Custom, Excise & Service Tax Tribunal
M/S Radiant Textiles Ltd vs Cce, Chandigarh-Ii on 29 July, 2016
Customs, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH-160 017 Single Member Bench COURT NO.1 Excise Appeal No. ST/200,201,202/2016-SM [Arising out of the Order-in-Appeal No. JAL-EXCUS-000-APP-244-15-16 dated 18.12.2015 passed by the Commissioner, Central Excise, Chandigarh] Date of Hearing/Decision: 29.07.2016 For Approval & signature: Honble Mr. Ashok Jindal, Member (Judicial) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the 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 Department Authorities? Yes M/s Radiant Textiles Ltd. Appellant Vs. CCE, Chandigarh-II Respondent
Appearance Shri Kamaljeet Singh, Advocate- for the appellant Shri Vijay Gupta, AR- for the respondent CORAM: Honble Mr.Ashok Jindal, Member (Judicial) FINAL ORDER NO: 61100-61102/2016 Per Ashok Jindal:
1. The appellant has filed these appeals against the impugned order wherein the benefit of Notification No. 18/2009-ST dated 07.07.2009 is denied.
2. The facts of the case are that the appellant is engaged in the manufacture of excisable goods which are sold in DTA as well as outside in India. The appellant were receiving the services of the overseas Commission Agent, and said service has been used for export of their goods. The service received by the appellant classify as a Business Auxiliary Service under Section 65 (105)(zzb) of the Finance Act, 1994. The appellant was required to pay service tax under reverse charge mechanism but the appellant sought exemption for payment of service tax on commission paid to the overseas commission agent in terms of Notification 18/2009-ST ibid. However, the same was denied on the premise that the appellant is not completely following the procedure laid down in the Notification No. 18/2009-ST, therefore, the appellant is not entitled to avail benefit of the said notification. Consequently, the demand of service tax was raised. Further, there is allegation that the appellant has received manpower recruitment service for loading and unloading of their goods, therefore, the demand of service tax was also sought to be confirmed under the category of manpower recruitment agency service. In these set of facts, various show cause notices were issued to the appellant and the same were adjudicated by denying the benefit of the said Notification 18/2009-ST ibid and to demand of service tax under the category of manpower recruitment agency service along with interest and various penalties were also imposed. Aggrieved from the said orders, the appellant is before me in these appeals.
3. The Ld. Counsel for the appellant submits that the facts of receiving service from the overseas commission agents and making payment for such services to the overseas commission agent is not in dispute. Therefore, the substantial benefit of notification cannot be denied on account of technical lapses as held by the Honble High Court in the case of Union of India vs. Farheen Texturisers 2015 (323) ELT 104 (Bom), Commissioner Vs. J.S. Gupta & Sons 2015 (318) ELT 63 (Allahabad), Packaging India Pvt. Ltd. Vs. CCE 2013 (294) ELT 246 ( Tri. Delhi) and Rajesh Art priners Vs. CCE 2016 (333) ELT 417 (Tri. Mumbai). 4. He further submits that there is no requirement to submit BRC of export goods. The only requirement of notification is to submit proof of payment to overseas commission agent. The said fact has been admitted and the basic requirement of notification has been met. The shipping bills were submitted with EXP-2 returns. The overseas commission agent issue invoices through e-mail. As these invoices received by the appellant through e-mail, the same is admissible documents under the provisions of Section 36B(1) of the Central excise Act, 1944. The benefit of Notification cannot be denied. He further submits that as per the notification, the services of the Commissioner Agent located outside India should be used export of the goods and exemption is available upto the limit of 1% of the FOB of export. Both, these requirement have been fulfilled and the other requirements were only procedural and the appellant has also met all those requirements by filing the EXP-1 and EXP-2 along with required document, therefore, exemption cannot be denied. He further submits that the demand in respect of show cause notice dated 21.10.2013 is barred by limitation as the appellant has regularly claimed the benefit of Notification No. 18/2009-ST- in their ST returns.
5. He further submitted that the demand under the category of Manpower Recruitment Agency service is not sustainable. The appellant has given contract for loading/unloading on the basis of weight of goods. The contractor is receiving payment from the appellant as per the work done not as per the labour provided, therefore, the service tax cannot be demanded under the category of Manpower Recruitment Agency Service. In these circumstances, the impugned orders are to be set aside.
6. On the other hand, the ld. AR opposed the contention of the Ld. Counsel and submits that the appellant was required to comply with the condition of notification strictly which the appellant failed to do so. Therefore, the authorities below have rightly denied the benefit of Notification No. 18/2009-ST.
7. Heard the parties and considered the conditions.
8. I have gone through the facts of the case and find that in this case following issue has been emerged:
A) Whether in the facts and circumstances of the case, the demand of service tax is correct under the reverse charge mechanism from the appellant by denying the benefit of Notification No. 18/2009-ST on account of technically lapses and B) Whether the activity of loading/unloading by the contractor is chargeable to service tax under the category of Manpower Recruitment Agency Services or not?
9. The facts of the case are not disputed that the appellant is receiving service of overseas commission agent and paying commission to the said agent. The benefit of notification has been denied due to reason that the appellant has not produce BRC and have not filed original copy of invoices and the return form the EXP-1 and EXP-2. In fact, the basic of requirement of notification has not been disputed by the Revenue, therefore, substantive benefit cannot be denied on account of technical lapses has held by the Honble High Court of Bombay in the case of Union of India Vs. Farheen Texturisers (Supra). Further by the Honble High Court of Allahabad in the case of J.S. Gupta & Sons (Supra) the payment made to the overseas commission agent not in disputed. The appellant has filed all the shipping bills and copy of invoices issued by the overseas agent. These fact has not been disputed by the Revenue. In that circumstance, I hold that the appellant has complied with the condition of the notification. Further, I observed that the commissioner paid to the overseas commission agent is less than 1% of the FOB value of the exported goods. Therefore, the appellant is entitled for benefit under Notification No. 18/2009-ST. Consequently, no service tax can be demanded under the category of Business Auxiliary Services under reverse charge mechanism.
10. Further, I find that the demand of service tax has been confirmed under the category of Manpower Recruitment Agency service for loading goods by the contractor on weight basis. As contractor has entered into agreement with the appellant on weighment basis. In that circumstances, the activity of loading/unloading cannot be termed as supply of Manpower Recruitment Agency Service therefore, the demand under such category is not sustainable.
11. With these observations, I hold that the impugned orders lack merits consequently, the same are set aside and the appeals filed by the appellant are allowed with consequential relief, if any.
(Dictated and Pronounced in the open court) Ashok Jindal Member (Judicial) rt 1