Custom, Excise & Service Tax Tribunal
M/S. Johnsons Matthey Chemical India ... vs C.C.E. Kanpur on 22 January, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/Decision: 22/01/2014
Service Tax Appeal No.ST/600 / 2008-CU (DB)
M/s. Johnsons Matthey Chemical India P.Ltd Appellant
Vs.
C.C.E. Kanpur Respondent
(Arising out of Order-in-Appeal No.265/ST/APPL/KNP/2008 dated 27.06.2008 passed by the Commissioner of Central Excise & Service Tax, Kanpur) For approval and signature:
Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, 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? 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? 4 Whether Order is to be circulated to the Departmental authorities? Appearance:
Rep. by Shri R. Santhanam, Advocate for the appellant.
Rep. by Shri Ranjana Jha, Joint CDR for the respondent.
CORAM:
Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) Final Order No:- 50323 /2014 dated 22.01.2014 Per Rakesh Kumar:
The appellant have service tax registration with the jurisdictional central excise authorities for providing scientific and technical consultancy service and also for Goods Transport Agency Service. They are a merchant exporter and have an agreement with ICI India Ltd. for manufacture of catalysts out of raw material supplied by them. During the period from March, 2005 to May, 2007, they availed services of GTA for transportation of inputs to their premises. The appellant availed Cenvat Credit of the GTA service availed by them for inward transportation of their goods to their premises and utilized the same for payment of service tax on the scientific and technical consultancy service provided by them. The department was of the view that the appellant were not eligible for Cenvat Credit in respect of the GTA service availed by them, as the same has no nexus with their activity of scientific and technical consultancy service and on the contrary, has been used in respect of their trading activities. Accordingly, the Department issued a show cause notice dated 17.01.2008 for recovery of Cenvat Credit amounting to Rs.96,357/- in respect of the GTA service. Since Cenvat Credit of Rs.41,999/- in respect of GTA service earlier availed by them had been utilized for payment of service tax in respect of scientific and technical consultancy service during August 2006 and since the appellant were not entitled for Cenvat Credit in respect of GTA service received by them, the show cause notice also demanded service tax of Rs.41,999/-. Besides this, a show cause notice also demanded interest on the allegedly wrongly availed Cenvat Credit and the service tax wrongly paid through Cenvat Credit and also for imposition of penalty on them under Section 11 AC. The show cause notice dated 17.1.2008 was adjudicated by the Assistant Commissioner vide order-in-original dated 11.03.2008 by which the Cenvat Credit demand of Rs.96,351/- and service tax demand of Rs.41,999/- were confirmed along with interest and besides this, penalty of Rs.1,38,350/- was imposed under Section 11 AC of Central Excise Act, 1944, another penalty of Rs.2,76,700 was imposed on them under Section 78 of the Finance Act, 1994. On appeal being filed to the Commissioner (Appeals) against this order of the Assistant Commissioner , the Commissioner (Appeals) vide order-in-appeal dated 27.06.2008 dismissed the appeal. Against this order of the Commissioner (Appeals), this appeal has been filed.
2. Heard both the sides.
3. Shri R. Santhanam, Advocate, ld. Counsel for the appellant, pleaded that the appellant were entitled for Cenvat Credit of GTA services availed by them for inward transportation of the inputs as they had used the inputs for getting the final products manufactured through M/s. ICI India Ltd., that in this regard, the appellant must be treated as a manufacturer, that no one to one co-relation between the inputs and input service and the final products manufactured/out put service provided is required for utilization of Cenvat Credit and therefore utilization of Cenvat Credit in respect of GTA Service received for payment of service tax on scientific and technical consultancy service cannot be denied., that in any case, the availment of Cenvat Credit in respect of GTA service received by them and its utilization for payment of service tax on the output service scientific and technical consultancy service had been disclosed by the appellant in their ST-3 Returns and hence, the appellant cannot be accused of suppressing any relevant information from the department and, therefore, longer limitation period under Proviso to Section 11A(1) of the Central Excise Act, 1944 and proviso to section 73(1) of the Finance Act, 1994, cannot be invoked and as such, the entire demand of Cenvat Credit/Service Tax is time barred and that since there was no wilful mis-statement or suppression of facts on the part of the appellant, penalties imposed under Section 11A of the Central Excise Act and Section 78 of the Finance Act, 1994 would not be sustainable. He, therefore, pleaded that the impugned order is not sustainable.
4. Ms. Ranjana Jha, ld. Joint CDR, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and emphasized that the activity of the appellant procuring raw materials, getting the finished goods manufactured through ICI India Ltd and thereafter exporting the finished goods was in the nature of the trading activity, that the GTA service availed for inward transportation of the inputs was in respect of their trading activities and hence, they were not eligible for Cenvat Credit in respect of the GTA service received by them, that in terms of the provisions of Rule 3(1) of the Cenvat Credit Rules, 2004, Cenvat Credit is available to a manufacturer of excisable goods or procedure of output services only in respect of inputs or input services used in or in relation to the manufacture of final products or provisions of output service, that since in this case the GTA services has been availed had been used in relation to their trading activities, they were not eligible for Cenvat Credit and hence to the extent, this Cenvat Credit has been used for payment of service tax on their scientific and technical consultancy service, such payment would not be treated as proper payment of service tax. She also pleaded that the appellant have suppressed the relevant facts from the department and hence, longer period of limitation has been correctly invoked and penalty under Section 11 AC of the Central Excise Act, 1944 and Section 78 of the Finance Act, 1994 have been correctly imposed.
5. We have considered the submissions from both the sides and perused the records.
6. There is no dispute about the fact that the GTA services, in question, were received by the appellant for inward transportation of the materials which were used by the appellant for getting final products manufactured through ICI India Ltd on job work basis and that the final products have been exported by the appellant. Since the appellant are not manufacture of the goods exported by them and as such the appellants activity of procuring the raw material, getting the goods manufactured and exporting them has to be treated as trading activity, and since the GTA service has been used entirely in respect of the trading activity, they would not be eligible for Cenvat Credit in respect of the GTA Service and as such, the Cenvat Credit availed in respect of the GTA services received by them and its utilization is incorrect. However, we find that availment of Cenvat Credit in respect of GTA services and its utilization for payment of service tax on scientific & technical consultancy service has been disclosed by them in their ST-3 Returns, they cannot be accused of having suppressed any relevant facts from the department. In view of this, neither the extended period under proviso to Section 11A(1) of the Central Excise Act, 1944 and proviso to Section 73 (1) of the Finance Act, 1994 would be available to the department for recovery of allegedly wrongly taken Cenvat Credit and non paid service tax nor the penal provisions of Section 11 AC of the Central Excise Act, 1944 or of the Section 78 of the Finance Act would be attracted. Since the show cause notice for demand of allegedly wrongly taken Cenvat Credit and non- paid service tax had been issued after the expiry of the normal period of limitation, the same is time barred and as such, the demand for wrongly taken Cenvat Credit and non-paid service tax is not sustainable. Hence, neither the demand for wrongly taken Cenvat Credit and non-paid service tax is sustainable nor the imposition of penalty under Section 11AC of the Central Excise Act, 1944 and under Section 78 of the Finance Act, 1944 is sustainable. The impugned order, therefore, is set aside. The appeal is allowed.
[Operative portion of the order already pronounced in the open court] ( Justice G. Raghuram ) President ( Rakesh Kumar ) Member (Technical) Ckp.
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