Custom, Excise & Service Tax Tribunal
Leotronics Scales Pvt.Ltd vs Cce, Chandigarh on 23 March, 2015
CUSTOMS, EXCISE AND SERVICE TAXAPPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066
CIRCUIT BENCH AT CHANDIGARH
Appeal No. ST/559/2009-Cus (DB)
(Arising out of OIA No.42/ST/APPL/09 dt.31.3.09 passed by CCE (Appeals), Chandigarh)
Leotronics Scales Pvt.Ltd. Appellants
Vs.
CCE, Chandigarh Respondent
Appearance:
Appellant: Ms.Krati Somani, Advocate Respondent: Shri Devender Singh, AR HonbleMr.P.K.Das, Member (Judicial) HonbleMr.P.S.Pruthi, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3. Whether their Lordships wish to see the fair copy of the order?
seen
4. Whether order is to be circulated to the Department Authorities?
Yes Coram:Honble Mr.P.K.Das, Member (Judicial) Honble Mr.P.S.Pruthi, Member(Technical) Date of Hearing/decision: 23.01.2015 FINAL ORDER NO.50894/2015 PER: P.S.PRUTHI The appellant is in appeal against the impugned Order-in-Appeal in which the Commissioner (Appeals) has confirmed the demand of Rs.5,09,888/- alongwith interest and imposed penalties under sections 75A, 77 and 78 of Finance Act. 1994.
2. The facts of the case are that the appellant are engaged in the manufacture of electronic Weigh Bridges. They are registered with the department under the category of Management, Maintenance and Repair service, Commercial or industrial construction services, and Transportation of goods by road service. They had executed annual maintenance contract with the parties to whom they sold weigh bridges. The Maintenance and Repair service was introduced in the Finance Act, 1994 with effect from 1.7.2003. In relation to annual maintenance contract signed before 1.7.2003, the appellant raised the bills prior to 1.7.2003 but the payments were received after 1.7.2003. The demand of Rs.1,83,510/- has been confirmed on the payments received after 1.7.2003 by invoking the extended period of limitation.
3. The other issue in the present case relates to availment of abatement of 67% on the value of Commercial and industrial construction service provided by the appellant in terms of condition of Notification No.15/2004-ST dated 10.6.2004 as amended by Notification No.1/2006-ST dated 1.3.2006. The issue was that the exemption provided in above notification was not applicable in cases where credit of duty paid on inputs and capital goods had been taken under the provisions of Cenvat Credit Rules. As the appellants had availed credit on inputs, capital goods and input services, the benefit of abatement in terms of notification was denied and demand of Rs.3,26,378/- for the period April to September, 2006 confirmed and penalties were imposed.
4. Heard both sides and perused the records.
5. Learned Counsel for the appellant contends that, on the first issue, the nature of annual maintenance contracts is such that it is not known when the service will actually be provided during the period of contract. As the bills were raised before 1.7.2003, the service should be considered as rendered before 1.7.2003 and only the payments were received after 1.7.2003. According to the ld.Counsel the weigh bridges installed by them are inspected before annual contract is executed. Thereafter their engineer made visit few times for examining the weighing equipment. Ld. Counsel relied on the case of P.T. Education & Training Services Ltd. vs. CCE, Jaipur-2009 (20) STR 34 (Tri.-Del.) to contend that the extended period of limitation is not applicable and penalties are not imposable as the case relates to interpretation of provision of law.
6. On the second issue, ld. Counsel refers to the judgement in the case of Hello Minerals Water (P) Ltd. vs. UOI -2004 (174) ELT 422(All.) and Chandrapur Magnet Wires Pvt.Ltd. vs. CCE-1996 (81) ELT 3 (SC) and U.B.Engineering Ltd. vs.CCE-2014-TIOL-2527-CESTAT-MUM in support of her view that if the credit is specifically reversed, the benefit of notification should not be denied.
7. Learned AR reiterated the finding of the Commissioner (Appeals). On the second issue, he relied on the judgement of the Supreme Court in the case of Amrit Paper vs. CCE, Ludhiana -2008 (12) STR 536 and Eagle Flask Industries Ltd. vs.CCE-2004 (171) ELT 296 (SC). In the first case, it was held that no credit of duty paid on inputs shall be allowed if the final product is exempted from the whole of duty of excise in terms of Notification No6/2000-CE and Rule 57C erstwhile of Central Excise Rules, 1994. In the second case, it was held that for availing the benefit under exemption notification, the conditions have to be strictly complied with.
8. We have considered the rival contentions.
9. On the first issue, we find that the Maintenance and Repair service was introduced in the Finance Act, 1994 with effect from 1.7.2003. The facts on record and adjudication proceedings do not reveal as to when the service was rendered physically under the annual maintenance contract. The contracts were signed before 1.7.2003 and bills were raised prior to 1.7.2003. But actually services may have been rendered by them prior to and after 1.7.2003. No delineation of services rendered before 1.7.2003 and after 1.7.2003 has been made. During the arguments, it appeared that such categorization is not available in the records. On merits there appears to be no doubt the service rendered after 1.7.2003 will be leviable to service tax. However, relying on the case of PT Education and Training Services (Supra), we hold that as the issue relates to interpretation of provision of law, imposition of penalty and extended period of limitation are not warranted. Thus the demand alongwith interest and penalties are set aside on limitation.
10. As regard the second issue, both sides have relied on the judgements including the Supreme Courts judgement. We have considered all the judgements. In the case of Amrit Paper the facts were that the manufacturer had availed the credit at the time of clearance of the goods and had suo-motu reversed/ availed exemption later on almost after 15 months when it claimed refund of modvat credit. In the case of Eagle Flask, it was held that for availing the benefit under notification, the conditions have to be strictly complied with and therefore exemption from operation of Rule 174 (rule requires declaration to be filed) was not available to the appellant. On the other hand, in the case of Chandrapur Magnet Wires Pvt.Ltd. (Supra), it was held in para 7 as under:
7. In view of the aforesaid clarification by the Department, we see no reason why the assessee cannot make a debit entry in the credit account before removal of the exempted final product. If this debit entry is permissible to be made, credit entry for the duties paid on the inputs utilised in manufacture of the final exempted product will stand deleted in the accounts of the assessee In such a situation, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manfuacture of the final exempted product under Rule 57A. In other words, the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manfuacture of these goods.
11. Perusing the facts of the three cases referred above, we find that the facts in the case of Chandrapur Magnet Wires Pvt. Ltd. are more similar to the facts of the case at hand. Therefore following by the ratio of Chandrapur Magnet Wires pvt. ltd. (supra), we set aside the demand of service tax of Rs.3,26,378/- along with penalties. However, we direct to pay interest on amount of credit availed from the date of availment upto the date of reversal of credit.
12. The appeal is disposed of in the above terms.
(Pronounced in the court)
(P.S.PRUTHI) (P.K.DAS)
MEMBER (TECHNICAL) MEMBER(JUDICIAL)
mk
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