Custom, Excise & Service Tax Tribunal
M/S Beico Industries Pvt. Ltd vs Commissioner Of Central Excise, Nasik on 15 September, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. ST/396/12 (Arising out of Order-in-Appeal No. AKP/48/NSK/2012 dated 22.03.2012 passed by the Commissioner of Customs & Central Excise (Appeals), Nasik). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Beico Industries Pvt. Ltd. Appellant Vs. Commissioner of Central Excise, Nasik Respondent Appearance: Shri Prasad Paranjape, Advocate for Appellant Shri B.K. Iyer, Supdt. (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 15.09.2014 Date of Decision: 15.09.2014 ORDER NO. Per: Shri Anil Choudhary
This appeal arises from Order-in-Appeal No. AKP/48/NSK/2012 dated 22.03.2012 passed by the Commissioner of Customs & Central Excise (Appeals), Nasik.
2. The brief facts of the case are that the appellant is a manufacturer and registered under Central Excise Act and also under the Service Tax Act. During the period 2007-08 and 2008-09, the appellant had received Consulting Engineers Services as defined under Section 65(105)(g) of the Finance Act, 1994 from the service provider, who is located outside India. Service Tax was payable on such services received by the appellant as service receiver on reverse charge basis under Section 66A of the Finance Act, 1994. The appellant in its understanding that the said service is not taxable being received from outside India did not pay Service Tax, but the expenditure was shown in books of account. In the final accounts, the said expenditure was shown as incurred in foreign currency during the period 2007-08 and 2008-09. On query from the Revenue, the appellant informed that it had paid the amount being consultancy fee to one Dr. Er. Marco Ugazio of Italy for design and manufacturing of enameled wire machines, received by it. On being pointed out by the Revenue that Service Tax is payable on such expenditure/received from outside India, the appellant, without any protest, deposited the Service Tax with interest on 6.11.2010. The Revenue issued show-cause notice dated 21.2.2011 alleging suppression of facts and proposing to levy Service Tax on Consulting Engineers Services received by it from outside India during the period 2007-08 and 2008-09 and as to why not the proposed tax be appropriated against the deposit already made along with interest and as to why not penalty be imposed under Sections 76, 77 and 78 of the Finance Act, 1994.
2.1 The show-cause notice was adjudicated vide Order-in-Original dated 30.11.2011 whereby the proposed demand of tax and interest was confirmed and appropriated and further penalty was imposed under Section 77(1)(a) of the Finance Act of Rs.2,62,000/- for delay in obtaining the Service Tax registration for receiving Consulting Engineers Services from outside India and further penalty of Rs.5000/- under Section 77(2) of the Act and penalty equal to tax under Section 78 was imposed.
2.2 Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals), who vide the impugned order was pleased to reject the appeal upholding the Order-in-Original.
3. Being aggrieved, the appellant is before this Tribunal on the ground that no case of suppression of facts is made out against the appellant as the appellant had disclosed the services received in its books of account, further classified expenditure in foreign currency. Further, records of appellant were subjected to audit by the Revenue in February, 2008 and again in May, 2010 wherein no objection was made. It was further stated that the Commissioner (Appeals) has erred in holding that from the periodical returns of the appellant in Form No. ER-1 and ST-3, the Revenue cannot visualize that the appellant has paid the value of Consulting Engineers Services to the service provider in foreign currency and hence, the charge of suppression stands fastened against the appellant particularly in view of the era of self-assessment and self-compliance of law. Further, audit is done on test check basis and all the records of the appellant assessee cannot be said to have been verified by the Audit Party. The appellant further states that on being pointed out by the Revenue, had immediately taken registration under the said category and deposited the tax forthwith, which is evident from the facts on record. From para 1 of the show-cause notice, it is evident that the registration under the said category of service was granted on 2.11.2010 and the appellant had paid the Service Tax with interest on 6.11.2010 under the Consulting Engineers Services category. The appellant further states that the very issue of show-cause notice is bad in view of the provisions of Section 73(3) of the Finance Act, 1994, which provides that it the assessee have deposited the tax with interest either on its own motion or on being so pointed out by the Revenue officer with proper intimation, no further proceedings of adjudication by issue of show-cause notice is called far. The appellant also relies on the ruling of this Tribunal in the case of Commissioner of Central Excise Vs. Shantha Satelite Vision 2009 (13) STR 76 (Tri-Bang) and also on the ruling of the Hon'ble Karnataka High Court in the case of Adecco Flexione Workforce Solutions Ltd. 2012 (26) STR 3 (Kar), wherein it has been held that when Service Tax and interest have been paid before issue of show-cause notice, no adjudication is called for by issue of show-cause notice and no penalty is required to be imposed. It is further stated that taxation on reverse charge basis was under litigation and the law was settled only sometime in year 2008 pursuant to the decision of the Hon'ble Bombay High Court in the case of Indian National Shipowners Association, which was subsequently confirmed by the Hon'ble Supreme Court. Thus, he further urged that the situation is revenue neutral as the appellant was entitled to take credit of the tax deposited and utilized the same for clearance of the goods manufactured by it. Reliance is also placed on the ruling of this Tribunal in the case of Essar Steel Ltd. Vs. Commissioner of Central Excise, Surat-I 2009 (13) STR 579 (Tri-Ahmd), wherein the Division Bench of this Tribunal in similar facts and circumstances of receipt of service by the service receiver in India from outside India, this Tribunal found force in the argument of the assessee that the entire exercise is revenue neutral and the default is due to lack of coordination between the Head Office and the factory. Further, the assessee have suffered heavy amount as interest, which is not available to it as CENVAT Credit and thus, the contention that the Revenue should be set aside as to suppression of facts. Accordingly, extending the benefit of Section 80, penalty levied was set aside. Accordingly, it is prayed for allowing the appeal.
4. The learned AR appearing for the Revenue relies on the impugned order and further placed reliance on the ruling of this Tribunal in the case of Commissioner of Central Excise Vs. Baba Asia Ltd. 2011 (267) ELT 115 (Tri-Del), wherein the goods being Tobacco Essences manufactured and captively consumed for manufacture of final product, which was marketable and excisable, it was held that merely because the product is not carried to the market that itself will not be a criteria to hold the product to be non-marketable. It is also not necessary that the product should have more than one purchaser for consumption. In view of the National Calamity Contingent (NCC) duty on the intermediate product and exemption provided on the same vide Notification No. 52/2002-CE held to be not available, and the credit of NCC duty paid on such tobacco was available in manufacture of some products and not available in case of some product, it was held that every situation cannot be termed as revenue neutral. Accordingly, he prays for dismissal of the appeal.
5. Having considered the rival contentions, I find that in the facts and circumstances, no case of suppression is made out against the appellant. Further, as the appellant have declared the expenses of service incurred specifically in its books of account and final account and subjected to audit by Revenue twice before further enquiry made by the Revenue, no case of suppression or any intention to evade duty is attributable to the appellant. I further hold that as the appellant has paid the Service Tax along with interest, soon after being so pointed out by the Revenue and in less than 7 days on grant of registration under the specific head, no show-cause notice was required to be issued and adjudicated in terms of the clear mandate under Section 73(3) of the Finance Act, 1994. Thus, I hold that the show-cause notice is bad in terms of Section 73 of the Finance Act, 1994 and accordingly, I allow the appeal and set aside the impugned order.
(Dictated and pronounced in Court) (Anil Choudhary) Member (Judicial) Sinha 1