Custom, Excise & Service Tax Tribunal
Good Year India Ltd. vs Commissioner Of Central Goods & ... on 4 October, 2024
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
Excise Appeal No. 417 of 2012
[Arising out of Order-in-Original No. 24-25/DM/ADJN/2011-2012 dated 15.11.2011
passed by the Commissioner of Central Excise & Customs, Delhi-IV, Faridabad]
Good Year India Ltd ......Appellant
Mathura Road, Ballabgarh,
Faridabad, Haryana
VERSUS
Commissioner of Central Goods & Service ......Respondent
Tax, Faridabad GST Bhawan, New CGO Complex, NH IV, Faridabad, Haryana 121001 WITH Excise Appeal No. 418 of 2012 [Arising out of Order-in-Original No. 24-25/DM/ADJN/2011-2012 dated 15.11.2011 passed by the Commissioner of Central Excise & Customs, Delhi-IV, Faridabad] Shri R. K. Gupta, ......Appellant Manager Excise of Good Year India Ltd Mathura Road, Ballabgarh, Faridabad, Haryana VERSUS Commissioner of Central Goods & Service ......Respondent Tax, Faridabad GST Bhawan, New CGO Complex, NH IV, Faridabad, Haryana 121001 APPEARANCE:
Ms Krati Singh & Ms. Shreya Khunteta, Advocates for the Appellants Sh. Anurag Kumar & Sh. Yashpal Singh, Authorized Representatives for the Respondent CORAM:
HON'BLE Sh. S. S. GARG, MEMBER (JUDICIAL) HON'BLE Sh. P. ANJANI KUMAR, MEMBER (TECHNICAL) FINAL ORDER NO. 60572-60573/2024 DATE OF HEARING: 24.06.2024 DATE OF DECISION: 04.10.2024
2 E/417-418/2012 PER : S. S. GARG These two appeals are directed against a common impugned order dated 15.11.2011 passed by the Commissioner of Central Excise, Delhi-IV (Faridabad), whereby the ld. Commissioner has confirmed the demands of Rs.1,19,66,923/- for the period December 2005 to August 2010 and Rs.26,51,768/- for the period September 2010 to May 2011 respectively under Rule 14 of the Cenvat Credit Rules, 2004 (in short 'CCR, 2004') read with proviso to Section 11A of the Central Excise Act, 1944 (in short 'the Act, 1944') along with interest under Rule 14 of the CCR, 2004 read with Section 11AB of the Act, 1944 and imposed equivalent penalty of Rs.1,46,18,691/- (Rs.1,19,66,923/- + Rs.26,51,768/-) under Rule 15(2) and Rule 15(1) of the CCR, 2004 read with Section 11AC of the Act. Penalty of Rs.50,000/- under Rule 26(1) of the Central Excise Rules, 2002 was also imposed on Shri R. K. Gupta, Manager Excise (appellant no.2). Since both the appeals are arising out of a common impugned order, therefore, both the appeals are taken up together for discussion and decision.
2.1 Briefly stated facts of the present case are that the appellant no.1, M/s Good Year India Ltd, is engaged in the manufacture of tyres and has depots at various locations across the country. The appellant availed the Cenvat Credit of the duty paid on inputs and capital goods and service tax paid on various input services during the relevant period.
3 E/417-418/2012 2.2 Audit of the appellant was conducted and consequent to the audit, show cause notices dated 07.01.2011 and 21.07.2011 were issued to the appellant on the allegation that the appellant has wrongfully availed the Cenvat Credit of service tax paid on the services of Clearing & Forwarding Agents (in short 'C&F Agents'), rent of bungalow, brokerage charges to arrange residential accommodation, rent of office/godown after sale and maintenance & repair of computers and air conditioners for the period December 2005 to August 2010 and September 2010 to May 2011 respectively. Accordingly, the credit of the tax paid on the input services was proposed to be denied on the ground that the input services had no nexus or relation with manufacturing of dutiable goods by the appellant. Also, a personal penalty was proposed to be imposed on appellant no.2.
2.3 The appellant filed the detailed replies to the said SCNs and after following the due process, the ld. Commissioner disallowed the credit and confirmed the demands alongwith interest and penalties. Hence, the present appeals.
3. Heard both the parties and perused the material on record. 4.1 The learned Counsel for the appellants submits that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law; and binding judicial precedents on the identical issue.
4 E/417-418/2012 4.2 She further submits that the entire issue involved in the present case has been settled in appellant's own case for the subsequent periods in favour of the appellant basis the same audit objections raised by the department. She further submits that for the subsequent periods, proceedings were initiated vide show cause notice dated 07.05.2015 for the period 2014-15 and show cause notice dated 08.06.2016 for the period 2015-16 on the same issue basis the same audit objections, but the proceedings were dropped by the adjudicating authority vide Order-in-Original dated 27.07.2016 and the issue was decided in favour of the appellant for the subsequent periods and the appellant was allowed to avail the Cenvat Credit of service tax paid on all the impugned services. No appeal has been filed by the department against the said order and the department has accepted that the appellant has correctly availed the Cenvat Credit in respect of services in dispute and accordingly, the said order has attained finality, which is evident from the RTI reply provided by CPIO in respect of the status of the order dated 27.07.2016 which has been furnished by the appellant. She also submits that it is settled proposition of law that the department cannot take contrary stands in proceedings on the same issue for the same assessee. In this regard, she relies on the following cases. Commissioner of Central Excise Pune-II vs. SS Engineers vide Order dt. 07.07.2023 (SC) in Civil Appeal No. 5700 of 2019 Rosmerta Technologies Ltd. vs. Comm. of Central Excise - 2020-TIOL-916-CESTAT-CHD affirmed by Supreme Court vide order dt. 10.07.2023 in Civil Appeal No. 177 of 2021 5 E/417-418/2012 SRF Ltd. vs. Commissioner of CE & ST - 2021-TIOL-523- CESTAT-DEL Carrier Air Conditioning and Refrigeration Ltd vs. Commissioner of Central Excise, Delhi-III vide Final Order Nos. 60098-60099/2023 dated 18.042023 in Excise Appeal Nos. 2929-2023 of 2009.
4.3 She further submits that the appellant has correctly availed the Cenvat Credit on input services as the services received by the appellant are 'input services' and the same were used in relation to the manufacture of final products and clearance of the final products from/upto the place of removal. She further submits that the inclusive part of the definition of 'input services' as provided under Rule 2(l) of the CCR, 2004, specifically covers the activities related to business i.e. any service in relation to business of manufacturing of final products would be covered within the ambit of inclusive part of the definition. As regards each impugned service, the ld. Counsel has given full justification.
4.4 As regards the C&F Agents service, the ld. Counsel submits that the appellant has availed the C&F agents services for clearing, forwarding, storage and distribution of the goods manufactured by the appellant. She refers to the various clauses of the Agreement with C&F agents and under the Agreement, the scope of activities performed by such agents includes the collection of the goods dispatched by the appellant after due checking and inspection of the same, transportation of the same with sufficient safeguards to the warehouse provided by the appellant, stocking of the goods in the warehouse, issuance of the goods to the appellant's customers as per 6 E/417-418/2012 the direction given by the appellant from time to time, issuance of invoices in the format prescribed by the appellant, maintenance of stock registers etc. She further submits that all such activities are performed on behalf of the appellant and as per the directions of the appellant. She also submits that the said service is specifically covered within the main part of the definition of input services i.e. used in relation to the manufacture of final product and clearance of the final product from/upto the place of removal. She also refers to the definition of place of removal as provided under Section 4(3)(c) of the Act which inter alia means depot, premises of a consignment. agent or any other place or premises from where the excisable goods are to be sold after its clearance from the factory or from where the goods are removed. She relies on the following decisions where it has been held that C&F agents services are covered within the definition of 'input services' :
Ambuja Cements Ltd. Vs Union Of India - 2009 (236) E.L.T. 431 (P&H) Commissioner of Central Excise Vs Manglam Cement Ltd. - 2018 (9) G.S.T.L. 17 (Raj.), maintained by the Supreme Court in 2018 (16) G.S.T.L. J168 (S.C.) Commissioner of C. Ex., Rohtak Vs Haryana Sheet Glass Ltd. - 2015 (39) S.T.R. 392 (P&H) M/s JSW Steel Ltd Vs Commissioner of Central Excise, Customs and Service Tax, Belgaum (Vice-Versa) vide Final Order No. 20849-20851/2021 dated 01/12/2021 (Tri.- Bangalore) Sundaram Clayton Ltd. Vs Commissioner of C. Ex., Chennai-II - 2016 (42) S.T.R. 741 (Tri.-Chennai)
7 E/417-418/2012 4.5 As regards Rent of Bungalow, the ld. Counsel submits that Bungalow rent is paid by the appellant for stay of the employees/ management people for carrying out the production in times of an emergency or when there is an immediate requirement. She further submits that these expenses are commercially expedient for effective running of business. In this regard, she relies on the following cases:
Commissioner of Central Excise, Trichy Vus Madras Cements Ltd. - 2019 (370) E.L.T. 568 (Tri. - Chennai) ITC Ltd. Vs Commissioner of Central Excise, Hyderabad - 2010 (17) S.T.R. 146 (Tri. - Bang.) affirmed by Andhra Pradesh High Court in 2013 (32) S.T.R. 288 (A.P.) 4.6 As regards Rent of Office/Godown after sale, the ld.
Counsel submits that godown rent is paid by the appellant, when godowns are used for storage of manufactured products and sale thereof by C&F Agents as per the directions of the appellant. The godowns are integral for storage of goods dispatched from the factory of the appellant and thus are indirectly used in relation to manufacturing of the final products. For this submission, reliance is placed on the following cases:
Barmalt (India) Pvt. Ltd. Vs Commissioner of C. Ex., Delhi- III - 2015 (38) S.T.R. 882 (Tri. - Del.) Cantabil Retail India Ltd. Vs Commissioner of Central Excise, Delhi- I - 2018 (17) G.S.T.L. 275 (Tri. - Del.) 4.7 As regards Brokerage charges, the ld. Counsel submits that Brokerage charges are paid for finding suitable accommodation for stay of employees and management. These expenses are commercially expedient for the effective running of business and thus 8 E/417-418/2012 are being used in relation to the manufacture of the final products and hence covered within the ambit of the main clause of the definition of 'input services'. For this submission, she relies on the following cases:
Axis Bank Ltd. vs. Commissioner of Service Tax Mumbai and vice versa - 2017 (3) G.S.T.L. 427 (Tri. Mumbai) affirmed by Bombay High Court in 2019 (369) E.L.T. 583 (Bom.) M/s Titan Industries Ltd. vs. Commissioner of Service Tax, Chennai - 2018- TIOL-2052-CESTAT-MAD 4.8 As regards Maintenance and Repairs of Computers and Air Conditioners, the ld. Counsel submits that the appellant is utilising the maintenance services for upkeep of their computers and air conditioners and their efficient working and running and the same are necessary for commercial expediency of the business. Thus, the said services are used in relation to the manufacture of the final products and are covered within the ambit of the main clause of the definition of "input services". In this regard, she relies on the following decisions:
M/s JSW Steel Ltd Vs Commissioner of Central Excise, Customs and Service Tax, Belgaum (Vice-Versa)) vide Final Order No. 20849- 20851/2021 dated 01/12/2021 (Tri.- Bang.) Liladhar Pasoo Forwarders Pvt Ltd Vs C.S.T. Ahmedabad vide Final Order No. A/11238/2023 dated 12.06.2023 M/s Steel Authority of India Ltd. Vs Commissioner of Customs and Central Excise, Raipur - 2019-TIOL-3280- CESTAT-DEL 4.9 As regards extended period of limitation, the ld. Counsel submits that the demand is time barred as the show cause notice 9 E/417-418/2012 dated 07.01.2011 for the period December 2005 to August 2010 was issued by invoking the extended period of limitation in absence of any element of mala fide and suppression of facts on the part of the appellant. She also submits that the appellant duly filed the returns with full disclosure of the Cenvat Credit amount availed on the input services and the department was already aware of the fact about availment of Cenvat Credit of tax paid on input services. Therefore, extended period in such a case cannot be invoked. In this regard, she relies on the following case:
GD Goenka Private Limited vs Commissioner of CGST, Delhi South [ST/51787/2022, order dated 21.08.2022] 4.10 As regards interest and penalties, the ld. Counsel submits that when the demand of Cenvat Credit is unsustainable, the questions of interest and penalties do not arise.
5. On the other hand, the learned Authorized Representative for the department has filed the written submissions which are taken on record and also relied on the following decisions:
a) CCE, Mumbai-III vs. EMCO Ltd - 2015 (322) ELT 394 (SC)
b) Mahle Engine Components India Pvt Ltd vs. CCE, Indore -
2017 (51) STR 44 (Tri. Del.)
c) Manikgarh Cement vs. CCE, Nagpur - 2018 (14) GSTL 263 (Tri. Mumbai)
d) Bengal Iron Corporation vs. Commercial Tax Officer - 1993 (66) ELT 13 (SC)
e) Elson Machines Pvt Ltd vs. Collector of CE - 1988 (38) ELT 571 (SC)
f) State of Gujarat vs. Arcelor Mittal Nippon Steel India Ltd - 2022 (379) ELT 418 (SC) 10 E/417-418/2012
g) IFB Industries Ltd vs. CCE & ST, Bangalore-I - 2017 (4) GSTL 366 (Tri. Bang.)
h) CCE vs. Gujarat Heavy Chemicals Ltd - 2011 (22) STR 610 (Guj.)
i) EIMCO Elecon (India) Ltd vs. CCE & ST, Vadodara-I - 2017 (52) STR 316 (Tri. Ahmd.)
j) CCE, Nagpur vs. Manikgarh Cement - 2010 (20) STR 456 (Bom.)
k) CCE, Trichy vs. Madras Cement Ltd - 2019 (370) ELT 568 (Tri. Chennai) Ld. AR has further submitted that the appellant is not entitled to the Cenvat Credit of service tax paid on various input services as the said services are received by the appellant after sale/clearance of the goods. He furthers submits that the said services do not have any nexus or relation to the manufacture of dutiable goods.
6. We have considered the submissions made by both the parties and perused of the material on record; and have also gone through the various decisions relied upon by both the parties. We find that it is not in dispute that for the subsequent periods, two show cause notices dated 07.05.2015 and 08.06.2016 for the period 2014-15 and 2015-16 respectively on the basis of same audit objections, were decided by the ld. Commissioner on 27.07.2016 and Cenvat Credit of service tax paid on all the impugned services involved in the present case, was allowed. We also find that the department has accepted the said order of the ld. Commissioner and has not filed any appeal against the said order, which is evident from the RTI reply provided by CPIO in respect of the status of the said order. We also find that once the department has accepted the order of the ld. Commissioner 11 E/417-418/2012 for the subsequent period, then, in that case, the department cannot take contrary stands in proceedings on the same issue for the same assessee as held in the cases cited supra.
7. As regards the C&F agents services, we note that the Commissioner for the subsequent periods, has discussed all the clauses of the Agreement between the appellant and C&F agents and has come to the conclusion that the services provided by the C&F agents to the appellant are 'input services' used in relation to the manufacture of the finished goods. This issue has also been held in favour of the assessee by the various decisions cited supra. As regards Rent of Bangalow, this has been held as an input service in the decisions cited supra. Similarly, as regards Rent of Office/Godown, this has held to be input service in the decisions cited supra. As regards, Brokerage Charges and Maintenance & Repairs of Computers and Air Conditioners, we find that these services have also been held to be input services in various decisions cited supra. Further, the decisions relied upon by the ld. AR are not applicable to the facts of the present case and are distinguishable.
8. As regards extended period of limitation, we find that the demand is barred by time as the show cause notice was issued on 07.01.2011 for the period December 2005 to August 2010 without establishing the mala fide and suppression of facts on the part of the appellant as the appellant has been regularly filing the returns with full disclosure of the Cenvat Credit amount availed on the input 12 E/417-418/2012 services. Therefore, the invocation of extended period is bad in law as held in the case of GD Goenka Pvt Ltd (supra).
9. In view of our discussion above, we find that this issue is no more res integra as held in various cases cited supra with regard to each of the services.
10. As regards the penalty under Rule 26(1) of the Central Excise Rules, 2002 imposed on Shri R.K. Gupta, appellant no.2, is concerned, we find that the said penalty is not sustainable because the appellant no.2 was not dealing with the excisable goods. This issue is also covered in favour of the appellant in the following cases:
Zapak Digital Entertainment Limited vs. CCE, Mumbai-II -
Final Order No. 85107/2023 dated 31.01.2023 (Tribunal Mumbai) Steel Tubes of India vs. CCE, Indore - 2007 (217) ELT 506 (Tri. LB)
11. By following the ratios of the various decisions cited above, we are of the considered opinion that the impugned order is not sustainable in law and is liable to be set aside and we do so by allowing both the appeals of the appellants with consequential relief, if any, as per law.
(Order pronounced in the court on 04.10.2024) (S. S. GARG) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) RA_Saifi