Custom, Excise & Service Tax Tribunal
M/S. Kankariya Automobiles Pvt. Ltd vs Commissioner Of Central Excise & ... on 2 July, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO.ST/89541/13 [Arising out of Order-in-Appeal No. AV(250)183/2013 dtd. 21/8/2013 passed by the Commissioner (Appeals) of Central Excise & Customs, Aurangabad] For approval and signature: Honble Mr Ramesh Nair, Member (Judicial) =======================================================
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 :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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M/s. Kankariya Automobiles Pvt. Ltd.
:
Appellant
VS
Commissioner of Central Excise & Customs, Aurangabad
:
Respondent
Appearance
Shri Nimesh Mehta, Advocate for the Appellant
Shri A.B. Kulgod, Asstt. Commissioner (A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 2/7/2015
Date of decision: 2/7/2015
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in-Appeal No. AV(250)183/2013 dtd. 21/8/2013 passed by the Commissioner (Appeals) of Central Excise & Customs, Aurangabad, wherein the Ld. Commissioner (Appeals), rejected the appeal filed by the appellant.
2. The fact of the case is that the appellant are providing taxable service of Authorized Service Centre Service (Serving of motor Vehicles). During the period from April, 2007 to March, 2011, they had availed and utilized Cenvat credit of Rs. 11,68,494/-in respect of service tax paid on Goods Transport Agency (GTA) service where as freight paid on inward transportation of the vehicle from M/s. Maruti Suzuki India Ltd.. The appellant also availed Cenvat credit of Rs. 2,08,665/- on construction materials viz. Rolling Steel, Cement, Water-proofing Chemicals etc. The said goods being construction materials were neither inputs nor capital goods used for providing output service and therefore Cenvat credit of excise duty paid thereon is not admissible. Show cause notice was issued on 16/10/2012, wherein Cenvat Credit of Rs. 11,68,494/- and 2,08,665/- was proposed to be denied and proposed to demand penalty under Section 78 and under Rule 15(a) of Cenvat Credit Rules, 2004. The show cause notice adjudicated vide order dated 4/4/2013 wherein adjudicating authority passed following order:
1. I disallow & recover the CENVAT Credit of Rs.11,68,494/- (Rupees Eleven Lakhs Sixty Eight Thousands Four Hundreds Ninety Four Only) availed in respect of service tax (paid by MSIL) on inward transportation of new vehicles under the Rule 14 of CENVAT Credit Rules, 2004 read with Section 73 of Finance Act, 1994.
2. I confirm the recovery of interest on the confirmed Cenvat Credit amount at S.No. (1) above at appropriate rate under Section 75 of Finance Act, 1994.
3. I disallow & recover CENVAT Credit of Rs.2,08,665/- availed in respect of construction material under Rule 14 of CENVAT Credit Rules, 2004 read with Section 73 of Finance Act, 1994. I also appropriate the CENVAT Credit of Rs.2,08,665/- already reversed by them vide entry dated 05.04.2010.
4. I confirm the recovery of interest Rs.16,002/- on confirmed & paid amount at S.No.(3) above at appropriate rate under section 75 of Finance Act, 1994.
5. I impose penalty of Rs.11,68,494/- and Rs.2,08,665/- on M/s. Kankariya Automobiles (P) Ltd., Nagar Manmad Road, Savedi, Ahmednagar under Rule 15(3) of CENVAT Credit Rules, 2004 read with Section 78 of Finance Act, 1994 for availing and utilizing inadmissible input service credit in respect of GTA service and inadmissible inputs viz. construction materials with intent to evade payment of service.
6. I impose penalty of Rs.5,000/- under Rule 15A of CENVAT Credit Rules, 2004 for misrepresenting the facts vis-`-vis availment and utilization of Cenvat Credit in the ST-3 returns submitted by them. Aggrieved by the original order, the appellant filed appeal before the Commissioner (Appeals) who rejected the appeal of the appellant. In original order and the impugned order grounds of denial of Cenvat credit is that (a) GTA service is not used in providing the services of authorized service centre, therefore it is not classified as input service (b) Service tax was paid by M/s. Maruti Suzuki therefore appellant is not entitle Cenvat credit of service tax the same was neither paid by them nor they are registered as GTA service provider. Being aggrieved by the impugned order the appellant is before me.
3. Shri Nimesh Mehta, Ld. Counsel for the appellant submits that services of GTA on which credit was availed is inward transportation therefore it is input service. Since they are registered as out put service provider in respect of authorized station service, they discharged the service tax on their output service. Since the inward GTA is in respect of transportation of the car supplied by the M/s. Maruti Suzuki to the appellant and they are engaged in the services of the car manufactured and supplied by M/s. Maruti Suzuki, the GTA is service input service and credit is admissible. As regard the issue that service tax was paid by M/s. Maruti Suzuki. As regard contention of the Revenue that credit is not admissible on service tax paid by the M/s. Maruti Suzuki and not by the appellant, though the service tax paid by M/s. Maruti Suzuki to the government but in respect of said service tax and service charges i.e GTA, issued invoices wherein Service tax paid by them is clearly mentioned. It is his submission that as per Cenvat credit rules, invoice is valid documents for availing Cenvat credit in respect of service tax paid by service tax provider. Therefore even though service tax paid by M/s. Maruti Suzuki but subsequently it was born by the appellant by way of making payment of service charges as well as service tax to the M/s. Maruti Suzuki, therefore they are entitle for the Cenvat credit. In support he placed reliance on this Tribunal Judgment in case of Commissioner of Central Excise, Tirupathi Vs. Shariff Motors [2010(18) S.T.R. 64 (Tri. Bang)], where in identical issue, the Tribunal has allowed the credit. The said judgment has been upheld by the Honble Andra Pradesh High Court as reported in [2015(38) S.T.R.J53 (A.P.)]. He also relied upon the judgment of this Tribunal in case of Badrika Motors (P) Ltd. Vs. Commissioner of C. Ex. & S.T. Bhopal [2014(S.T.R.) 349 (Tri. Del)]. As regard the service tax of Rs. 2,08,665/-, it is his submission that appellant is not contesting service tax liability in respect of building material and accordingly they have paid service tax alongwith interest before the show cause notice and interest after issuance of show cause notice. He prays for waiver of penalty.
4. Shri A.B. Kulgod, Ld. Asstt. Commissioner (A.R.) appearing for the Revenue reiterates the findings of the impugned order. He further submits that GTA service on which appellant has availed credit is in respect of transportation during the sale of the car by M/s. Maruti Suzuki to the appellant. These cars for which transportation is made are sold as such in the market and no input services involved in respect of sale of the car for which this GTA service was availed. As regard the authorized station service the GTA service is nowhere related to the authorized station service for the reason that from the authorized station service the appellant is providing service of repair and maintenance of already sold cars and no service is provided in respect of the new cars which sold directly in the market, therefore there is no nexus of GTA service with their output services i.e. authorized station service. Therefore it is not input service, hence credit is not admissible. He placed reliance on the judgments in case of Asstt. Commr. C. C. Ex. & ST., Visakhapatnam Vs. Shree Siva Sankar Automobiles [2012 (284) ELT 109 (Tri. Bang.)].
5. I have carefully considered the submissions made by both sides and perused the record.
6. Cenvat credit in respect of GTA was availed by the appellant on inward transportation towards transportation of new cars from M/s. Maruti Suzuki to the appellant. The contention of the Revenue is that GTA is in respect of purchase of car which is sold as such and authorized station service has no relation with this transportation service, therefore the GTA in respect of present service is not input service for providing out service i.e. authorized station service. The identical issue has been dealt by this Tribunal in case of Shariff Motors (supra) in which it was held as under:
6.?We have gone through the records of the case very carefully. The Respondents are paying service tax on GTA services on the service tax paid on transportation of the vehicles to their show room. They are also providers of output service. This output service is servicing of various vehicles. The Revenue has taken a very narrow view that the Respondents might be servicing even vehicles sold by other authorized dealers. In our view, unless the vehicles are received and sold, there would not be any servicing of the same. Moreover the definition of the input service is broad enough to cover the input service availed by the Respondents and also the output service rendered by them. We do not find any merit in the appeal of the Revenue. The Respondents are rightly entitled for the credit. Hence we reject the Revenues appeal and uphold the impugned order.
This case has been upheld by the Honble Andra Pradesh Court wherein Honble Court has passed following order:
Cenvat credit when Service Tax paid as input service on GTA and utilized as output service for payment of Service Tax under Authorised Service Station The Andhra Pradesh High Court Bench comprising Honble Mr. Chief Justice Kalyan Jyoti Sengupta and Honble Mr. Justice Sanjay Kumar on 19-12-2013 dismissed the Central Excise Appeal No. 91 of 2010 filed by Commissioner of Customs, Central Excise & Service Tax, Tirupati against the CESTAT Final Order No. 565/2009, dated 12-3-2009 as reported in 2010 (18) S.T.R. 64 (Tri. - Bang.) (Commissioner v. Shariff Motors). While dismissing the appeal, the High Court passed the following order :
This appeal is preferred against the judgment and order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Bangalore, dated 12-3-2009 and sought to be admitted on the following suggested question of law :
Whether CESTAT is correct in holding that the GTA service utilized by the assessee as recipient, is input service for providing the output service i.e., authorized service station? The aforesaid question amply suggests that there is no element of law involved on the factual aspect. The learned Tribunal has dealt with this aspect in the manner as follows :
In our view, unless the vehicles are received and sold, there would not be any servicing of the same. Moreover, the definition of the input service is broad enough to cover the input service availed by the Respondents and also the output service rendered by them.
We are of the view that the learned Tribunal has given correct interpretation and this is one possible interpretation and we cannot substitute by another one. Thus, we do not find any element of law involved for admission of this appeal.
Accordingly, the appeal is dismissed. No order as to costs. The Appellate Tribunal in its impugned order had held that assessee paid Service Tax on Goods Transport Agency service for transportation of motor cycles from factory to showroom as input service and utilized the same as output service for payment of Service Tax under Authorized Service Station Service. They were also engaged in providing output service of servising of various vehicles but Revenue took a narrow view that assessee might be servising vehicles sold by other authorized dealers. Here, definition of input service is broad enough to cover input service availed and output service rendered by the respondents. So, they are entitled for Cenvat credit under Rules 2(l) and 14 of Cenvat Credit Rules, 2004.
In view of the above Tribunal judgment which was upheld by the Honble High Court, credit of GTA of transportation of new vehicle has been allowed as Cenvat credit for utilizing the same for payment of service tax on output service i.e. authorized station services. As regard the judgment relied upon by the Revenue in case of Sree Siva Sankar Automobiles (supra), I am of the view that judgment is passed by the single member bench of this Tribunal whereas Shariff Motors(supra) was passed by Division Bench and it was upheld by the Honble Andra Pradesh High Court therefore Sree Siva Sankar Automobiles(supra) is not applicable.
Following the ratio of the above judgments, I hold that appellant is entitle for Cenvat credit in respect of GTA as input service. Therefore demand of Rs.11,68,494/- is set aside. As regard credit of Rs.2,08,665/- availed by the appellant on building material, even on merit it is not admissible. Appellant admittedly paid amount and not contesting the same, therefore the demand of Rs.2,08,665/- is maintained. I do not find any reason in default of such payment of service tax by the appellant, therefore, I am of the view that penalty of equal amount imposed and upheld by the lower authority is maintainable. Appeal is partly allowed in above terms.
(Dictated in court) Ramesh Nair Member (Judicial) sk 9 APPEAL NO.ST/89541/13