Custom, Excise & Service Tax Tribunal
B.G. Shirke Technology P. Ltd vs Commissioner Of Central Excise, Pune Ii on 12 April, 2012
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No. ST/187/08
(Arising out Order-in-Original No. 05/PIII/STC/COMMR/2008-09 dated 4.6.2008 passed by the Commissioner of Central Excise, Pune III)
For approval and signature:
Honble Mr. Ashok Jindal, Member (Judicial)
Honble Mr. P.R. Chandrasekharan, Member (Technical)
1. Whether Press Reporters may be allowed to see No
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 Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Yes
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
B.G. Shirke Technology P. Ltd.
Appellant
Vs.
Commissioner of Central Excise, Pune II
Respondent
Appearance:
Shri Prakash Shah, Advocate for the appellant Shri V.K. Agarwal, Addl.Comm (AR) for the respondent CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. P.R. Chandrasekharan, Member (Technical) Date of hearing : 12.04.2012 Date of decision : 12.04.2012 O R D E R No:..
Per: Mr. Ashok Jindal, Member (Judicial) The appellant is in appeal against the impugned order for demanding the service tax of about Rs.9.7 crores and Rs.10.82 lakhs and equivalent amount of penalty imposed on them under the Finance Act, 1994.
2. The facts of the case are that the appellant are engaged in providing construction services i.e. construction of commercial building and residential complexes. The appellant were availing the benefit of Notification 15/04 in relation to commercial construction and Notification 18/05 in respect of residential construction which provides an abatement of 67% from the gross value received of the service provided by them if the appellant has not availed CENVAT credit on inputs/capital goods. On 1.3.2006, Notification 1/2006 came into force and as per the said Notification abatement of 67% was available only in case where the CENVAT credit of input/capital goods/input service is not availed by the assessee.
3. During the course of scrutiny of records of the appellant, it was found that during the month of March 2006 to June 2006 the appellant has availed CENVAT credit of Rs.17,50,000/- + Rs.33,867/- education cess in respect of service tax paid on input service and availed the CENVAT credit for payment of service tax about Rs.10,61,342/- + Rs.21,227/- education cess on the service provided prior to 1.3.2006.
4. Second demand has been raised for availment of CENVAT credit on outward transportation services. As it was observed that appellant has violated the condition of Notification 1/2006, a show-cause notice was issued for denying the benefit of Notification 1/2006. Therefore, appellant asked why not the service tax to be paid on the entire receipt of gross amount of service rendered by them and denial of CENVAT credit on outward transportation service. The show-cause notice was adjudicated. During the course of adjudication, appellant contested the case, and after considering their contention, impugned order was passed confirming the demands hereinabove along with penalty under the Finance Act, 1994. Aggrieved from the said order, appellant is before us.
5. Shri Prakash Shah, ld. advocate for the appellant appeared and submitted that appellant has not availed any input service credit for the services received after introduction of Notification 1/06. The credit of the input service which was taken by the appellant during the period March 2006 to June 2006 is for the services received by the appellant prior to 1.3.2006 and the said credit was utilised for the payment of service rendered by the appellant prior to 1.3.2006. Therefore appellant has not violated the condition of Notification 1/06. Accordingly, the denial of abatement of 67% of gross service rendered as per Notification 1/06 is not sustainable. To support his contention, he placed reliance on the decision of the Hon'ble Gujarat High Court in the case of CCE vs. Reliance Inds. Ltd. 2010 (19) STR 807 , Ashima Dyecot Ltd. 2008 (232) ELT 580. He further submitted that on the issue of input service credit on outward transportation services, the issue has been settled by the Karnataka High Court in ABB Ltd. reported in 2011 (23) STR 97. Therefore, the demand on that account is not sustainable. As the demands are not sustainable, penalties are not leviable.
6. In alternative, he submitted that on pointing out by the department, they reversed the CENVAT credit and paid some amount in cash. He further submitted that after issuance of show-cause notice they have paid the interest also. In that event, the reversal of credit deems that the credit is not taken therefore, the impugned order be set aside.
7. Shri V.K. Agarwal, Ld. AR opposed the contention of the ld. counsel and submitted that Notification are to be interpreted in strict terms. Notification 1/06 clearly spells out that assessee will not avail any CENVAT credit on input/capital goods/input services. Admittedly, in this case after 1.3.2006, the appellant has availed input service credit. Therefore, the benefit of the above cited Notification is not available to them.
8. Heard both sides.
9. After hearing both sides in detail, we find that there is no dispute between the parties regarding the fact that the appellant is entitled and has availed CENVAT credit on input service which they received prior to 1.3.2006 but the same were paid by them after 1.3.06. Further, there is also no dispute that the appellant has utilized the CENVAT credit for payment of service tax for the service provided by them prior to 1.3.2006. As the appellant has reversed the CENVAT credit along with interest, therefore we are not going into the issue whether the appellant is entitled for CENVAT credit or not. As the appellant is not claiming the refund of reversal of CENVAT credit along with interest, and was under bonafide belief that he is entitled for CENVAT credit for the service which received prior to 1.3.2006, therefore, penalty on the appellant are not imposable in these circumstances.
10. As the appellant has reversed the CENVAT credit availed by them along with interest, same shall be interpreted as appellant has not availed input service credit after introduction of Notification 1/06. The same view was taken by the Hon'ble Apex Court in the case of CCE vs. Ashima Dyecot Ltd. 2009 (240) ELT A41 (SC).
11. In view of these observations, we set aside the impugned order on the condition that appellant shall not claim refund of the amount already reversed by them along with interest.
12. As the ld. counsel has submitted that the issue of input service credit on outward transportation services has been settled by the Hon'ble High Court of Karnataka in the case of ABB Ltd. (supra) by holding that prior to 1.4.2008 the assessee is entitled to take CENVAT credit of Outward Transport Agency service, therefore issue no more res integra. Accordingly, the appellant is entitled for input service credit on outward transportation services.
13. In view of these observations, appeal is disposed of.
(Dictated in Court) (P.R. Chandrasekharan) (Ashok Jindal) Member (Technical) Member (Judicial) SR 6