Custom, Excise & Service Tax Tribunal
Cce Belapur vs Bharat Bijlee Ltd on 19 September, 2017
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
E/87252/15
(Arising out Order-in- Appeal No. CD/514/BEL/2015 dated 19.05.2015 passed by the Commissioner of Central Excise (A), Mumbai II)
For approval and signature:
Honble Shri Raju, Member (Technical)
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 No 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?
CCE Belapur
Appellant
Vs.
Bharat Bijlee Ltd.
Respondent
Appearance:
Shri V.K. Agarwal, Addl. Commissioner(AR) for the appellant Ms. Mansi Patil, Advocate for the respondent CORAM:
Honble Shri Raju, Member (Technical) Date of hearing : 24.08.2017 Date of decision : 19.09.2017 O R D E R No: ..
Per: Raju This appeal has been filed by Revenue against order of Commissioner (Appeals) dropping the demand of reversal of cenvat credit in respect of input services used attributable to trading activity.
2. Ld. AR relied on the grounds of review. He further argued that the issue is squarely covered by the decision of the Tribunal in case of Godfrey Phillips India Ltd. & Ors. vide Order no. A/93158-93161/16/EB dated 14.10.2016. in the said case, penalty as well as extended period of limitation was upheld.
3. Ld. Counsel for the respondents argued that they are engaged in manufacture as well as trading activity and certain common services are used for the said purpose. She argued that trading activity has been included in the activity of exempted services only from 01.04.2011 and for the period prior to that no reversal of cenvat credit is required in respect of input services attributable to trading activity. She further argued that they have reversed the cenvat credit required along with interest and filed a letter dated 16.03.2011 accepting their liability. She also relied on the decision of Tribunal in the case of Kundan Cars 2016 (43) STR 630. She further argued that no penalty should be imposed in these circumstances.
4. I have gone through the rival submissions.
5. I find that the issue is squarely covered by the decision of the Tribunal in Godfrey Phillips India Ltd. & Ors. (supra). In para 3.4 and 3.5 of the said decision, following has been observed:-
3.4 Learned AR relied on the decision of the Tribunal in the case of SKF India Ltd. vide Order No. A/947-948/15/EB dated 28.4.2015 and on the decision of the Tribunal in the case of Clariant Chemicals (I) Ltd. Vs. Commissioner of Central Excise, Pune-I vide Order No. A/3360/15/EB dated 15.10.2015. He argued that decision cited by the appellants were in reference to situation where only exempted services or exempted goods were cleared. The decision in the case of SKF India (supra) and Clariant Chemicals (supra) have been given after considering the traded activities as well. In the case of SKF India Ltd., the Tribunal has observed as under: -
15. The next contention of the appellant was that the credit relating to categories of services specified in Rule 6(5) of the Cenvat Credit Rules, 2004 shall be allowed. We have gone through the said Rule 6(5). Said sub-rule starts with non-obstanta clause with reference to sub-rule (1), (2) & (3) of Rule 6. Eligibility of credit is defined in Rule 3 read with definition in Rule 2(l). It is only after that various questions in Rule 6, come into play. Rule 6(5) cannot be read in isolation but has to be read in the overall scheme of the things. The overall scheme of CENVAT Credit is with reference to the manufacturing activity or providing of output service. The Cenvat Credit Rules are not with reference to the trading activities. In the present case, the dispute is between the manufacturing activity and that relating to trading activity. We, therefore, out rightly reject the contention of the appellant. In case of Clariant Chemicals, the Tribunal has observed as follows: -
18. Learned counsel for the appellant has submitted that they should be given the benefit of the then Rule 6(5) of the Cenvat Credit Rules, which provides entire credit of service tax in respect of specified services, unless such service is used exclusively in or in relation to manufacture of exempted goods or providing exempted service. As noted earlier, even the appellants contention is that they were providing exempted service or not, manufacturing exempted goods, but they were providing trading service. In our view Rule 6(5) is not relevant in the facts of the present case. 3.5 We find that the issue regarding interpretation of sub-rule (5) of Rule 6 of Cenvat Credit Rules, 2004 is no longer res integra. In view of the above, respectfully following the decisions of the Tribunal on the issue, we hold that benefit of Rule 6(5) of Cenvat Credit Rules, 2004 cannot be extended in respect of trading activities. The said credit needs to be reversed in proportion to the trading turnover and the total turnover. Relying on the aforesaid decision, demand of reversal of cenvat credit is sustained.
6. I also find that in the said decision with respect to imposition of penalty following has been observed:-
5. We find that in the case of Clarient Chemicals (Supra) the tribunal was dealing with similar situation and upheld the invocation of extended period. The tribunal in the said case observed as follows: -
19. Another contention of the learned counsel is relating to limitation viz: demand is issued invoking the extended period of limitation. It is an admitted position that the appellant was registered as input service distributor and the fact that the appellant was also undertaking trading activity was suppressed from department and this has been admitted by the Director of the Company. Thus, there is a suppression of fact and in our view the extended period of limitation is correctly invoked.
20. We have also gone through the findings of the Commissioner relating to the extended period of limitation and we entirely agree availment of cenvat credit the primary responsibility that the credit has been correctly taken is on the manufacturer or availer of cenvat credit as per Rule 9 (5) and 9 (6). Rule 9 (5) very clearly provides that the burden or poof regarding admissibility of the cenvat credit shall lie upon the manufacturer or provider of output service taking such credit. In view of this position, we have no hesitation in holding that the extended period of limitation has been correctly invoked. We also note the judgement of Hon'ble Madras High Court in the case of F.L. Smidth Pvt. Ltd. (supra). For the same reason, the penalty imposed under Rule 15 of the Cenvat Credit Rules read with Section11AC of the Central Excise Act is in order. We also note, as far as the demand of Rs.1,11,444/- is concerned, appellant has already admitted that the demand of Rs.49,731/- as these have nothing to do with the manufacture of goods. As far as the remaining demand is concerned, which is relating to the security broker service, etc. For the reasons stated earlier, the same is upheld. Penalty imposed in respect of the same is also upheld. It is the primary responsibility of the assessee to take/reverse the credit correctly. The provisions require reversal of credit in these situations. The appellants have not reversed any credit on their own and only when they were investigated that they have reversed as per their own calculation. There was no doubt regarding liability to reverse. In this appeal also they are contesting merely the quantification and not liability to reverse. In these circumstances the extended period has been rightly invoked. The penalty on the appellant company is upheld.
7. Relying on the said decision, penalty and the extended period of limitation is also upheld. The appeal of revenue is allowed.
(Pronounced in Court on ..............................) (Raju) Member (Technical) //SR
- 6 -
E/87252/15