Custom, Excise & Service Tax Tribunal
M/S Rushil Decor Limited vs C.C.E. & S.T.-Ahmedabad-Iii on 27 February, 2018
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Zonal Bench 2nd Floor, Bahumali Building, Nr Girdharnagar Bridge, Asarwa Ahmedabad 380 004 Appeal No. : E/11037/2017 Arising out of OIA-AHM-EXCUS-003-APP-255-16-17 27/02/2017 passed by the Commissioner (Appeal), Central Excise, Customs and Service Tax-AHMEDABAD-I M/s Rushil Decor Limited - Appellant(s) Vs C.C.E. & S.T.-Ahmedabad-iii - Respondent(s)
Represented by For Appellant(s) : Ms Khushboo Kundalia, Chartered Accountant For Respondent(s) : Shri J Nagori, Authorised Representative CORAM :
Dr D.M. Misra, Hon'ble Member (Judicial) Date of Hearing / Decision : 27/02/2018 ORDER No. A/10416 / 2018 Per : Dr D.M. Misra, This appeal is filed against OIA-AHM-EXCUS-003-APP-255-16-17 27/02/2017 passed by the Commissioner (Appeal), Central Excise, Customs and Service Tax-AHMEDABAD-I.
2. Briefly stated the facts of the case area that the appellant had availed Cenvat Credit on various services input viz., Manpower Supply Service, Legal Service, Professional Service, Transportation Service etc., and used the same for manufacturing as well as and trading activities. Show cause notice was issued to them for recovery of Rs 33,33,754/- being 5% / 6% of the value of the trading sales in accordance with Rule 6(3) of the CCR, 2004. Also, an amount of Rs 4,17,125/- was demanded as inadmissible credit availed on Construction Service used in the repair and maintenance work in the factory premises during the relevant period. On adjudication, the demand was confirmed with interest and penalty. Aggrieved the said order, they preferred appeal before the Commissioner (Appeals), who in turn, rejected their appeal hence, this present appeal.
3. The Ld Chartered Accountant for the appellant submits that they had not undertaken trading activity of their imported inputs. They imported goods but stock transferred it to their other units. It is their contention that since the goods were imported against advance license therefore, no cenvat credit was availed on the imports by the appellant hence, the same was not reversed at the time of transferring the imported goods as such to their other units. Therefore, the transfer of non-cenvatable imported inputs as such to their other units cannot be construed as trading sale and 5% / 6% of the vale of such imported inputs demanded under Rule 6(3) of CCR, 2004 is bad in law. In support of her contention, the Ld Chartered Accountant has produced sample copy of the invoices where under consignor and the consignee are the appellant, but having different factory addresses. Also, she has placed a certificate from the statutory auditor that the transfer challans were issued for the purpose of transfer of raw materials as such from one unit to another unit of the appellant and not sales transaction. On the issue of admissibility of credit availed on Construction Service used for repair and maintenance work in the factory, the Ld CA submits that the Service Tax paid on such Construction Service being used for repair and maintenance work of plant and machinery is admissible to credit even after amendment to the definition of input services with effect from1.4.2011. In support, she has referred to the order of this Tribunal in the case of Ion Exchange India Ltd vs CCE&ST, Surat, vide Final Order No A/13513/2017 dtd 8.11.2017.
4. Ld AR for the Revenue reiterated the findings of the Ld Commissioner (Appeals).
5. I find that there are two issues involved in the present appeal for consideration. The first issue relates to demand of Rs 33,33,794/- confirmed by the Ld Commissioner (Appeals) relates to charging of 5% / 6% of the value of trading sales sunder Rule 6(3) of CCR, 2004. The appellants have vehemently argued that the imported raw materials received against advance license and had been transferred to their other units, hence does not involve any sale but stock transfer of goods. Therefore, it cannot be construed as trading sale. Consequently, Rule 6(3) of the CCR, 2004 is not applicable. I find force in the contention of the Ld CA for the appellant. On going through the Chartered Accountants certificate dt 25.1.2017 and the sample invoices produced, it is clear that the imported materials had been transferred from one unit to another unit even though these documents are referred to as inter-sale and invoice numbers allotted showing the value of the product, but the transactions between the two units cannot be considered as sale and purchase, but stock transfer of the goods. Therefore, confirmation of the demand in this regard is unsustainable and consequently set aside. On the issue of admissibility of credit on Construction Services used for repair and maintenance of the plant and machinery, I find that it is covered by the judgment of this Tribunal in Ion Exchange India Ltds case (supra).
6. In the result, the impugned order is set aside and the appeal is allowed.
(Dictated and pronounced in the open Court) (D.M. Misra) Member (Judicial) swami 2