidencing payment of tax after 14 days of taxable service, as a result of offence case. It is not an eligible document for availing credit. The learned Authorised Representative particularly drew the attention of the bench to paragraph 3.5 of the Grounds of appeal. Hence, the applicant is not eligible to avail credit on the basis of such challans.
4. On the other hand, the learned counsel on behalf of the respondent submits that they have availed credit on the basis of challan, which is specified document under Rule 9(1)(e) of the Cenvat Credit Rules, 2004. It is submitted that by Notification No.13/2011-CE(NT), dated 31.03.2011 clause (bb) was inserted in Rule 9 of the said Rules, 2004, by which challan was included for recoverable Cenvat credit on account of fraud or collusion etc. In the present case, the period of dispute is much before the notification dated 31.03.2011. He further relied upon the decision of the Tribunal in the case of Commissioner of Central Excise, Coimbatore Vs M/s. Metafab & 3 Ors., dated 11.04.20-05. He further submits that Rule 4A is applicable in respect of taxable services to be provided or to be distributed on invoices, bill or challan, which is not applicable in the present case.
5. After hearing both sides and on perusal of records, I find that the issue involved in this case is whether the respondent is eligible to avail credit on the basis of TR-6 challan during the month of May, 2007 which was paid after detection by the DGCEI officer.
6. The findings of the Commissioner (Appeals) is reproduced below:-
With regard to Lower Authoritys observation that the TR-6 challan evidencing payment of Service Tax involved in an offence case is not an eligible document in terms of Rule 9(1)(b) of CCR, 2004, Appellants contended that the provisions of Rule 9(1)(b) of CCR, 2004 are not applicable to Service Tax. The contention of the Appellants is acceptable for the reason that the clause (b) of Rule 9(1) of CCR, 2004 dealing with a supplementary invoice does not cover Service Tax and also that the Explanation given under clause (b) is applicable only to cases covered under clause (b) and not to other documents like TR-6 Challan for payment of Service Tax enumerated under clauses (e), (f) and (g) of Rule 9(1) of the CCR, 2004 as held in JSW Steels Ltd Vs. CCE, Salem [2009 (14) STR 310 (Tri.-Chennai). As such, the order of the Lower Authority holding that TR-6 challan involved in an offence case is not eligible document for availing Cenvat credit is not sustainable and is liable to be set aside. According to the Revenue credit of service tax was denied on the basis of documents, which was not issued in the normal course of business transaction. It has strongly relied upon the provision of Rule 9(1)(b) of the Rules, 2004, where the restriction was imposed for taking the credit on supplementary invoice issued not in the normal course of business. It is also contended that Rule 4A of the Service Tax Rules, 1994 stipulated to issue the challan within 14 days from the date of completion of such taxable service. In the present case, the respondent issued challan after 14 days of such taxable services and, therefore, it could not be treated as challan under Rule 9(1)(b) of Rule, 2004. There is no dispute that Rule 9 (1)(e) permitted to avail credit on the basis of a challan. A challan evidencing payment of service tax by the person liable to pay service tax under [sub-clauses (iii), (iv), (v) and (vii)] of clause (d) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994. Notification No.13/2011 (supra) after clause (b) of Rule 9(1), clause (bb) was inserted as under:-
(bb) a supplementary invoice, bill or challan issued by a provider of output service, in terms of the provisions of Service Tax Rules, 1994 except where the additional amount of tax became recoverable from the provider of service on account of non-levy or non-payment or short-levy or short-payment by reasons of fraud or collusion or willful mis-statement or suppression of facts or contravention of any of the provisions of the Finance Act, or of the rules made thereunder with the intent to evade payment of service tax. So, it is apparent that after insertion of clause (bb) in Rule 9(1) Notification No.13/2011 supra, credit can be denied on a challan availed on account of fraud, collusion etc.
7. The Tribunal in the case of M/s. Metafab (supra) while dealing with Notification No.6/97-CE wherein Rule 57E of the erstwhile Rules was amended, whereby fraud, collusion, suppression of facts etc., were incorporated as ground for denying the benefit of Rule 57E to a manufacturer of final product receiving inputs on which initially duty had not been paid or had been short-paid on account of fraud, collusion, suppression of facts etc. In that case, The Tribunal has observed that the said amendment was not applicable prior to the date of Notification. Similarly, in the present case, the denial of credit on the basis of a challan for the reason of fraud, collusion, suppression of facts etc., would not be applicable prior to the notification dated 31.03.2011. Hence, I am unable to accept the contention of the learned Authorised Representative. Hence, in the present case, the respondent availed credit on the basis of the challan as specified under Rule 9(1)(e) which cannot be denied.
8. In view of the above discussion, I do not find any reason to interfere with the order of Commissioner (Appeals). Accordingly, the appeal filed by the Revenue is rejected.
(Dictated and pronounced in open court) (P.K. DAS) JUDICIAL MEMBER ksr DRAFT Remarks I II III Date of dictation 04.04.2014 Draft Order - Date of typing 08.04.2014 10.07.2014 Received the DFA for fair typing on 10.07.2014 Fair Order Typing 11.07.2014 Date of numbering and date of dispatch 17.07.2014 E/392/2009 9