Custom, Excise & Service Tax Tribunal
Shv Lpg India Pvt Ltd vs Service Tax - Chennai on 27 June, 2018
1
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No. ST/00210/2011
(Arising out of Order-in-Original No. 25/2010 dated 22.12.2010 passed by
The Commissioner of Central Excise, Chennai II Commissionerate)
M/s. SHV LPG India Pvt. Ltd. : Appellant
Vs.
The Commissioner of Service Tax, : Respondent
Chennai Appearance:-
Shri S. Muthu Venkataraman, Advocate for the Appellant Shri B. Balamurugan, AC (AR) for the Respondent CORAM:
Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial) Hon'ble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing/Decision:27.06.2018 Final Order No. 41930 / 2018 Per Bench, Brief facts are that the appellant is engaged in providing Storage and Warehousing Services and also import and sell LPG in cylinders. During the audit of accounts, it was noticed that the appellants make bulk import of LPG and store the same in the storage terminal located at Tuticorin. After bottling the LPG in cylinders of varying capacities, they market the 2 same under the brand name 'Caltex in the domestic market. They were not paying excise duty on these cylinders. Apart from the above activity, they were also providing storage facilities for the LPG imported by M/s. BPCL for which the appellants collected service charges from BPCL and discharged service tax under the category of Storage and Warehousing Service. The appellants also undertook bottling of LPG for which they collected bottling charges from BPCL and paid service tax under the category of Packaging Services. They utilized credit of service tax paid on various input services such as Man Power Supply Services, Maintenance and Repair Services, etc., which were used for both services provided to BPCL as well as sale of LPG cylinders on their own account. It appeared to the Department that appellants are not eligible for credit availed on common input services used for providing output services to BPCL and for trading activity. Show Cause Notice was issued proposing to disallow the credit and recover the same along with interest and for imposing penalties. After due process of law, the Original Authority confirmed the recovery of excess Cenvat Credit of Rs, 58,22,939/- along with interest and imposed penalty with an option to pay reduced penalty of 25% as per proviso to Section 78 of the Finance Act, 1994. The proposal in the SCN, for demanding service tax to the tune of Rs. 58,22,939/-, was dropped. Aggrieved by the confirmation of recovery of Cenvat Credit to the tune of Rs. 58,22,939/-, the appellants are now before the Tribunal. 3
2. The learned Counsel, Shri Muthu Venkataraman, appeared and argued the matter on behalf of the appellant. He submitted that the period involved is from October, 2004 to March, 2008. The appellant was engaged in trading of LPG cylinders in their own brand name of 'Caltex'. The allegation is that the credit availed in respect of input services attributable to such trading activity is not eligible for credit. The appellants were using common input services for the trading activity as well as for the storage and packaging of the LPG of BPCL also. The demand in respect of the input services availed and attributable to the service provided to BPCL has been dropped by the lower authority. He argued that after 01.04.2011, trading activity is deemed to be an exempted service. Prior to this, there was much confusion as to whether trading is an exempted service and there were decisions in favour of the assessee observing that credit is eligible. He relied upon the decision in the case of M/s. Orient Bell Ltd., M/s. Orient Ceramics and Industries Ltd. Vs. C.C.E. & S.T., Noida and (vice versa)[2018 (3) T.M.I. 7 - CESTAT Allahabad] wherein the decisions in Tricity Auto Vs. C.C.E. Chandigarh-II [2016 (44) S.T.R. 601 (Tri. - Chan.)] was followed. That since there were decisions in favour of the appellant, it cannot be said that the appellant had intentionally availed wrongful credit. The appellant had submitted all necessary details in their returns and there was no suppression of facts with intent to evade payment of duty. All the details, when sought for by the Department, were furnished. The issue is 4 one involving interpretation and was mired in litigation during the relevant period. In fact, the amendment dated 01.04.2011 adding an explanation to the definition of exempted services was introduced to settle the confusion as to whether trading is an exempted service or not. He argued that the demand for the extended period may be set aside and also prayed to set aside the penalties for the normal period.
3. The learned AR, Shri B. Balamurugan, supported the findings in the impugned order. He submitted that the appellant was engaged in trading of LPG cylinders using their brand name 'Caltex' as well as rendering packing and storage services to M/s. BPCL. They have availed common input services for the trading activity of LPG cylinders in their brand name as well as for providing output services of packing and storing for BPCL. The appellant was fully aware that they are not eligible for credit on 'trading activities' and did not maintain separate accounts. Therefore, they are not eligible for the credit. They have suppressed the fact that input services were used for trading activity. The extended period has been rightly invoked.
4. Heard both sides.
5.1 The period involved is from 9/2004 to 3/2009. The Show cause Notice is dt. 09.04.2009. The learned Counsel has argued vehemently on the ground of limitation. The main allegation is that the appellants are not 5 eligible for the credit on common input services used for trading activity. The Original Authority has given relief by dropping the demand in respect of the credit availed and attributable to the services provided to BPCL. It is seen that the appellants are engaged in marketing of imported Liquefied Petroleum Gas. They make bulk import of LPG and store the same in the storage terminal located at Tuticorin. On the same premises, the bottling and packaging of BPCL also takes place. On the belief that bottling and branding of LPG cylinders does not amount to manufacture, they did not discharge excise duty on the LPG cylinders sold by them. Whereas, they were discharging service tax for the service of Storage and Warehousing Services as well as Packaging Services provided to BPCL.The learned Counsel has placed various decisions before us to contend that there were decisions in favour of assessee for the period prior to 01.04.2011, which held that credit is eligible for trading. On perusal of the various decisions placed before us as well as taking note of the amendment brought forth in the definition of exempted service w.e.f. 01.04.2011, we cannot deny the fact that there was much confusion as to whether credit can be availed in respect of trading activities. The issue was mired in litigation. For this reason, we find that the extended period is not invocable. There is no evidence bringing out any positive act of suppression on the part of the appellants to evade payment of duty. We, therefore, hold that the demand for the extended period cannot sustain and requires to be set aside, which 6 we hereby do. For the very same reasons, the penalty relating to the demand for the normal period cannot sustain and we set aside the same. 5.2 From the above discussions, we hold that the impugned order is modified to the extent of setting aside the demand on the ground of limitation only and sustaining the demand for the normal period. However, the penalty relating to the normal period is set aside.
6. The appeal is partly allowed in above terms, with consequential reliefs, if any.
(Operative part of the order was
pronounced in open Court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Sdd