Custom, Excise & Service Tax Tribunal
M/S.Bch Electric Ltd vs Cce,Delhi-Iv on 21 December, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/ Decision:21.12.2012
Excise Stay Application No.3115 of 2012 -SM
Excise Appeal No.E/2394 of 2012
[(Arising out of Order-in-Appeal No.52/CE/APPL/DLH-IV/2012 dated 25.04.2012. passed by the Commissioner (Appeals)of Central Excise, Faridabad (Haryana).]
For approval and signature:
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) Rule, 1982?
2. Whether it would be released under Rule 27 of :
the CESTAT (procedure) Rule, 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 Department :
Authorities?
M/s.BCH Electric Ltd. Appellants
Vs.
CCE,Delhi-IV Respondent
Appearance: Shri K.L. Handa, Advocate for the appellant. Shri R.K. Mathur, DR for the respondent. Coram: Honble Shri Rakesh Kumar, Member (Technical) F.O. NoA/55156/2013 dated 21.12.2012 Per Rakesh Kumar:-
The appellant are manufacturers of motor starters, converters, connectors, MCC Panel, etc. chargeable to the central excise duty under Chapter 85 & 90 of the Central Excise Tariff. The factory is located at Faridabad and their Head Office is at New Delhi. The point of dispute is as to whether the appellant would be eligible for cenvat credit of service tax paid on services of renting of immovable property (used for car parking) and services of club membership (membership of India International Centre, New Delhi and IEEMA, New Delhi). The total disputed amount of cenvat credit in respect of these two services is Rs.1,06,375/- which was availed during the period from 2007-2008 to September, 2010. The Jurisdictional Asstt. Commissioner vide order-in-original dated 18.11.2011 held that these two services are not eligible for cenvat credit and accordingly vide order dated 18.11.2011 confirmed the cenvat credit demand along with interest and imposed penalty of equal amount on them under Rule 15 of the Central Excise Rules, 2004. On appeal to the Commissioner (Appeals), this order of the Asstt. Commissioner was upheld by the order-in-appeal dated 25.4.2012 against which this appeal has been filed.
2. Heard both the sides.
3. Shri K.L. Handa, Consultant, ld. counsel for the appellant pleaded that the car parking expenses have been included in the costing of their final product as availment of this service is essential for their business, that this service has to be treated as activity relating to manufacturing business of the appellant, that the club membership is necessary as IEEMA provides the market related information such as information of events, market expectations, new technology, help for advertisement, etc. to its members to carry out the business and it is also helpful in view of the future order booking for a company and such information is the basic need of an industry to stand in competition in the market, that in view of this cenvat credit has been wrongly disallowed in respect of these services, more so, when the expenses on both these services are included in the cost of final products as is clear from the certificate dated 20.12.12 given by Chartered Accountant, that the Honble Bombay High Court in the case of CCE Vs. Ultra Tech Cement reported in 2010 (20) STR 577 (para-38) of the judgement has, expressing agreement with the judgement of the Honble High Court in Coca Cola India .reported in 2009 (15) STR 657 (Bombay), wherein it has been held that when a service forms part of the cost of final product then, the credit of service tax paid on such input service would be allowable, that during the period of dispute, definition of input service covered activities relating to business, that in any case, the bulk of the cenvat credit demand is time barred as while the period of demand is from 2007-2008 to September, 2010, the show cause notice has been issued on 8.12.2010 and in this case the appellant were regularly filing the ER-1 return disclosing the availment of cenvat credit in respect of the various inputs and input services, and hence the appellant cannot be accused of suppressing any information from the department, more so, when the availment of cenvat credit in respect of these services was detected by the department in course of audit of their records, during which, the Appellant themselves had produced all the records, that he also relies upon the judgemnt of the Honble Gujarat High Court in the case of Prolite Engg Vs. CCE reported in 1995 (75) ELT 257 (Gujarat) wherein Honble High Court held that non-disclosure of information which is not required to be disclosed by the statutory provisions or prescribed proforma does not amount to suppression or concealment, that since in the ER-1 returns a manufacturer is not required to give invoice-wise details of input or input services in respect of cenvat credit has been taken and the jurisdictional central excise officer while examining the ER-1 returns is free to call for any records to examine the correctness of the cenvat credit availed, the appellant cannot be accused of suppressing the relevant facts from the department. He, therefore, pleaded that the impugned order denying the cenvat credit and confirming its demand along with interest is not sustainable.
4. Shri R.K. Mathur, ld. Departmental Representative, pleaded that sofaras the renting of immovable property for parking of the cars is concerned, the same is welfare activity, that the genuineness of the appellants claim regarding availment of this service is doubtful, as during day time only two cars are parked and during night, 15 cars are claimed to have been parked, that in any case, there is no nexus of the services of renting of car parking space with the manufacture of finished product and hence, this service is not covered by the definition of input services, that sofar as the services of club membership is concerned, there is no nexus of this service with the manufacture of final products and hence, this service is also not eligible for cenvat credit, that the appellant while availing the cenvat credit in respect of these two services never specifically disclosed in ER-I returns filed by them or by other means about the availment of cenvat credit and hence, the longer limitation period under proviso to Section 11 A(1) of the Central Excise Act has been correctly invoked and penalty of equal amount has been correctly imposed on the appellant. He, therefore, pleaded that there is no infirmity in the impugned order.
5. I have considered the submissions from both the sides and perused the records.
6. Sofars as the service of club membership is concerned, the appellant were availing this service from India International Centre and IEEMA. In respect of membership of IEEMA, the appellants plea is that this is an association of engineering products manufacturers and the association provides the market related information, information about new technology etc. to its members which is essential to carry out business and such information is the basic need of an industry to stand in competition in the market. I am of the view that there is merit in the appellants plea. As such membership of this club would be covered by the definition of input services. However, appellant has not shown as to how the membership of India International Centre, New Delhi has the nexus with the manufacturing business and as such the services tax paid on the membership fee of this club is not cenvatable.
7. As regards services on renting of car parking space, I am of the view that the car parking space had obviously been used for parking of the vehicles of the Appellant company and its officers and as such this service has nexus with the business of the appellant and has to be treated activity related to business. Moreover, the appellant has also pleaded that the cost of this service has also been included in the value of the final products and therefore, in view of the judgement of the Honble High Court in the case of Ultra Hich Tech this service would have to be treated as an input service
8. As regards the question of limitation, it is not denied the availment of cenvat credit in respect of these services was detected by the department only in course of audit of their records in course of which the appellant themselves had presented their records to the auditors. It is also not denied that the appellant were regularly submitting ER-I returns and the jurisdictional central excise officers were well within their powers to call for records and examine the same. Therefore, in view of the judgement of the Honble Gujarat High Court in case of Prolite Engg. Vs. CCE (supra), the appellant cannot be accused of suppression of the relevant information as it is not the allegation of the department that the appellant in terms of legal requirements were required to give invoice wise and item wise details of cenvat credit which they have not given. Therefore, only normal limitation period would be available to the department for recovery of ineligible cenvat credit.
8. In view of the above discussion, the impugned order is set aside and the matter is remanded to the original adjudicating authority for re-quantification of the cenvat credit demand keeping in view the observations made above. The penalty under Rule 15(1) would be only in proportion to the cenvat credit demand confirmed.
(Rakesh Kumar ) Member (Technical) Ckp.
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