Custom, Excise & Service Tax Tribunal
M/S. Carborandum Universal Ltd vs Commissioner Of Central Excise, ... on 2 December, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos. ST/12 and 13/2003
(Arising out of Order-in-Appeal Nos.71 & 72/2003 (M-I) dated 18.7.203 passed by the Commissioner of Central Excise (Appeals), Chennai)
For approval and signature:
Honble Ms. Jyoti Balasundaram, Vice President
Honble Dr. Chittaranjan Satapathy, Technical Member
1. Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
M/s. Carborandum Universal Ltd. Appellants
Vs.
Commissioner of Central Excise, Chennai Respondent
Appearance Shri R. Raghavan & M. Kannan, Counsel, for the Appellants Shri V.V. Hariharan, Jt. CDR for the Respondent CORAM Honble Ms. Jyoti Balasundaram, Vice-President Honble Dr. Chittaranjan Satapathy, Technical Member Date of Hearing: 02.12.2009 Date of Decision: 02.12.2009 Final Order Nos. ____________ Per Dr. Chittaranjan Satapathy These two appeals relate to two different periods October 1998 to March 2000 and April 2000 to September 2001. The related show-cause notices have been issued on 9.5.2001 and 28.1.2002. The issue involved in both the cases is the same and hence both the appeals are taken up together for hearing and disposal.
2. Shri R. Raghavan, learned counsel appearing for the appellants states that demands of service tax amounting to Rs.11,97,041/- and Rs.8,75,064/- have been respectively confirmed for the two periods on the ground that the appellants have provided management consultancy services. He states that out of the said amounts Rs.7,23,254/- and Rs.5,30,934/- relate to deputation of staff in respect of which service tax is not payable for the relevant periods. For such activities, the appellants are paying service tax subsequently after the manpower supply service has been brought under the service tax net. In respect of the balance amount of Rs.4,73,786.80 and Rs.3,44,130/-, he states that the appellants have contested the demands as the activity undertaken by the appellants does not amount to management consultancy service. However, he states that the appellants are agreeable to tax demanded but pray for waiver of the penalties imposed. He argues that the related contracts were executed well before the levy of service tax on management consultancy service and the appellants were under the bonafide belief that the activity undertaken by them do not attract levy of service tax under the management consultancy service. The period covered also relates to the initial period of levy and hence the appellants satisfy the condition under Section 80 of the Finance Act, 1994 for waiver of penalties imposed.
3. Heard Shri V.V. Hariharan, learned Jt. CDR appearing for the Department. He fairly agrees that the amounts attributable to deputation of staff cannot be charged to tax under the head management consultancy service. Otherwise, he supports the impugned order.
4. After hearing both sides and perusal of the case records, we find that an amount of Rs.7,23,254/- and Rs.5,30,934/- out of the total demand relate to deputation of staff by the appellants. The arguments advanced by the learned counsel that deputation of staff come under manpower supply service and not under management consultancy service is acceptable. We also note that for such services the appellants are paying service tax under manpower supply service for the subsequent period after the same has been brought under tax net. Accordingly, we set aside the demand amounting to Rs.7,23,254/- and Rs.5,30,934/-. As regards the balance amounts of Rs.4,73,786.80 and Rs.3,44,130/-, we take note of the fact that the appellants have expressed their willingness through their counsel to pay these amounts and hence we confirm the demands.
5. As regards the penalty relate to deputation of staff, the same is set aside in view of the fact that the related demand has been set aside above holding that such deputation of staff does not amount to management consultancy service. As regards the penalty relating to the balance amount of tax confirmed above, we are of the view that considering the facts and circumstances of these cases and taking into consideration the fact that the contracts pre-existed the levy of the service tax on management consultancy service which was newly levied, the appellants have made out a case that there was reasonable cause for their failure to take registration and pay the tax amounts in respect of the new levy on management consultancy service. Accordingly, in terms of Section 80 of the Finance Act, 1994, we waive the penalties imposed under Section 76, 77 and 78 of the said Act.
6. In the result, the demands of Rs.4,73,786.80 and Rs.3,44,130/- are upheld and the demand for the balance amounts are set aside. The penalties imposed are also set aside.
7. The appeals are thus partly allowed.
(Operative portion of the order was pronounced
in open court on completion of the hearing)
(Dr. Chittaranjan Satapathy) (Jyoti Balasundaram)
Technical Member Vice President
Rex
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