Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise Pune-Ii vs M/S. I.J. Mathu Foods Pvt. Ltd on 2 March, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI APPEAL NO. ST/65,88/08 (Arising out of Order-in-Appeal No. PII/PAP/133/2007 dated 31.12.2007 passed by the Commissioner (Appeals) Central Excise, Pune-II For approval and signature: Honble Shri Ashok Jindal, 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 :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Yes
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
=============================================================
Commissioner of Central Excise Pune-II
:
Appellants
VS
M/s. I.J. Mathu Foods Pvt. Ltd.
Respondents
Appearance
Shri S.M. Vaidya JDR Authorized Representative
Shri M.H. Patil, Advocate For respondent.
CORAM:
Shri Ashok Jindal, Member (Judicial)
Date of decision : 02/03/2010
ORDER NO.
Per : Ashok Jindal, Member (Judicial)
The Revenue has filed these appeals against the impugned order set aside the order-in-original.
2. The brief facts of the case are that respondents are engaged in production of ready-to eat-meals and clearing the same export under bond. The respondents were registered as deemed service provider under Section 68(2) of the Finance Act, 1994 under the category of Business Auxiliary Service. A show cause was issued demanding service tax interest and penalty on the ground that the respondents has incurred Rs.40,66,127/- in foreign exchange towards advertising, publicity and promotion expenses for evaluation of prospective customers situated outside India to M/s. Utmost Foods LCC, Dubai and M/s. LEP International Pvt. Ltd. Australia during the period 2004-05 and 2005-06. The demand was made as service receiver under Rule 2(1)(d) (iv) of Service Tax Rules, 2004 as Business Auxiliary Service provided by a non-resident person providing services to Indian Client.
3. The learned DR submitted that the respondent is required to pay service tax as per Rule 2(1) (d) (iv) of the Service Tax Rules, 2002 which was introduced w.e.f. 16.8.2002 wherein a person other than the service provider is liable to pay the Service Tax where service provider has his business/fixed establishment or permanent address/usual residence outside India, has no office in India, it is the service recipient who has his business, fixed establishment or permanent address/usual residence in India, is required to pay service tax.
4. On the other hand Shri M.H. Patil learned Advocate appearing on behalf of the respondent submits that the recipient of overseas service not liable to pay service tax for period prior to 18.4.2006 before insertion of Section 66A of the Finance Act, 1994. To support this contention he placed reliance on Pashupati Spg.&Wvg. Mills Ltd. Vs. Commr. Of C. Ex. Chandigarh reported in 2009 (15) S.T.R. 274 (Tri.- Del.) wherein it was held that liability of the recipient on import of service is not leviable before 18.4.2006. In the case of M/s. Anant Spg. Mills also Tribunal has taken a same view he submitted that the case is covered by above two decisions and the Board Circular clarifying the issue. Hence appeals are liable to be rejected.
5. Heard.
6. I find that in the case of Hindustan Zinc Ltd. reported 2008 (11) S.T.R. 338 (Tri.LB) has held that the taxable service provided by the non-resident or from outside India, who does not have any office in India, having been specified as taxable service w.e.f.1.1.2005 under Notification No. 36/2004, recipient of such service could not be held liable for paying service tax prior to 1.1.05. Further in the case of M/s. Anant Spinning. Mills Vs. Commissioner of Central Excise, Bhopal reported in 2009 (14) S.T.R. 184 (Tri.-Del.). The Tribunal has held that in view of insertion of Section 66A of the Finance Act, 1994, offshore services cannot be subjected to Service Tax prior o 18.4. 2006. The Tribunal considered the Board Circular on the issue and extract of the same is reproduced here as under:-
. 6.8 We also noticed that there has been an amendment by way of inserting Section 66A in the Service Tax Provisions by the Finance Act, 2006 w.e.f.18.4.2006. There is no doubt that the services rendered are ultimately in relation to setting up of the LNG terminal in India. Nevertheless, no reliable evidence has been adduced to contradict the claim of the appellant that the services claimed by them as offshore services are not offshore services. Such offshore services are liable for tax consequent to the amendment w.e.f. 18.4.2006, but for earlier period the same will not be so.
6.9 Service Tax Circular No. 36/4/01 dt. 8.10.2001 holds that service provided beyond the territorial waters will not attract service tax. This circular will be relevant till the amendment brought out in service tax laws by insertion of Section 66A w.e.f. 18.4.2006. Therefore, the appellants contention that the demand on services relating to identified offshore services cannot be subjected to service tax during the relevant/period is acceptable.
7. As we find that the issues in the present appeal are squarely covered by the decision in the case of Foster Wheeler Engergy Ltd. cited supra, following the same, we allow the appeal with consequential relief. Inasmuch as we are allowing the appeal on merit, we are not going into the issue of limitation.
And further in the case of Indian National Shipowners Association Vs. Union of India reported in 2009 (13) STR 235 (Bom.), the Honble High Court of Bombay also held that recipient in India liable to service tax for service received from abroad only from 18.4.2006 after enactment of Section 66A of the Finance Act, 1994. I find that the issue has been decided by the Honble Bombay High Court in the case of Indian National Ship owners Association holding that recipient of service from outside India is liable for service tax only from 18.4.2006 and the same has been confirmed by the Honble Apex Court on 14.12.2009 reported in 2010 (17) STR J57(SC) In the present case, the period involved is prior to 18.4.06 hence the respondent are not liable to pay service tax as demanded in show cause notice as held by the Honble Apex Court. I do not find any force in the argument of the learned DR. Accordingly, the appeals are rejected.
(Pronounced in court) (Ashok Jindal) Member (Judicial) Sm 4