Custom, Excise & Service Tax Tribunal
M/S. Sentosa Color Lab vs C.C.E. Jaipur-I on 3 November, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Appeal No. ST/315, 318/2012-ST(DB)
[Arising out of Order-in-Appeal No. 453, 462(AKJ)ST/JPR-I/2011 dated 01 & 02.12.2011, by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Jaipur].
For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
Honble Shri V. Padmanabhan, 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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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
M/s. Sentosa Color Lab
M/s. Amar Color Lab .Applicants
Vs.
C.C.E. Jaipur-I .Respondent
Appearance:
Ms. Rinki Arora, Advocate for the Applicants Ms. Neha Garg, DR for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Date of Hearing: 03.11.2016 FINAL ORDER NO. 54908-54909/2016-CU(DB) Per Archana Wadhwa:
Both the appeals are being disposed of by one order as the issue is common. The demand to the tune of Rs. 2,31,773/- in one case and Rs. 47,600/- in another case, stands confirmed against the appellants who is a provider of photographic service, on the ground that the value of the material used by them, while providing the said services, are required to be added in the assessable value of the services. The said demand for the period July 2001-March 2006 stands raised by the Show Cause Notice dated 26.09.2006 in one case and from October 2003-March 2005 stands raised by the Show Cause Notice dated 20.11.2006.
2. Ld. Advocate appearing for the appellants fairly agrees that the issue on merits stand decided against them by Larger Bench decision of the Tribunal in the case of Aggarwal Colour Advance Photo System Vs. CCE - 2011 (23) S.T.R. 608 (Tri. LB). However, the demand is being assailed on the point of limitation.
3. Ld. Advocate has brought to our notice the precedent decision of the Tribunal wherein in identical circumstances, it was held that longer period of limitation would not be available to the Revenue. For better appreciation one such reference can be made to the Tribunals decision in the case of CCE Vs. Centre Point Colour Lab 2014 (34) STR 126 (Tr.-Del.), para 5 & 6 of the said decision is being reproduced below:-
5.?However, we note that period involved in the present appeals is from 1-7-2003 to 31-3-2005 and show cause notice were raised on 22-9-2005 in the case of M/s. Centre Point Colour Lab and on 3-4-2006 in the case of M/s. Agrawal Photo Finish. As such, the demand stands raised by invoking the extending period of limitation. It is seen that the said issue was the subject matter of consideration by the Government as also by the Tribunal. Government in its Circular F. No. 233/2/2003-CX-4, dated 7-4-2004 addressed to the Punjab Colour Lab Association had clarified that service provider was entitled to claim exemption in respect of inputs, material consumed/sold to the service recipient. Apart from the above clarification, the earlier decision of the Tribunal in the case of Shilpa Colour Lab as also in the case of Adlab Labs etc. were in favour of the assessee. As such, it can be safely concluded that there could be bona fide belief on the part of the respondents as regards non-inclusion of the material cost in the value of services. The issue stands decided against the respondents by the Larger Bench decision of the Tribunal delivered on 11-8-2011. The Honble Supreme Court in the case of Jaiprakash Industries Ltd. v. CCE, Chandigarh reported in 2002 (146) E.L.T. 481 (S.C.) has observed that when there is a bona fide doubt as regards the non-excisability of the goods due to divergent views of the High Courts extended period of five years cannot be invoked. It further stands observed that mere failure or negligence in not taking licence or not paying duty is not sufficient to invoke extended period. By applying the ratio of law declared in the above decision, we find that since the earlier decisions of the Tribunal were in favour of the assessee, it has to be held that there was bona fide doubt about the inclusion of the cost of material in the cost of services. If that be so, no mala fide can be attributable to the appellant so as to invoke the extended period of limitation.
6.?We find that the issue of limitation was considered at length in an identical matter in the case of CCE, Raipur v. Satyam Digital Photo Lab vide Final Order Nos. ST/503-504/2011, dated 20-9-2011 [2012 (27) S.T.R. 64 (Tri. - Del.)], it was held that the notices issued beyond the period of limitation would not stand inasmuch during the relevant period, there was sufficient material for the assessee to entertain a bona fide belief that the value of raw material used would not form part of the value of services. By holding so, the matter was sent back for requantifying the demand falling within the period of limitation. The Bench further observed that on account of bona fide belief, no penalty is required to be imposed. By applying the ratio of the above decision to the facts of the present case, we hold that the demand beyond the period of limitation is time barred and no penalty is required to be imposed. Matters are remanded for requantifying the duty demand falling within the period of limitation. While requantifying the duty, the claim of the appellants as regards the credit of duty/tax paid on the raw materials is required to be considered and if found eligible, to be allowed.
4. The ld. DR fairly agrees that the issue of limitation stands decided by the Tribunal in the above referred decision rendered under identical circumstances.
5. In as much as in the present case the demand is admittedly beyond the normal period of limitation except a part, in one case, by following the above referred decision of the Tribunal, we set aside the impugned orders and remand the matter to the original adjudicating authority for requantification of the demand, if any falling within the limitation period.
6. As we have already held, that the issue was not free from doubt and there is no malafide on the part of the appellant, imposition of any penalty upon them is not justified. Accordingly, the penalties are set aside.
7. Both the appeals are disposed of in above terms.
[Dictated and Pronounced in the open Court]
(V. Padmanabhan) (Archana Wadhwa)
Member (Technical) Member (Judicial)
Bhanu
4
ST/315, 318/2012-ST(DB)