Custom, Excise & Service Tax Tribunal
Mackintosh Burn Limited vs Service Tax - Kolkata on 30 August, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.1
S. Tax Appeal No. 71151 of 2013
Arising out of Order-in-Original No.15/Commr/ST/KOL/2013-14 dated 20/06/2013
passed by the Commissioner of Service Tax, Kolkata.
M/s. Mackintosh Burn Ltd.
D-1/1, Gillander House,
8, N. S. road, B.B.D. Bagh, Kolkata-700001
Appellant (s)
VERSUS
Commr. of Service Tax, Kol
Kendriya Utpad, Shulk Bhawan (3rd Floor),
180, Santipally, Rajdanga Main Road,
Kolkata-700107
Respondent (s)
APPERANCE :
Present for the Appellant: Mr. K. Kurmi, Advocate Present for the Respondent: Mr. S. Mukhopadhyay, A. R. CORAM:
HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) ORDER NO.FO/76184/2019 DATE OF HEARING: 30/08/2019 DATE OF DECISION: 30/08/2019 PER BENCH:
This appeal is preferred by the appellant M/s. Mackintosh Burn Ltd. (PSU), Kolkata against the Order-in-Original No. 15/Commr/ST/KOL/2013-14 dated 20/06/2013, passed by the Commissioner of Service Tax, Kolkata. Vide the Impugned Order, Ld. Commissioner has demanded Service Tax of Rs.2,53,08,925/- under Section 73(2) of the Finance Act, 1994 along with interest while imposing penalty under Section 76 of the Finance Act, 1994.
2. Ld. Counsel for the appellants submits that in the impugned order, Commissioner has traversed beyond the scope of Show Cause 2 S. Tax Appeal No. 71151 of 2013 Notice by not appropriating the amount of Service Tax paid by them through Cenvat Credit while he has appropriated the amount paid by cash. Ld. Counsel for the appellants relied on the following case laws to support their point that the adjudicating authority cannot be traverse beyond the issues set out in the Show Cause Notice.:-
(i) CCE Vs. Ballarpur Indust. Ltd. [2007 (215) ELT 489 (SC)]
(ii) CCE Vs. Toyo Engg. India Ltd. [2006 (201) ELT 513 (SC)]
(iii) CCE Vs. Shital International [(2011) 1 SCC 109]
(iv) Reckitt & Colman of India Ltd. Vs. CCE [1996 (88) ELT 641 (SC)]
(v) Prince Khadi Woolen Handloom Prod. Coop. Indl. Society Vs. CCE [1996(88) ELT 637 (SC)
(vi) CCE Vs. Nepa Ltd. [2013 (298) ELT 225 (Tri.-Del.)]
(vii) UOI Vs. Rajasthan Spining & Weaving Mills [2009 (238) ELT
3 (SC)]
(viii) CCE Vs. Rajasthan Renewable Energy Corp. Ltd. 2018 (15) G.S.T.L 661 (Raj)
(ix) CCE Vs. Bharat Yantra Nigam Ltd. 2014 (36) S. T.R. 554 (Tri-Del.) He submits that in the instant case, the Show Cause Notice is basically issued for demand of duty and as such, Ld. Commissioner's findings on the Cenvat Credit were not called for. Ld. Counsel also submits that in view of the provision of Section 67 (2) of the Finance Act, 1994, the appellants are eligible for Cum Duty benefit on the amount received by them from their clients. Ld. Commissioner having denied the same has done great in justice to the appellants.
3. Ld. AR for the Department while reiterating the findings of the OIO submits that it is not the Commissioner who has raked up the issue of Cenvat Credit in the Adjudication Order. In fact, the appellants themselves have joined the issue in the proceedings by way of their reply to the Show Cause Notice and therefore, the Ld. Commissioner was within his rights to discuss the issue and give his findings on the same. Ld. AR submits that Hon'ble Supreme Court in the case of Jajmau Dyeing & Proofing CO. Vs. Collector of C. Ex., Kanpur reported in 1998 (97) E.L.T. 217 (SC), has held that when the appellants submit an issue 3 S. Tax Appeal No. 71151 of 2013 which is not raised in the Show Cause Notice, the Appellate Authority is entitled to give findings as the same. Regarding the applicability of Cum Duty benefit, Ld. AR submits that the case being built on suppression of fact by the appellants, Commissioner has rightly denied the Cum Duty benefit.
4. At this juncture, Ld. Counsel for the appellants submits that since the liability of Service Tax has been slapped on them, they have submitted that a part of the demand has been paid. Further, they have reflected the same in the returns to submit that without going into the correctness or otherwise of the Cenvat Credit availed by initiating a proper enquiry at the relevant time, the Commissioner could not have passed a judgment on the availment and utilization of Cenvat Credit. More so, when the Show Cause Notice does not raise any such issue and no other Show Cause Notice has been issued disputing either the credit availed by them or the credit utilized by them.
5. Heard both sides and perused the records of the case.
6. We find that the brief issues that require our consideration in this case are (i) as to whether the Commissioner has traversed beyond the scope of the Show Cause Notice and (ii) as to whether the Commissioner was right in denying Cum Duty benefit as requested by the appellants. Coming to the first issue, Ld. Counsel for the appellants submits that Hon'ble Supreme Court in the case of Ballarpur Indust. Ltd. (Supra) has held that Before concluding, we may mention that, in the present case, the second and the third show cause notices are alone remitted. The first show cause notice dated 21-5-1999 is set aside as time-barred. However, it is made clear that Rule 7 of the Valuation Rules, 1975 will not be invoked and applied to the facts of this case as it has not been mentioned in the second and the third show cause notices. It is well settled that the show cause notice is the foundation in the matter of levy and recovery of duty, penalty and interest. If there is no invocation of Rule 7 of the Valuation Rules 1975 in the show cause notice, it would not be open to the Commissioner to invoke the said rule.
Supreme Court also held in the case of Shital International that 4 S. Tax Appeal No. 71151 of 2013
19.As regards the process of electrifying polish, now pressed into service by the Revenue, it is trite law that unless the foundation of the case is laid in the Show Cause Notice, the Revenue cannot be permitted to build up a new case against the assessee. (See Commr. Of Customs V. Toyo Engg.India Ltd., CCE. V. Ballarpur Industries Ltd. and CCE V. Champdany Industries Ltd.) Admittedly, in the instant case, no such objection was raised by the adjudicating authority in the Show Cause Notice dated 22.06.2001 relating to Assessment Years 1988-1989 to 2000-2001. However, in the Show Cause Notice dated 12.12.2000, the process of electrifying polish finds a brief mention. Therefore, in the light of the settled legal position, the plea of the learned counsel for the Revenue in that behalf cannot be entertained as the Revenue cannot be allowed to raise a fresh plea, which has not been raised in the Show Cause Notice nor can it be allowed to take contradictory stands in relation to the same assessee.
20. In the light of the foregoing discussion, we are in agreement with the Tribunal that the said processes do not amount to "manufacture" in terms of Note 4 to Chapter 60 of the Tariff Act, and hence the fabric in question is "unprocessed knitted fabric" falling under Serial No. 165 of Exemption Notification No. 6/2000 dated 1- 3-2000, attracting nil rate of duty as also under Notification Nos. 5/9 and 18/96. These appeals are bereft of any merit and are, therefore, dismissed accordingly, leaving the parties to bear their own costs.
Similarly, we find that the Apex Court in the case of Prince Khadi Woolen Handloom Prod. Coop. Indl. Society (supra) have held that
2. It does not appear that at any stage of the proceedings the appellants had been required to show that the factories in which they produced the woollen fabrics were owned by them. The order of the Tribunal refusing them the exemption of this ground must, therefore, be set aside.
3. If it is the case of the Revenue that the appellants are not entitled to the benefit of the exemption under the said Notification by reason of the fact that the appellants do not own the factories in which the woollen fabrics are produced, the Revenue must give to 5 S. Tax Appeal No. 71151 of 2013 the appellants a notice to Show Cause in this regard and the matter must be processed from that stage.
7. We find that by applying the ratio of the above judgments, the Ld. Counsel submits that the Commissioner has gone beyond the scope of the Show Cause Notice while passing the impugned order whereas the Ld. AR vehemently opposes the contentions and says that only when the appellants have submitted that a part of the demand has been paid through Cenvat Credit, Ld. Commissioner had to go into the issue to find that Ld. Commissioner held that the condition for allowance of Cenvat Credit in respect of input service is as per Rule 4 (7) of the Cenvat Credit Rules, 2004. He holds that for availing of Cenvat Credit, the noticee must pay the value of input service check with the documents submitted by the appellants as to the correctness of their claim. In case, the Ld. Commissioner felt/found that any of the claim of the appellants about the payment were incorrect, he has given a finding on the same without going into the liability of the Cenvat Credit. We find that for this issue, it is required to go through the claim of the appellants about the arithmetical correctness of the duty paid by them through Cenvat Credit, verification needs to be undertaken by the Adjudicating Authority. For this reason, the issue needs to travel back to such Authority.
8. Coming to the issue of admissibility of Cum Duty value while computing the duty liability, the Ld. AR submits that in view of the suppression of facts resorted by the appellants, such benefit cannot be extended in view of the findings of the certain fora. However, we find that the appellants are a Public Sector Undertaking and as such, as held by the Tribunal as well as various Courts Mens- aria cannot be assumed in respect of PSUs. It was consistently held that no particular person or officer could be benefited by such suppression/mis-declaration by the Organization. Therefore, we find that the appellants are entitled to the benefit of Cum Duty price. The amounts received by them by the appellants from their Customers should be treated to be inclusive of Service Tax and accordingly, the liability of Service Tax re-calculated. For this purpose, also the impugned order needs to go back to the Adjudicating Authority. In view of our findings suppression etc., cannot 6 S. Tax Appeal No. 71151 of 2013 be imputed to the appellant. Penalty imposed is not sustainable however, they shall be liable to pay interest on the duty arise at in terms of the above. It is needless to say that the appellants shall be provided with an opportunity to be heard/represented.
9. In view of the above, we allow the appeal by way of remand to the Adjudicating Authority.
(Dictated and pronounced in the open court.) Sd/-
(P. Anjani Kumar) Member (Technical) Sd/-
(P. Dinesha) Member (Judicial) Pooja