Custom, Excise & Service Tax Tribunal
M/S Vodafone Essar South Ltd vs Commissioner Of Service Tax, Bangalore on 10 September, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL BANGALORE Final Order No. 21693 / 2014 Application(s) Involved: ST/COD/26380/2013 & ST/Stay/26381/2013 Appeal(s) Involved: ST/26069/2013-DB [Arising out of Order-in-Original No. 134/2012 dated 11/12/2012 passed by Commissioner of Central Excise and Service Tax, BANGALORE ] M/s Vodafone Essar South Ltd 11/1, 12/1, Maruthi Infotech Centre, Amarjyothi Layout, Domlur,BANGALORE 560007 Appellant(s) Versus Commissioner of Service Tax, BANGALORE 1ST TO 5TH FLOOR, TTMC BUILDING, Above BMTC BUS STAND, DOMLUR, BANGALORE - 560071 Respondent(s)
Appearance:
Mr. G.SHIVADASS, ADV.
WORLD TRADE CENTER NO.404-406, 4TH FLOOR, SOUTH WING, BRIGADE GATEWAY CAMPUS,NO.26/1DR.RAJKUMAR ROAD, MALLESWARAM WEST, BANGLAORE -560055 For the Appellant Mr. R. Gurunathan, A.R. For the Respondent CORAM :
HON'BLE SHRI B.S.V. MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER ________________________________________ Date of Hearing: 08/09/2014 Date of Decision: 08/09/2014 Per B.S.V. MURTHY Appellant is seeking condonation of delay of 16 days in filing the appeal. It has been explained that the Order-in-Original was mis-placed by the Company officials and the order was retrieved and thereafter, the appeal has been filed. It was submitted that during the relevant time, they had other proceedings which were taken up and consequently, this was missed out. We are satisfied with the reasons given for condonation of delay and accordingly, the delay is condoned.
2. There is a total demand of Rs. 5,20,09,346/- being the credit of service tax paid by distributors of SIM cards on commission received during the period from April 2006 to March 2011. On this issue, we find that the same issue had come up before this Tribunal and the Tribunal vide Final order No. 21330/2014 dated 13.8.2014, had taken a view that credit is admissible, in paragraph 7 of the order which is reproduced herein below :
7. In view of the above, the issue as to whether the appellant is eligible for Cenvat credit on input service provided by the distributors of SIM cards is held as admissible in favour of the appellant. As regards the documents/invoices, the matter is remanded to the original adjudicating authority. The appellant shall produce the copy of the invoices as per requirement for verification purpose and if credit is admissible on the basis of documents, the same shall be allowed. Appeal is disposed of in above terms. In view of above decision on this issue, the matter has to be remanded for examining the admissibility after verification of documents as was done in the order referred to above.
3. There is a demand for interest which was short paid for the period from April 2006 to September 2006 on account of alleged short payment of service tax on international roaming service. It was submitted by learned counsel that in this case, there is a decision of the Tribunal taking a view that no service tax is payable on such service at all. He relied upon the decision in their own case in Final Order No. 27047/2013 dated 02.12.2013. He submitted that since the service itself has been held as not liable to service tax, the question of payment of differential interest does not arise. Prima facie, we find that this submission has considerable force. In this case, the Order-in-Original was passed on 26.10.2012 and the decision of the Tribunal was not available at that time. Therefore, it would be appropriate to direct the original adjudicating authority to take into account the decision of the Tribunal and apply the same to the facts of the case and pass an order.
4.1. The next demand is for interest on 50% of credit taken in the year 2006-07. This demand has arisen on the ground that the appellant took entire amount of 100% Cenvat credit on capital goods instead of taking only 50%. It was submitted by learned counsel that even though they had taken 100% credit, the same was not at all used during the year and carried forward to the next year. However, in the absence of any record to show that their claim is correct, and absence of details of Cenvat credit, we consider that this claim is required to be considered by the original adjudicating authority.
4.2. This was opposed by learned A.R. on the ground that in view of the decision of Honble Supreme Court in the case of Union of India vs. Ind-swift Laboratories Ltd. [2012 (25) S.T.R. 184 (S.C.)], interest is payable. He also relied upon the Tribunals decision in the case of M/s Dr. Reddys Laboratories Ltd. reported in 2013-TIOL-934-CESTAT-BANG and the decision in the case of Balmer Lawrie & Co. Ltd. [2014 (301) E.L.T. 573 (Tri.-Mumbai)] and submitted that in these cases, it has been held that once credit is taken, whether it is utilized or not, interest liability arises.
4.3. However, learned counsel on behalf of the appellant relied upon the decision of Honble High Court of Karnataka in the case of C.C.E. & S.T., LTU, Bangalore vs. Bill Forge Pvt. Ltd. [2011-TIOL-799-HC-KAR-CX] and the decision of the Honble High Court of Madras in the case of C.C.E., Madurai vs. M/s Strategic Engineering (P) Ltd. [2014-TIOL-466-HC-MAD-CX] and submitted that in both these cases, the decision of Honble Supreme Court in the case of Ind-swift Laboratories Ltd. (supra) was considered and thereafter, both High Courts came to the conclusion that if credit is not utilized, there is no need to pay interest.
4.4. We take note of the fact that in the case of Balmer Lawrie & Co. Ltd. (supra), the Tribunal had considered the decision in the case of Bill Forge Pvt. Ltd. (supra) and had observed that in Bill Forge Pvt. Ltd. case, the credit was taken and reversed in the same month which is not a case before us. However, we find that the decision of Honble High Court of Madras in case of Strategic Engineering (P) Ltd. [2014-TIOL-466-HC-MAD-CX] is the only decision that has been rendered after amendment of Rule 14 of the Cenvat Credit Rules, 2004 and is the only decision which takes into account the amendment also while arriving at the conclusion. The observations of Honble High Court in paragraphs 5 to 12 are relevant and are reproduced herein below :
5. The short point involved in the present Civil Miscellaneous Appeal is as to whether a mere taken of CENVAT credit facilities without actually using it, would carry interest as well as penalty?
6. The Appellate Tribunal has come to a definite conclusion to the effect that in the instant case the assessee has merely taken CENVAT credit facilities and before utilising the same, the Department has reversed it and therefore, the assessee is not liable to pay interest and penalty.
7. The learned counsel appearing for the appellant has contended elaborately that the reasoning given by the Appellate Authority for setting aside the order passed by the Authority is totally baseless by the Appellate Authority is liable to be set aside.
8. The entire argument put forth on the side of the appellant/Department is based upon decision reported in 2012 (25) S.T.R. 184 (SC) (Union of India Vs. Ind-Swift Laboratories Limited) - 2011-TIOL-21-SC-CX, wherein the Apex Court has given a finding to the effect that in Rule 14 of Cenvat Credit Rules, 2004 it has been clearly mentioned three stages, known as taken or utilisation of erroneous refund. In the instant case, the first limb of Rule 14 of the said Rules is applicable and therefore, the assessee is bound to pay interest as well as penalty. The Honourable Apex Court has dealt with Rule 14 of the said Rules and subsequently on the basis of facts available in that case has given a finding to the effect that assessee therein is liable to pay interest as well as penalty.
9. The learned counsel appearing for the respondent has contended that the decision reported in 2012 (25) S.T.R. 184 (SC) (Union of India) Vs. Ind-Swift Laboratories Limited) 2011-TIOL-21-SC-CX has been elaborately dealt with in the decision reported in 2012 (26) S.T.R. 204 (Karnataka) (Commissioner of Central Excise & S.T Bangalore Vs. Bill Forge Private Limited) - 2011-TIOL-799-HC-KAR-CX
10. In fact, this Court has perused the entire decision reported in 2012 (26) S.T.R. 204 (Karnataka) (Commissioner of Central Excise & S.T Bangalore Vs. Bill Forge Private Limited) -(2011-TIOL-799-HC-KAR-CX) and ultimately found that mere taken of CENVAT credit facilities is not at all sufficient for claiming of interest as well as penalty.
11. It is an admitted fact that Rule 14 of the Cenvat Credit Rules has been subsequently amended, wherein it has been clearly stated as taken and utilised. Therefore it is quite clear the mere taking itself would not compel the assessee to pay interest as well as penalty. Further, as pointed out earlier, the subsequent amendment has given befitting answer to all doubts existed earlier. Since the subsequent amendment has cleared all doubts existed earlier in respect of Rule 14 of the said Rules, it is needless to say that the argument advanced by the learned counsel appearing for the appellant/Department is erroneous, whereas the argument advanced on the side of the respondent is really having merit and the substantial questions of law settled in the present Civil Miscellaneous Appeal are not having substance and altogether the present Civil Miscellaneous Appeal deserves to be dismissed.
12. In fine, this Civil Miscellaneous Appeal deserves dismissal and accordingly is dismissed without costs and the order passed in Final Order No. E/920/2006, dated 03.07.2009 is confirmed. We find that this decision is applicable to the facts of this case. Therefore, the only aspect that requires verification is whether the appellant had credit of more than the amount taken on capital goods during the relevant period or not. Since this requires factual verification and the details are not available, we consider that this issue also has to be remanded for consideration.
5. In view of above observations, the impugned order is set aside and the matter is remanded to the original adjudicating authority for consideration of all the issues afresh after observing the principles of natural justice and pass an appropriate order in accordance with law. Stay applications also stand disposed of.
(Operative portion of the order has been pronounced in open court) (S.K. MOHANTY) JUDICIAL MEMBER (B.S.V. MURTHY) TECHNICAL MEMBER /vc/