Custom, Excise & Service Tax Tribunal
Infotech Enterprises Ltd vs Commissioner Of Customs ,Central ... on 17 June, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order . 20981 / 2014 Application(s) Involved: ST/Stay/20674/2014 in ST/20670/2014-DB Appeal(s) Involved: ST/20670/2014-DB [Arising out of order-in-original No. 90/2013-Adjn(Commr) dated 14/11/2013 passed by Commissioner of Central Excise and Service Tax , HYDERABAD-IV ] Infotech Enterprises Ltd 4th Floor, 'a' Wing, Plot No.11, Software Units Layout, Infocity, Madhapur, HYDERABAD - 500081 AP Appellant(s) Versus Commissioner of Customs ,Central Excise and Service Tax Hyderabad-iv POSNETT BHAWAN, TILAK ROAD, RAMKOTI, HYDERABAD, - 500001 ANDHRA PRADESH Respondent(s)
Appearance:
Mr. Sankar Bala, C.A. For the Appellants For the Respondent Mr. Ganesh Haavanur, A.R. CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 17/06/2014 Date of Decision: 17/06/2014 Order Per : B.S.V.MURTHY The appellant is engaged in providing services falling under categories of online information and data base access or retrieval service, maintenance or repair service, information technology service, survey and map making service etc. Substantial portion of the services are exported and appellant was claiming the benefit of unutilized CENVAT credit as refund. During the verification of CENVAT credit taken for the period from April 2008 to September 2009, according to the Revenue it was found that the credit was taken more than once for the same invoice. Further it was also observed that credit could be taken only on or after the date on which payment is made for the value of input service and the service tax paid or payable. In this case, it was found that the assessee had availed credit before making payment to the vendors. It is not in dispute that the appellant had deposited the entire credit wrongly availed by them with interest even before proceedings were initiated. The appeal is only against imposition of penalty. Even though learned A.R. vehemently opposed and requested that only stay may be granted, after going through the details of the records and the submissions, and keeping the fact that only penalty is involved for consideration and falls within a narrow compass and does not require any further details to be verified or checked up, we consider it appropriate that the matter may be finally decided at this stage itself Accordingly, the requirement of predeposit is waived and appeal itself is taken up for final decision.
2. As already observed above, in this case, only two issues are involved.As regards the availment of credit twice on the same invoice, the learned C.A. submitted that this observation is not at all correct. The department is treating the availment of CENVAT credit on the second occasion after the payment of service charges and tax was paid as availment twice on the same invoice. In any case, since there is no demand for tax, we consider that this issue need not have to be considered in depth by us. If there was a demand arising because of second time availment, and it was not paid before show-cause notice this was required to be considered by us. As regards the second issue, the learned Chartered Accountant submitted that appellant by mistake was following the practice of availing credit on the basis of accounting practice followed by them for the purpose of payment in respect of services received by them. Since they were following accrual method, as and when the invoice was received for service charges and tax, not only they would make appropriate entries in the ledgers, but also they would take credit in the CENVAT credit account. When this was pointed out, in all cases where the appellant had taken credit before making the payment of service tax, they paid the amount with interest and the amount paid with interest has been accepted and there is no dispute. He also submitted that appellants used to have substantial credit accumulated during the relevant period and therefore there was no intentional evasion or there was excess utilization even after taking the admissible credit only into account. The appellant paid the tax with interest even though they had not utilized the credit in view of the decision of the Honble Supreme Court that interest is payable even if the credit is not utilized.
The learned A.R. would submit that the issue as to whether the appellant had utilized the credit which was not available in their books as a result of wrong practice followed by the appellant has been considered by the Commissioner in paragraph 12.3 and 12.4 of the impugned order. He draws our attention to paragraph 12.4 in particular wherein the Commissioner has taken one entry as an example and has clearly shown that there is availment of credit without sufficient balance.
After going through the table produced in paragraph 12.3 of the Commissioners order, we find that the Commissioners order does not have one column which in our opinion is very important and which has been the cause of the wrong conclusion by the Commissioner. This is the opening balance in respect of each month. Because of not taking opening balance into account, the CENVAT credit available at the end of each month for utilization has become incorrect and as a result in that particular month which is examined by the Commissioner, there is excess utilization of credit vis-a-vis availability. Paragraph 12.4 is reproduced below for ready reference:
12.4 However, such a conclusion would be a flawed one because when the principle of first-in-First-out( FIFO) is applied, it is clear that cenvat credit has been utilized by the assessee. For instance, when the cumulative total of credit utilization reached Rs. 24,57,513/- in December 2008, the irregular credit taken in the month of May 2008 stands utilized. It is pertinent to note that the scheme of cenvat credit indirectly recognizes the generally accepted FIFO principle as relevant. For instance, proviso to rule 3(4) of the rules stipulates that while paying duty of excise or service tax, the cenvat credit shall be utilized only to the extent such credit is available on the last day of the month or the quarter. We also like to reproduce the worksheet produced by the appellant which shows how and why the Commissioners conclusion has become wrong.
In the month of December 2008, which the Commissioner has examined the credit utilization is Rs. 24,57,513/- which is the cumulative total whereas if we see the table produced by the appellant, in the month of December 2008, appellant had opening balance of more than Rs 1.55 crores and admissible credit for the month was more than Rs. 34,00,000/- and as against cumulative balance of credit of more than Rs. 1.89 crores, the appellant had utilized only Rs 76.686/-. It can be seen that CENVAT credit utilization month-wise tallies in both the cases and revised CENVAT credit taken by the appellant as per the eligibility norms also tallies in both the statements. Because the Commissioner has adopted the method of taking the cumulative total of credit utilized which is not the criteria for examining the CENVAT credit at all and he has not taken the opening balance into account and he has not calculated the available cumulative balance of CENVAT credit, the conclusion reached by the Commissioner has arisen. We find that submissions made by learned C.A. that there was no excess utilization at all during the relevant period is correct Under these circumstances what has happened is only an accounting error by the appellant and that mistake has been rectified by them by paying the entire amount with interest and correcting their account suitably. Such being the position, since the entire amount has been paid before issue of show-cause notice and initiation of proceedings, the appellant need not be visited with penalty also. In any case having regard to the facts and circumstances, we are very clear that this is not a fit case for imposition of penalty at all. Apparently the omissions were not intentional and rectified as soon as pointed out. Therefore penalty can be waived by invoking provisions of Section 80 of Finance Act 1994 also. In the result appeal is allowed by way of waiving the entire amount of penalty imposed on the appellant.
(Operative portion of the order has been pronounced in open court) S.K. MOHANTY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER Pnr....
5