Custom, Excise & Service Tax Tribunal
M/S New Allenberry Works vs Cce, Delhi-Iv on 28 April, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 25.3.2014
Date of Pronouncement : 28.4.2014
Appeal No. E/1182/2011-EX(SM)
[Arising out of the Order-in-Appeal No. 15/CE/Apl/DLH-IV/2011 dated 8.2.2011 passed by the Commissioner of Central Excise (Appeals), Faridabad)
For Approval & signature :
Honble Ms. Archana Wadhwa, Member (Judicial)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would 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 of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s New Allenberry Works Appellant
Vs.
CCE, Delhi-IV Respondent
Appearance Shri J.P. Kaushik, Advocate - for the appellant Shri R.K. Mishra, D.R. - for the respondent CORAM:Honble Ms. Archana Wadhwa, Member (Judicial) Final Order No.51803/2014 Per Archana Wadhwa :
The appellant is engaged in the manufacture of gears and gearboxes. The dispute in the present appeal relates to availability of Cenvat credit of service tax paid on rent of premises, which the appellant has taken for their job worker. As per the appellant, the job worker is exclusively doing the job for the company and the appellant has provided him the rented premises as also the machinery required for doing the job work. According to the appellant, the use of the rented premises is for furtherance of their business and is covered by the definition of input services. On the other hand, Revenue has observed that inasmuch as job worker is an independent entity and has entered into an agreement with the appellant, he cannot be held to be an extended arm of the appellant. As such, the credit of Rs.4,19,467/- availed by them during the period November 2007 to September 2009 stands denied to them by the impugned orders of the authorities below, along with imposition of penalty of identical amount.
2. After hearing both the sides duly represented by Shri J.P. Kaushik, ld. Advocate for the appellant and Shri R.K. Mishra, ld. D.R. for Revenue, I find that the dispute is in respect of the service tax paid on the rented premises, which the appellant hired for their job worker. As per the appellant the said job worker was earlier working from their premises and on account of shortage of space, he was provided a separate rented premises along with the machinery etc.
3. The question which arises is as to whether renting of premises for the job worker can be held to be an activity connected with the appellants business, so as to enable them to take the Cenvat credit of service tax paid on the same. Admittedly, the appellant is under no legal obligation to provide rented premises to the job worker. He has also entered into an agreement with the job worker for undertaking the job work. The raw materials moved to the job work premises and after processing, were returned to the appellants factory under the job work challans. Full procedure for movement of the goods is being followed by both the persons i.e. the appellant has also the job worker. This fact establishes that job worker is an independent person working on principle to principle basis with the manufacturer. If that be so, can the expression in relation to business, can be extended to such an extent so as to include the activities at the end an independent person as having relation to the appellants business. The answer would be a clear NO. Admittedly the business of any person is dependent or associated with the business activities of alliance/other connected persons. If the activities at the job workers end are considered to be activities related to the appellants business, there would be no end to the stretching of the said expression and the links in the chain would keep on increasing.
4. Viewed from the other side, if the rent of the premises occupied by job worker is paid by him only, whether the appellant would be entitled to avail the credit of the service tax paid on the same? Admittedly not, the appellant has extended the facility of the rented premises to its job worker out of his own sweet will. Such extended facility, along with installation of the machines would definitely have impact on the quantum of the job charges being charged by the job worker. Merely because the appellant has chosen to provide rented premises to his job worker, it cannot be said that such a facility extended to the job worker is associated with the appellants business and is covered by the definition of input services. As such, I find no merits in the appellants contention for availment of credit on the said activities.
5. However, I find that the demands stand raised for the period November 2007 to March 2009 by way of raising a Show Cause Notice on 4.6.2009 and for the period April 2009 to September 2009 by way of raising a Show Cause Notice on 18.11.2009. As such, it is seen that a part of the demand is barred by limitation. Admittedly, the appellant was availing the credit by reflecting the same in their statutory records as also in the returns filed with the department. Further the issue involved is also a bona fide dispute on interpretation of law and does not involve any clandestine activities. As such, no suppression, mis-statement or mala fide intention can be attributed to them so as to justifiably invoke longer period of limitation. Accordingly, I hold the demand to be barred by limitation. Inasmuch as a part of the demand falls within the limitation period, I direct the lower authority to quantify the same accordingly.
6. As regards penalty, I find that the issue involved is bona fide legal issue and does not reflect upon any mala fide intention on the part of the appellant. Accordingly, the penalty is set aside
7. Appeal is disposed in above terms.
(Pronounced in Court on 28.4.2014) (Archana Wadhwa) Member (Judicial) RM 5