Customs, Excise and Gold Tribunal - Bangalore
The Commissioner Of Central Excise vs Restile Ceramics Ltd. on 29 November, 2007
ORDER S.L. Peeran, Member (J)
1. This Revenue's appeal arises from the Order-in-Appeal No. 04/2007 (H-I) (D) CE dated 10.3.2007 passed by the Commissioner (Appeals) confirming the Order-in-Original No. 28/2005 dated 19.12.2005 passed by the Assistant Commissioner in favour of the assessee.
2. The Assistant Commissioner has dropped the proceedings initiated in the show cause notice dated 08.06.2005 which was Challenged by the Revenue before the Commissioner (Appeals) on the ground that the matter has been disposed of under Central Excise Act while the matter has to be disposed of under Finance Act as the issue pertains to levy of Service Tax. The Commissioner (Appeals) has examined all the aspects on merit and decided the issue in the assessee's favour. The findings recorded in Paragraphs 6 to 11 are reproduced herein below:
6. I have carefully gone through the records of this appeal, the written submissions of the appellants made in their appeal memorandum. I have also considered the written as well as the submissions made in the course of personal hearing held in 09.03.2007 by the Respondents. The short issues to be decided in the subject appeal are whether or not the subject appeal filed by the Department is maintainable?
7. The case made out against the Respondents was that they had not obtained Service Tax registration and not paid the service tax of Rs. 4,39,443/-. The Respondents had never informed the Department that they were receiving taxable services from the service provider of foreign origin on which they had to pay service tax as per the provisions of Finance Act, 1994. They had allegedly suppressed the facts to the Department and they had willfully contravened the provisions of the Act and Rules made there under.
8. I find myself in agreement with the Respondents' view points that no Service Tax was leviable on the payments made to a foreign firm for transfer of know-how. I also agree with the Respondents' contentions that the royalty can be paid on one time as well as on periodical basis. It can be observed from the grounds of appeal that the appellant's only contention is that the royalty in the present case was paid on one time basis. However, once it is accepted that no service tax is leviable on the payments made towards transfer of know how, it becomes immaterial whether the payment of royalty is made on one time basis or on periodical basis. In view of the above, I am of the opinion that the Adjudicating Authority has rightly come to the conclusion that the demand of service tax on the Respondents with reference to their payments made to their foreign firm M/s Continental cannot be sustained.
9. As far as the demand of service tax on the amounts paid by the Respondents to the foreign firm towards assembling, installation, testing and commissioning of new machines by holding that all these are covered under "Consulting Engineer Services" is concerned, I find that the Board vide Circular No. 79/9/2004-ST dated 13.5.2004 has already clarified that "charges of erection, installation and commissioning are not covered under the category of Consulting Engineer Services. Commissioning or installation services will be separately taxable under relevant entry and not chargeable under Consulting Engineer Services. The appellant has also accepted this contention. However, they have contented that the CBEC Circular No. 79/9/2004-ST dated 13.5.2004 clarified the above situation only after 01.07.2003, whereas the demand is for the period form December 2002 to May 2003. I do not see any merit in the appellant's above contention that the above circular is not applicable for the earlier period. I find that the aforesaid circular, under reference, is a beneficial circular and also clarificatory in nature and such a claricatory and beneficial circular issued by the department is required to be applied from a retrospective dates. This view finds supports from the Hon'ble Supreme Court's judgment in the case of Suchithra Components Ltd v. CCE, Guntur 2007 (208) ELT 517 (SC) wherein it was held that:
Beneficial circular to be applied retrospectively while oppressive circular applicable protectively circular when against the assessees, they have right to claim enforcement prospectively.
10. In view of the above discussions, I see no merit and substance in the subject appeal and the same is not found sustainable. The impugned Order-in-Original, therefore, merits upholding. I accordingly reject the subject appeal.
11. The subject appeal is disposed off in above terms.
The Revenue has restricted the appeal only with regard to the maintainability of the appeal. It is submitted that the Commissioner (Appeals) ought to have remanded the matter to the Divisional Authority, i.e. Commissioner of Central Excise, Hyderabad and the appeal should have been treated as an appeal of Revision of the Order-in-Original.
3. We have heard both the sides in the matter.
4. The learned DR submits that the Commissioner (Appeals) should have transferred all the papers to the Commissioner of Central Excise, Hyderabad and the appeal should have been treated as an appeal of revision of the Order-in-Original. He prays for remanding the matter to the Commissioner of Central Excise, Hyderabad.
5. The learned Counsel submits that the Authorization Order signed by the Commissioner to file the appeal is not correct. In terms of the Notification, the Authorization has to be issued by two Commissioners. Therefore the authorization order and the appeal filed by the Commissioner before the Commissioner (Appeals) is not correct. He submits that the issue involved in the matter is no longer res-integra as the same has been decided in the assesee's favour in a large number of judgments. With regard to the Authorisation being not in order, he relies on the following judgments:
(i) Vivek Mukund Modhe v. CCE, Nasik 2007-TIOL-1083-CESTAT-MUM
(ii) CCE &C, BBSR-II v. Gupta Steels Pvt Ltd. 2007 (8) STR 248 (Tri. - Kolkata)
(iii) CCE, Belapur v. Coromandel Fertilizers Ltd. 2007 (217) ELT 269 (Tri.-Mumbai) He submits that in the cited judgments, it has been held that the Revenue is required to file Review Petition before the Commissioner of Central Excise and not before the Commissioner (Appeals) and such appeal is not maintainable. It has also been held in the case of CCE, Belapur v. Coromandel Fertilizers Ltd. (supra) that the appeal filed by only one Commissioner and not the Committee of the Commissioners is not maintainable in terms of the Section 35B of the Central Excise Act, 1944.
6. We have carefully considered the submissions made by both the sides. We find that the orders passed by both the authorities are not correct in law. The Authorisation Order signed by the Single Commissioner is not maintainable. The Authorisation has to be signed by a Committee of two Commissioners as held in the case of Coromandel Fertilizers Ltd. (supra) and also in the case of Gupta Steels Pvt Ltd. (supra). The ratio of the finding given by the Tribunal in the case of Vivek Mukund Modhe (supra) is also applies to the facts of the case. We find, even on merit, the issue is decided finally in the assessee's favour. We do not find any merit in the Revenue's appeal and the same is rejected.
(Pronounced and dictated in the open court)