Custom, Excise & Service Tax Tribunal
Reliance Industries Ltd vs Commissioner Of Central Excise on 3 March, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II Appln.No.E/S/92724/14 APPEAL No.E/85336/14 (Arising out of Order-in-Original No.79-81/COMMR/(BKS)/LTU-M/Ex/2013 dated 23/10/2013 passed by Commissioner of Central Excise & Service Tax, LTU, Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Anil Choudhary, 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 :Yes 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? ========================================
Reliance Industries Ltd., Appellant Vs. Commissioner of Central Excise, Respondent & Service Tax (LTU) Mumbai Appearance: Shri.J.C.Patel, Advocate for appellant Dr.B.S.Meena, Addl. Comm. (AR), for respondent CORAM:
Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr.Anil Choudhary, Member (Judicial) Date of Hearing : 03/03/2014 Date of Decision : 03/03/2014 ORDER NO Per: P.R.Chandrasekharan
1. The appeal and stay petition are directed against Order-in-Original No.79-81/COMMR/(BKS)/LTU-M/Ex/2013 dated 23/10/2013 passed by Commissioner of Central Excise & Service Tax, LTU, Mumbai.
2. Vide the impugned order, Cenvat Credit amounting to Rs.2,39,47,069/- has been denied to the appellant mainly on the ground that the appellant has not been able to establish the nexus between the services availed and the manufacturing operations undertaken by them. Further, interest on the amount has been confirmed apart from imposing penalties on the appellant. Aggrieved of the same, the appellant is before us.
3. The learned Counsel for the appellant submits that various services on which the service tax credit has been denied and the amount denied are as given below. In respect of insurance coverage to dependent parents of the employees, the appellant has already reversed credit taken along with interest:
No. Show Cause Notice Services in respect of which credit is denied Amounts Remarks
1. 19.02.2010 Insurance of employees stationed abroad 1,77,844.14 insurance coverage given to dependent parents of Leader employee and insurance of spouse and family members of employees.
95,151.00 Rs. 95,151 along with interest of Rs. 58,626/-
Summer Trainees 278.10 273273.24
2. 30.04.2012 Aircraft refueling liability policy 30,62,980.83 comprehensive off shore package policy 2345479.32 Container policy 901.26 insurance coverage given to dependent parents of Leader employee and insurance of spouse and family members of employees 1841421.17 (correct amount Rs. 18,19,412.00) 18,19,412 along with interest of Rs. 7,70,517 Enterprise Secure Package Policy 65010.96 Fire and allied peril insurance of stock 19357.57 Insurance of building of factory township 14878.30 Motor Vehicle Insurance 1891415.46 Insurance of public liability industrial risk 74533.67 Refueller insurance policy 288695.70 Standard fire and special perils insurance 170880.47 Stock Insurance 271329.53 Survey fees 37002.77 Third party liability (offshore and onshore) 10863678.50 Aviation fleet/aircraft related insurance 2368098.47 2,33,15,663.98
3. 02.05.2013 comprehensive off shore package policy 332102.16 Standard fire and special perils insurance 25018 Survey Fees/Professional fees/Chartered Engineer 92.92 Comprehensive petrol pump policy 919 358132.08 3.1 The learned Counsel contends that all these services availed relate to their manufacturing operations and bulk of the demands pertain to the period prior to 01/07/2011. Without availing these services, business operations of the appellant could not be carried out at all. He further submits that all these expenses incurred formed part of value of the products sold on which excise duty liability has been discharged and they have furnished before the adjudicating authority. Cost Accountants Certificate dated 27/10/2012 (for the period November 2008 to March 2012) and certificate dated 23/05/2013 (for the period April 2012 to February 2013) wherein it has been certified that the cost of production of the products manufactured by the appellant includes all these expenses and they have discharged duty liability on these final products, on a price inclusive of these costs. However, the learned adjudicating authority has not considered these submissions made by the appellant nor given any findings. He has simply brushed aside the contention of the appellant and has concluded that there is no nexus between the services availed and the manufacturing operations undertaken. Therefore, the denial of Cenvat Credit vide the impugned order is not sustainable. Accordingly, he pleads for grant of stay.
4. The learned Additional Commissioner (AR) appearing for the Revenue reiterates the findings of the adjudicating authority.
5. We have carefully considered the submissions made by both the sides. As the issue lies in a narrow compass, we take up the appeal itself for consideration and disposal after waiving the requirement of any pre-deposit. 5.1 Prima facie, we find that the costs of various services availed forms part of the assessable value of the goods manufactured and sold by the appellant. Therefore, there is no reason to deny Cenvat Credit of the duty/taxes paid on the various inputs/input services availed by the appellant for undertaking their business operations. The appellant has also furnished Cost Accountants certificates certifying the above. For any reason, if the department does not want to place reliance on these certificates, under Section 14AA of the Central Excise Act, they can conduct special audit where the credit of duty availed of or utilised is not within the normal limits or such credit has been availed by reason of fraud, collusion or any willful mis-statement or suppression of facts. The department has not invoked these powers available to it. In these circumstances, we are of the view that the matter has to go back to the adjudicating authority either to consider the Cost Accountants Certificates furnished by the appellant or to undertake special audit in terms of the powers of Section 14AA of the Central Excise Act and satisfy himself as to the eligibility of the credit taken by the appellant on these various services. Accordingly, we remand the case back to the adjudicating authority for denovo consideration. 5.2 Needless to say that the manufacturer/appellant should be given adequate opportunity of being heard in respect of any material covered by the audit and proposed to be utilised in any proceedings against the appellant.
6. Thus, the appeal is allowed by way of remand. The stay petition is also disposed of.
(Dictated in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 6