Custom, Excise & Service Tax Tribunal
M/S. Cmc Ltd vs Cc,Ce&St(Appeals-Ii), Hyderabad on 21 October, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Court I(DB) Date of Hearing:21/10/2013 Date of decision:21/10/2013 Application No.ST/Stay/394/2012 Appeal No.ST/632/2012 (Arising out of Order-in-Appeal No.6/2012 dt. 21/01/2012 passed by CC,CE&ST(Appeals-II), Hyderabad) M/s. CMC Ltd. ..Appellant(s) Vs. CC,CE&ST(Appeals-II), Hyderabad ..Respondent(s)
Appearance Mr. I.S. Karthikeyan, Advocate for the appellant.
Mr. N. Jagdish, Superintendent(AR) for the respondent.
Coram:
Honble Mr. B.S.V. Murthy, Member(Technical) Honble Mr. Anil Choudhary, Member(Judicial) FINAL ORDER No.26802/2013 [Order per: B.S.V. Murthy] During the period from April 2010 to March 2011, there was a mistake on the part of the assessee. While filing the return, in column 5a & 5b, which are meant for showing the credit taken and credit utilized, they were showing 0. This, according to the appellant, happened because the system refused to accept the figures of opening balance while preparing the return and therefore they entered it as 0. Finally when the matter could not be sorted out, according to the appellant, after filing the returns, they approached the Commissioner and as per advice, they took the entire amount of CENVAT credit involved in the two returns as credit taken in the month of April 2011 and showed the same as debit entry. When this fact became known to the Superintendent of Central Excise in charge of assessees unit, the Superintendent informed them that since there was no balance in their account during the earlier period when they had foiled the two returns period and they had utilized CENVAT credit of more than Rs.89 lakhs, they should pay interest on the amount so-utilised by them which came to Rs.14,55,451/-. On receipt of the said letter, the assessee filed an appeal before the Commissioner(Appeals), the Commissioner has confirmed the view taken by the Superintendent and asked the assessee to pay the interest amount demanded by the Superintendent.
2. After hearing both sides for considerable time, we find that the appeal itself can be decided and therefore we waive the requirement of pre-deposit and take up the appeal for final decision. First of all, we have to appreciate the fact that the assessee in this case has not even insisted upon the show-case notice being issued and based on the letter they have contested the issue. Even though they could have canvassed a stand that no show-cause notice has been issued and therefore they are not liable to pay the interest, they have not done so. On going through the returns we find that in the returns, the debit entries have made by them and the same has been reflected in columns 4a & 4b of the service tax returns. However, the corresponding entries in columns 5a & 5b were showing as 0. This led to a situation whrein it can be concluded that the assessee did not have any balance in the CENVAT credit account but nevertheless made debit entries towards the duty liability. Consequently if we look at the returns, without looking at other documents in this case, it would appear that the stand taken by the Department that the assessee should have paid interest to be correct. However, in this case, the facts according to the learned counsel are that the return could not be filed properly because of the problem in the computerized system of filing return. However the appellant had maintained CENVAT credit account and the credit had been taken during the relevant period, input services had been received and utilized for providing output service. Further it was also submitted that there is no dispute that the appellant did not receive input services or utilized the same. The only question that arises is whether the assessee had maintained proper documents/records for this purpose. On going through the order of the Commissioner(Appeals), in paragraph 4 of the order, the Commissioner has summarized the submissions made by the appellants which are reproduced below:-
It is submitted that the tax was not captured while generating the return. The certificate in support of this claim issued by the Chartered Accountant certifying that the amount has been paid through CENVAT is also submitted at page No.414 of the paper book. The error happened on the account of newly introduced ACES for which they were not familiar.
They have filed the revised return on October 18, 2011 in compliance to the observations of the Superintendent, Service Tax.
The procedural lapse can be condoned as the credit has been availed and utilized even in their books of account supported by certificate of CA. Therefore, in the light of Honble CESTAT decision in the case of Park Digital Color Lab Vs. CCE, Madurai [2011-TIOL-1368-CESTAT-MAD] dt. 01/07/2011, they can do so. Alternatively, the revised return filed beyond 90 days can also be accepted as held by Honble CESTAT in the case of Ceolric Services Vs. Commissioner of Service Tax, Bangalore [2011(23) STR 369 (Tri. Bang.)]. In case the late returns are accepted they are also willing to pay the penalty under Rule 7C as applicable.
3. Today when the matter was being heard also, the learned counsel drew our attention to pages 151 onwards in the paper book wherein they have produced copies of CENVAT account maintained by them. Besides as observed and noted by the Commissioner, they have also produced the Charted Accountants certificate certified that they have maintained the account and credit has been taken in that account and debits have been made. Under these circumstances, what emerges from the facts of this case and after going through the records and after hearing the learned counsel, is that, the appellant had maintained the CENVAT credit account and they have taken the credit on the relevant dates and they have also made debit entries and they have also reflected the same in the column 4a and 4b. The only problem that has arisen is column 5a and 5b of the return could not be filled because of the difficulty in taking opening balance and difficulty in making entries. According to Rule 9 of CCR, what is required for availing CENVAT credit is, input service should have been received, the documents should be the one which are recognized as acceptable for availing CENVAT credit and input services should have been utilized for providing the output services. There is not even a whisper about any problem in these areas. The only problem the Department seems to be having is that in the returns filed there is a mismatch between the two columns as discussed above. Since there is substantive with the law except for filing the wrong return, we do not agree with the stand taken by the Revenue that appellant should pay interest. Even though, the learned AR vehemently argued that interest is payable, we are not convinced because of the reasons given above and we are also not able to agree with the view that the only when the return is filed and debit entry is shown in the return, it can be said that duty has been paid. If there is substantive compliance with the law and in fact the services have been received and credit entries and debit entries are made in the returns, in our opinion, just because of some omission in the returns, there cannot be a situation wherein an assessee is to be treated as not having paid the service tax at all. Unfortunately, there is no penal provision invoked and no penalty has been imposed, which in our opinion could have been justified especially in view of the arguments advanced by the learned AR that the assessee is at fault since when they faced problems in filing the returns on system, they could have filed returns manually and in such a case legally they would have been perfectly correct. However, in the absence of invocation of penal provisions, there is nothing that can be done at this point. In the result, the appeal is allowed.
(Pronounced and dictated in open court)
( ANIL CHOUDHARY) (B.S.V. MURTHY)
MEMBER(JUDICIAL) MEMBER(TECHNICAL)
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