Custom, Excise & Service Tax Tribunal
Zydus Nycomed Healthcare Pvt Ltd vs Belapur on 4 July, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: E/840/2012
[Arising out of Order-in-Appeal No: BC/333/BEL/2011-12 dated 27/02/2012 passed by the Commissioner of Central Excise (Appeals), Mumbai III.]
For approval and signature:
Honble Shri C J Mathew, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
No
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Zydus Nycomed Healthcare Pvt Ltd
Appellant
versus
Commissioner of Central Excise
Belapur
Respondent
Appearance:
Shri Dileep R Bhosle, Assistant Manager of appellant-company Shri Sanjay Hasija, Superintendent (AR) for the respondent CORAM:
Honble Shri C J Mathew, Member (Technical) Date of hearing: 04/07/2016 Date of decision: 04/07/2016 ORDER NO: ____________________________ M/s Zydus Nycomed Healthcare Pvt Ltd, challenging order-in-appeal No: BC/333/BEL/2011-12 dated 27th February 2012 passed by the Commissioner of Central Excise (Appeals), Mumbai III, is a 100% Export Oriented Unit (EOU) and had filed a claim for refund of accumulated CENVAT credit of ` 19,81,887/- for the period from March 2009 to June 2009 under Rule 5 of CENVAT Credit Rules, 2004. Of this ` 16,90,222/- was sanctioned and the balance amount of ` 2,91,665/- was rejected by Assistant Commissioner of Central Excise, Belapur II Division on the ground that tax on which credit was taken related to services that were not input services under rule 2(k) and 2(l) of CENVAT Credit Rules, 2004. The said services were clearing and forwarding agents service, tours and travel, construction and catering. On appeal the impugned order has upheld the order of lower authority in relation to clearing and forwarding service on the ground that there is no documentary, or other evidence, to show the same to be an input service. It was also held that the records reveal that appellant had volunteered that credit in relation to catering service, rent-a-cab/tours and travels and construction services be excluded from the refund sanction.
2. Heard the representative of appellant, Shri Dileep R Bhosle, and Learned Authorised Representative.
3. Attention was drawn to the decision of the Honble High Court of Bombay in Coca Cola India Pvt Ltd v. Commissioner of Central Excise, Pune III [2009 (242) ELT 168 (Bom.)] which held:
39.?The definition of input service which has been reproduced earlier, can be effectively divided into the following five categories, in so far as a manufacturer is concerned :
(i) Any service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products
(ii) Any service used by the manufacturer whether directly or indirectly, in or in relation to clearance of final products from the place of removal
(iii) Services used in relation to setting up, modernization, renovation or repairs of a factory, or an office relating to such factory,
(iv) Services used in relation to advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs,
(v) Services used in relation to activities relating to business and outward transportation upto the place of removal.
Each limb of the definition of input service can be considered as an independent benefit or concession exemption. If an assessee can satisfy any one of the limbs of the above benefit, exemption or concession, then credit of the input service would be available. This would be so even if the assessee does not satisfy other limb/limbs of the above definition. To illustrate, input services used in relation to setting up, modernization, renovation or repairs of a factory will be allowed as credit, even if they are assumed as not an activity relating to business as long as they are associated directly or indirectly in relation to manufacture of final products and transportation of final products upto the place of removal. This would follow from the observation of the Supreme Court in Kerala State Co-operative Marketing Federation Ltd. and Ors. v. Commissioner of Income-tax - 1998 (5) SCC 48, which is as under :
7.?We may notice that the provision is introduced with a view to encouraging and promoting growth of co-operative sector in the economic life of the country and in pursuance of the declared policy of the Government. The correct way of reading the different heads of exemption enumerated in the section would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of an income of a co-operative society is exempt from tax what has to be seen is whether income fell within any of the several heads of exemption. If it fell within any one head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption.
[Emphasis supplied]
40.?In Share Medical Care v. Union of India - 2007 (209) E.L.T. 321 (S.C.) the Supreme Court has laid down the same proposition in the following words :
15.?From the above decisions, it is clear that even if an applicant does not claim benefit under a particular notification at the initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage.
16.?In the instant case, the ground which weighed with the Deputy Director General (Medical), DGHS for non-considering the prayer of the appellant was that earlier, exemption was sought under category 2 of exemption notification, not under category 3 of exemption notification and exemption under category 2 was withdrawn. This is hardly a ground sustainable in law. On the contrary, well settled law is that in case the applicant is entitled to benefit under two different Notifications or under two different Heads, he can claim more benefit and it is the duty of the authorities to grant such benefits if the applicant is otherwise entitled to such benefit. Therefore, non-consideration on the part of the Deputy Director General (Medical) , DGHS to the prayer of the appellant in claiming exemption under category 3 of the notification is illegal and improper. The prayer ought to have been considered and decided on merits. Grant of exemption under category 2 of the notification or withdrawal of the said benefit cannot come in the way of the applicant in claiming exemption under category 3 if the conditions laid down thereunder have been fulfilled. The High Court also committed the same error and hence the order of the High Court also suffers from the same infirmity and is liable to be set aside.
[Emphasis supplied]
41.?The principle that a specific provision will override a general provision is not applicable to provisions which are in the nature of concessions or exemptions. We may consider the facts and some circumstances. In HCL Ltd. v. Collector of Customs - 2003 (159) E.L.T. 257 (Tri. - Del.) = 1998 (77) ECR 126 (T), Sl. No. 53 of Notification No. 96/61-Cus., dated 25-7-1991 referred to automatic testing or marking or printing or typing machine or any combination thereof and exempted customs duty in excess of 20% ad valorem. Notification No. 59/88-Cus., dated 1-3-1988 referred to optical time domain reflectometer and exempted customs duty in excess of 55% ad valorem. Assessee imported a optical time domain reflectometer. There was no dispute that product in question was a optical time domain reflectometer. Assessee claimed the benefit of Sl. No. 53 of Notification No. 96/61-Cus. CESTAT held that product is squarely and more specifically covered by Notification No. 59/88-Cus and rejected the assessees contention. CESTAT held as under :
9.?We have carefully considered the matter. We find that there is no dispute and it is an admitted position that the goods imported were optical time domain reflectometer. Optical time domain reflactometer are specifically described in Notification No. 59/88-Cus., dt. 1-3-1988 which provided exemption to the goods specified in the Table annexed to that Notification No. 59/88-Cus., which was falling under Chapters 84, 85 or 90 of the Customs Tariff. The exemption was to the extent of the duty as was in excess of the amount calculated at the rate of 55% ad valorem. Subsequently, another Notification No. 96/91-Cus., dt. 25-7-1991 was issued which exempted the goods falling within the Chapters 82, 84, 85 and 90 of the Customs Tariff which was used in the electronic industries. The exemption available was to the extent of duty which was in excess of the amount calculated at 20% ad valorem. At serial No. 53 of the Table the following goods were covered :
Automatic testing or marking or printing or taping machine or any combination thereof. We find that the goods imported were Optical Time Domain Reflee tometer which was specifically covered by the already existing Notification No. 59/88-Cus. The description at serial No. 53 of the Table under Notification No. 96/91-Cus. was general in nature and it could not be said that the goods were equally covered by both the Notifications. When there is specific entry, it is settled position in law that the goods would be classified under that specific entry as against the general entry.
10.?The learned Advocate had submitted that the Asstt. Collector, Customs had not disputed that the item in question was covered by serial No. 53 of Notification No. 96/91-Cus. We find that the Asstt. Collector, Customs had only referred that entry under Customs Notification No. 96/91-Cus. which was generic in nature and covered broad category of goods of particular nature. We find that he had held that the goods were not covered by serial No. 53 of Notification No. 96/91-Cus.
11.?Learned Advocate had also referred that when two notifications were available to an assessee it was the option of the assessee to choose any one which was beneficial to him. He referred to the case law in support of his contention.
We consider that in the present case the two notifications were not equally applicable to the goods in question. In one notification, the goods were specifically and categorically described while the description in another notification was general in nature. We consider that the case law will be applicable only when the two notifications are equally applicable to the goods and the manufacturer.
The Supreme Court in an appeal filed by the assessee in HCL Limited v. Collector of Customs, New Delhi - 2001 (130) E.L.T. 405 (S.C.) reversed the decision of CESTAT and held as under :
The question in these appeals is covered in favour of the appellant by the order of this Court in Collector of Central Excise, Baroda v. Indian Petro Chemicals [1997 (92) E.L.T. 13]. Where there are two exemption notifications that cover the goods in question, the assessee is entitled to the benefit of that exemption notification which gives him greater relief, regardless of the fact that the latter notification is general in its terms and the other notification is more specific to the goods.
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43.?What follows from the above discussion is that the credit is availed on the tax paid on the input service, which is advertisement and not on the contents of the advertisement. Thus it is not necessary that the contents of the advertisement must be that of the final product manufactured by the person advertising, as long as the manufacturer can demonstrate that the advertisement services availed have an effect of or impact on the manufacture of the final product and establish the relationship between the input service and the manufacture of the final product. The manufacturer thereby can avail the credit of the service tax paid by him. Once the cost incurred by the service has to be added to the cost, and is so assessed, it is a recognition by Revenue of the advertisement services having a connection with the manufacture of the final product. This test will also apply in the case of sales promotion.
4. The latitude encompassed by the judgment supra should be taken into consideration especially when an exporting unit seeks refund of CENVAT credit of tax discharged on input services. The lower authorities do not appear to have done so. Further, the first appellate authority has noted that appellant has not produced documentary evidence to establish that the disputed amounts were taxes paid on services that were indeed inputs. Appellant has submitted tax invoices that do carry some description of the utilization of the services.
5. As these facts were not examined by the refund sanctioning authority, and in the light of the decision of the Honble High Court of Bombay in re Coca Cola India Pvt Ltd., it would be appropriate to remand the matter back to the original authority for reconsideration of the rejected portion of the refund claim.
6. Impugned order is set aside and matter remanded on above terms.
(Pronounced in Court) (C J Mathew) Member (Technical) */as 9 9