Custom, Excise & Service Tax Tribunal
Ms Aman Vision vs Cgst & Ce Kanpur on 20 November, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70100 of 2022
(Arising out of Order-in-Appeal No.236-ST-Alld-2021, dated -13/08/2021
passed by Commissioner (Appeals) CGST & Central Excise, Allahabad)
M/s Aman Vision .....Appellant
((Proprietor Ranjeet Kaur)
38/131, 85, Gandhi Gram, Krishna Nagar,
Kanpur, Uttar Pradesh 208001)
VERSUS
Commissioner, CGST & Central Excise, Kanpur
....Respondent
(Kanpur)
APPEARANCE:
Request for adjournment for the Appellant
Shri Santosh Kumar, Authorized Representative for the Respondent
CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NO.-70774/2024
DATE OF HEARING : 20.11.2024
DATE OF DECISION : 20.11.2024
SANIV SRIVASTAVA:
This appeal is directed against Order-in-Appeal No.236-ST-
Alld-2021, dated-13/08/2021 passed by Commissioner
(Appeals), CGST & Central Excise, Allahabad. By the impugned
order Commissioner (Appeals) has held as follows:-
"4.10 In view of the above, I modify the impugned Order
dated 29.10.2020, as under:
(i) Confirmation of demand of Service Tax (including
Cesses) is reduced to Rs.6,34,313/- along with interest;
2 Service Tax Appeal No.70100 of 2022
(ii) Penalty imposed upon the appellant, under Section 78
of the Act, is reduced to Rs.6,34,313/-; and
(iii) Penalty imposed under Sections 77(1)(a), 77(1)(b),
77(1)(c) & 77(2) of the Act, shall remain unchanged."
2.1 The Appellant is engaged in providing Cable Operator
Service, taxable under Finance Act, 1994 but was not paying
service tax as required.
2.2 Enquiry was initiated against the Appellant and it was
observed that during the period April, 2013 to June, 2017
Appellant has short paid service tax amounting to
Rs.11,61,686/- on the services provided by them. They had also
not taken service tax registration in due time and also did not
file any ST-3 returns during the said period.
2.3 A show cause notice dated 15.04.2019 was issued to the
Appellant asking them as to why:-
"17. Now, therefore, M/s Aman Vision, (Proprietor Shri
Ranjeet Kaur), 38/131, 85, Gandhi Gram, Krishna Nagar,
Kanpur is hereby required to show cause to the
Deputy/Assistant Commissioner, Central Goods & Service
Tax, Division-II, 117/7. Sarvodaya Nagar, Kanpur, as to why
(i) The Service Tax amounting to Rs.11,61,686/-
(including S. Tax, Education Cess, Higher Education Cess,
Swach Bharat Cess and Krishi Kalyan Cess), as discussed
above, should not be demanded and recovered from them
by invoking extended period under proviso to Section 73(1)
of Finance Act 1994 read with Section 68 of the Finance Act,
1994 and Rule 6 of Service Tax Rules, 1994, as the Service
Tax has not been paid with intent to evade payment of
Service Tax by suppressing the facts from the department
read with Section 174(2) of the CGST Act, 2017.
(ii) Interest should not be demanded / recovered from them
under the provisions of Section 75 of the Finance Act, 1994
on the confirmed amount of service tax.
(iii) Penalty should not be imposed upon them under Section
78 of the Finance Act, 1994 for failure to pay Service Tax
and for suppression of the value of taxable service with
3 Service Tax Appeal No.70100 of 2022
intent to evade the payment to service tax, thereby
contravening the provisions of Section 68 of the Finance Act,
1994 read with Rule 6 of Service Tax (Determination of
Value) Rules, 2006.
(iv) Penalty should not be imposed upon them under Section
77(1)(a),77(1)(b), & 77(1)(c) of the Finance Act, 1994, for
failure to take registration under the category of "Cable
Operator Service within time and manner as prescribed
under Section 69 of the Finance Act, 1994 read with Rule 4
of the Service Tax Rules, 1994, failed to maintained books of
Accounts and other documents, failed to furnish information
and produced documents called by the Department (as
amended);
(v) Penalty should not be imposed upon them under Section
77(2) of the Chapter V of the Finance Act, 1994 for
contravention of Section 70 of the Act ibid read with Rule 7
of the Rules ibid."
2.4 This show cause notice was adjudicated by the Original
Authority vide Order dated 29.10.2020 holding as follows:-
"i. Against the demand of service tax of Rs.11,61,686/-
(including Cess) proposed in the Show Cause Notice, I
confirm the demand of Service Tax of Rs. 7,64,747/-
(including Cess), against M/s. Aman Vision, 38/131, 85,
Gandhi Gram, Krishna Nagar, Kanpur (Proprietor Shri
Ranjeet Kaur) under proviso of Section 73(1) of the Finance
Act, 1994 read with Section 174(2) of the CGST Act, 2017,
which is recoverable from them alongwith Interest under
Section 75 of the Finance Act, 1994. Remaining demand of
service tax of Rs. 3,96,939/- is hereby dropped.
ii. I impose penalty of Rs. 7,64,747/-under Section 78 of the
Finance Act, 1994 upon M/s. Aman Vision, 38/131, 85,
Gandhi Gram, Krishna Nagar, Kanpur (Proprietor Shri
Ranjeet Kaur).
iii. I impose penalty of Rs. 10,000/- each under Section
77(1)(a), 77(1)(b), 77(1)(c), & 77(2) of the Finance Act,
1994 upon M/s. Aman Vision, 38/131, 85, Gandhi Gram,
Krishna Nagar, Kanpur (Proprietor Shri Ranjeet Kaur)."
4 Service Tax Appeal No.70100 of 2022
2.5 Aggrieved Appellant filed the appeal before the
Commissioner (Appeals) who has vide the impugned order
disposed of the appeal.
2.6 Aggrieved Appellant filed this appeal.
3.1 Counsel for the Appellant has requested for an
adjournment. I have heard Shri Santosh Kumar, Authorized
Representative for the Revenue.
3.2 As matter is in very narrow compass and has been settled
decided in similar cases number of times, the request for
adjournment made is not accepted and matter is considered on
the basis of the available records.
3.3 Learned Authorized Representative for the Revenue
reiterated the findings recorded in the impugned order.
4.1 I have considered the impugned order alongwith the
submissions made in the appeal and during the course of
arguments.
4.2 The impugned order records the findings as follows:-
"4.1 I have gone through the records of the case, the
averments made during the personal hearing and all other
documents/material available on records.
4.2 I take up the issues one by one for decision. Firstly,
the core issue of taxability on account of "Cable Operators
under tile category of "Cable Services needs to be discussed.
I observe that the Cable Operators Service provided by
Cable Operators was first time brought under the ambit of
Service Tax vide Notification No. 08/2002-ST dated
01.08.2002 and as per Section 65/21) of the Finance Act,
1994, "Cable operator has the meaning assigned to it in
clause (aa) of Section 2 of the Cable Television Networks
(Regulation) Act, 1995 (7 of 1995) and as per Section
65(22) of the Act, "Cable Service" shall have the meaning
assigned to it in clause (b) of Section 2 of the Cable
Television Networks (Regulation) Act, 1995 (7 of 1995).
Further, as per Section 2(aa) of the Cable Television
Networks (Regulation) Act, 1995 (7 of 1995) (here-in-after
5 Service Tax Appeal No.70100 of 2022
referred to as "CTN Act'), "cable operator" means any person
who provides cable service through a cable television
network or otherwise controls or is responsible for the
management and operation of a cable television network and
fulfills the prescribed eligibility criteria and conditions. Also,
Section 2(b) of the CTN Act, "cable service" means the
transmission by cables of programmes including re-
transmission by cables of any broadcast television signals.
Further, "the cable television network is defined as per
Section 2(c) of the CTN Act to mean any system consisting
of a set of closed transmission paths and associated signal
generation, control and distribution equipment, designed to
provide cable service for reception by multiple subscribers.
"Subscriber is defined as per Section 2(i) of the CTN Act to
mean any individual or association of individuals or a
company or any other organization or body who receives the
signals of cable television network at a place indicated by
him or it to the Cable Operator without further transmitting
it to any other person. The definition of the cable services
under the Act was amended w.e.f. 10.9.2004 as "Taxable
services" means any service provided to any person by a
cable operator including a MSO in relation to cable service.
Subsequently, w.e.f. 16.6.2005 the definition of taxable
service was amended as Taxable service means any service
provided or to be provided to any person by a cable operator
including MSO in relation to cable service. So the services
provided by both cable operator and MSO continued to be
taxable within the scope of definition of 'service' and taxable
service' given under Section 65B (44) of the Act which
emphasized that "service" means any activity carried out by
a person for another for consideration, and includes a
declared service after introduction of negative tax regime
w.e.f 01.07.2012.
4.3 I further observe that the CBEC vide Circular No.
80/10/2004-ST dated 17.09.2004, explained the changes
made in the budget for 2004-05 as under: 17.09.20% of
service tax on cable operators to Multi system operators
(MSOs): In cable TV senises, broadcast channels transmit
television signals to multi system operators (MSO) who
6 Service Tax Appeal No.70100 of 2022
further send them to the cable operator. The services
provided by the MSOs to the cable operators have been
made taxable".
4.3.1 Furthermore, CBEC vide circular No
F.No.B11/6/12005-TRU dated explained the changes in the
budget for 2005-06 as under: 27.07.2005,
"In the case of radio or TV broadcasting services, the
services are subject to tax where the services are effectively
used and enjoyed. Multi System Operators (MSOs) are
permitted to receive signals from the broadcasting agencies
on payment of prescribed amount. Cable operators transmit
programmes to customers through cable network after
receiving signals from the multisystem operators (MSOs).
Prior to 16.06.2005, service tax was leviable on services
provided by cable operators to their customers and
multisystem operators to cable operators. In this year's
budget, the charges recovered by the broadcasting agencies
from the multisystem operator for providing the signals have
been specifically made liable to service tax. This completes
the service tax chain from the customer to the broadcaster."
4.3.2 I observe that the MSO's received the TV signals from
the broadcasters/aggregators. They entered into agreements
with the broadcasters who provide the integrated receiver
decoder boxes (IRD) to receive the signals in the encrypted
form. These boxes were installed by the MSO. The MSO then
transmits the signals either through the LCO or directly to
the subscribers. When the MSO provides the service through
the local cable operator who would then re-transmit the
broadcast television signals by the cable to the last mile
subscriber, then such a LCO is the cable operator. The
definition of the cable operator as per Section 2(aa) of the
CTN Act states that a "cable operator means any person who
provides cable service through a Cable Television Network or
otherwise controls or is responsible for management and
operation of Cable Television Network and fulfills the
prescribed eligibility criteria and conditions. The "Cable
Television Network" as per section 2(c) of the CTN on other
hand means any system consisting of a set of closed
7 Service Tax Appeal No.70100 of 2022
transmission paths and associated signal generation, control
and distribution equipment designed to provide cable service
for reception by multiple subscribers. Hence there are two
main ingredients in the definition of the Cable Television
Network, one is cable service and the other is subscribers.
The "Cable Service" is defined in Section 2(b) of the CTN Act
to mean Cransmission by cables of programmes including
re-transmission by cables of any broadcast television signals
while "Subscriber" has been defined in Section 2(f) of the
CTN Act to mean any individual or association of individual
or a company or any other organization or body who
receives the signals of cable television network at a place
indicated by him from MSO or the cable operator, without
further transmitting it to any other person. In view of these
definitions it is clear that LCO is the cable operator when he
re-transmits the TV signal as he fulfills the definition of the
term Cable Operator when he provides cable service to the
last mile subscriber.
4.3.3 The same view has been taken by the Hon'ble High
Court of Delhi in its judgment dated 09.03.2017 in the case
of M/s Siti Cable Networks Limited vs Govt. of NCT of Delhi &
ORS. [W.P. (C) 427/2014 & CM No. 851/2014)], Hon'ble
Tribunal in the case of Krishna Satellite Cable Network vs
CCE, Jaipur reported in 2008 (12) S.T.R. 605 (Tri. Del) and
CESTAT, Chandigarh in its Final Order No- A/60167-
60171/2019 dated 22.2.2019 pronounced in the case of M/s
Blue Star Communication & others Vs CCE, Ludhiana.
4.4 From the above discussion, it is clear that as the MSO
had provided the service through the LCOs, the individual
LCOs having their own subscription network were regarded
as the cable operators and were liable to pay the service tax.
Thus, the contention of the appellant that since MSO has
already paid service tax, therefore, they are not liable to pay
service tax is devoid of merit.
4.5 The appellant has also contested that in the present case
the MSO were paying service tax on the same transmission
received by them from the Television Channels and the cable
operators again being asked to pay the service tax on the
8 Service Tax Appeal No.70100 of 2022
same transmission received from Television Channels leads
to the double taxation on the same service. The appellant
has relied upon the judgment of Hon'ble High Court of
Punjab & Hariyana given in the case of M/s Aameet Puri Vs
Union of India [2007 (5) STR 188 (P & H)]. I observe that in
the said case the Hon'ble High Court has held that the in
view of clear definition of "service" as "service to any
person" by a cable operator including "a Multi System
Operator", contention raised on behalf of the petitioners that
Multi System Operator was not liable to pay service tax,
unless service was rendered to a viewer or consumer, has no
merit. Similarly, contention that service tax is required to be
paid twice on the same service is also without any merit".
Thus, it is evident that the appellant has misconstrued the
said judgment of the Hon'ble High Court of Punjab &
Haryana. Relevant portion of the judgment is as under:
7. In the reply find on behalf of the Commissioner Central
Excise Service Tax, it is submitted that since w.e.f 10-9-
2004, "taxable service" has been re-defined to mean service
provided to "any person", it was not necessary that the cable
operator must be providing provided to any customer.
Definition of "cable service" under Section 65(22) is as per
definition under Section 2(b) of the Cable Television
Networks (Regulation) Act, 1995 which is
"cable service' means transmission by cables of programmes
including re-transmission by cable of any broadcast
Television signals."
7.1 Thus, the said definition also includes services provided
by "Multi System Operator". It is further pointed out that
there is no system of double burden as Cenvat Credit Rules
have been applicable to give credit of the amount of service
tax on the input by MSO which can be utilised on output
services by cable service providers to the viewers.
8. We have considered the rival submissions and perused
the record.
9. In view of clear definition of "service" as "service to any
person" by a cable operator including "a Multi System
Operator", contention raised on behalf of the petitioners that
9 Service Tax Appeal No.70100 of 2022
Multi System Operator was not liable to pay service tax,
unless service was rendered to a viewer or consumer, has no
merit. Similarly, contention that service tax is required to be
paid twice on the same service is also without any merit, in
view of the stand taken on behalf of the State in the written
statement to the effect that in terms of Cenvat Credit Rules,
2004, credit of the service tax paid on input services is
available while paying service tax on output services. The
same is also supported by Circular No. F. No. 82/8/2004-
TRU dated 10-9- 2004, para 29.
10. Accordingly, both the writ petitions are dismissed".
4.6 Now I take the issue whether the appellant is providing
branded service or not. I observe that in this case, the
appellant is cable operator and providing cable services to
the subscribers on the basis of signals received from the
MSO i.e M/s DEN. The subscriber has not asked for any
brand for providing the said services. In fact, the appellant is
also not providing any branded service as M/s DEN is
supplying signal to the appellant which has been transmitted
to the subscribers, in that circumstances, there is no relation
of brand name to the ultimate customers. Therefore, I hold
that the appellant is not providing any branded service to
the subscribers, therefore, the appellant is entitled to avail
the benefit of exemption Notification No. 33/2012-8T dated
20.06.2012 subject to fulfilment of conditions mentioned in
the said exemption notification.
4.6.1 I observe that the Notification No. 33/2012-ST, dated
20.06.2012 exempts taxable services of aggregate value not
exceeding ten lakh rupees in any financial year from the
whole of the service tax leviable thereon under section 66B
of the Finance Act, 1994, provided the aggregate value of
taxable services rendered by a provider of taxable service
does not exceed Ten Lakh rupees in the preceding financial
year. Since in the instant case the appellant has received Rs.
12,03,090/-, Rs. 14,20,359/- Rs. 22,35,750/- during the F.Y
2013-14, F.Y 2014-15 & F.Y 2016-17 respectively, therefore,
the appellant is not entitled to threshold exemption of Rs. 10
lakh in the F.Y. 2014-15, 2015-16 & 2017-18 in terms of
10 Service Tax Appeal No.70100 of 2022
Notification No. 33/2012-ST, dated 20.06.2012 as amended.
The appellant has not produced any evidence that taxable
value received during the F.Y 2012-13 was less than Ten
Lakh, therefore, threshold exemption of Rs. 10 lakh in the
F.Y. 2013-14 could not be extended to the appellant in terms
of Notification No. 33/2012-ST, dated 20.06.2012 as
amended. However, the appellant is eligible for threshold
exemption of Ten Lakh during the F.Y 2016-17 since taxable
value received during the F.Y 2015-16 was Rs. 9,08,868/-.
4.7 As regard the issue of admissibility of Cenvat credit of
the service tax paid by the MSO i.e M/s DEN, I find that the
matter has been decided by the CESTAT, Chandigarh in its
Final Order No- A/60167-60171/2019 dated 22.2.2019 in
the case of M/s Blue Star Communication & others Vs CCE,
Ludhiana by observing that- "We find that the out of total
amount received by the appellants, some amounts of total
subscriptions, the appellant are remitting to the MSO on
which the MSO is paying service tax, therefore, the signals
provided by the MSO to the appellants is an input services
for the appellants. Therefore, the service tax paid by the
MSO is available as Cenvat credit to the appellants".
Applying the ratio decided in the above decision of the
Hon'ble CESTAT, I hold that the Cenvat credit of total service
tax amount on input service used for providing taxable
service during relevant financial years is allowed to the
appellant subject to fulfillment of other such conditions as
provided under the Cenvat Credit Rules, 2004 for the
admissibility of the same. In the instant case appellant has
neither registered with the department during relevant
period nor filed statutory ST-3 returns showing availment
/utilization of eligible CENVAT credit in the said returns.
Thus, it is evident that the appellant failed to avail CENVAT
Credit on input services within prescribed limit of six
months/one year thereby Contravened the sixth proviso to
the Rule 4(7) of the CENVAT Credit Rules, 2004. It is well
settled principle that the claim of CENVAT Credit taken
and/or utilized crystallizes only when the appellant has
maintained CENVAT credit records & files statuary returns
before the Department claiming the eligible CENVAT credit in
11 Service Tax Appeal No.70100 of 2022
the said returns. Thus, the CENVAT Credit can only be
availed by filing the statuary ST-3 return, if no return is
filed, it cannot be presumed that appellant has legitimate
credit available within the prescribed time limit & would be
available for infinite period of time. The appellant has also
failed to maintained/produced any CENVAT record for
availment of CENVAT credit within prescribed time limit,
therefore, contravened the provisions of Rule 9(6) & Rule
9(9) of the CENVAT Credit Rules, 2004. Therefore, I am of
the considered opinion that the appellant is not eligible for
CENVAT credit due to non-fulfillment of condition mentioned
in the Rule 4(7), 9(6) & 9(9) of the CENVAT Credit Rules,
2004.
4.8 In view of the above discussion & findings, I hereby
determine the service tax liability after excluding the
entertainment tax from the taxable value and allowing the
benefit of threshold exemption & cum-tax benefit, as under:
Period Value excluding Threshold Taxable Rate of S Service Tax
entertainment exemption value after Tax payable
tax allowing
cum tax
value&
Threshold
exemption
2013-14 1203090 0 1070746 12.36% 132344
2014-15 1420359 0 1264114 12.36% 156245
2015-16 908868 0 793771 14.50% 115097
2016-17 2235750 1000000 1074565 15.00% 161185
2017-18 532386 0 462944 15.00% 69442
(upto
June'17)
Total 6300453 1000000 4666140 634313
4.9 It is observed that appellant has neither taken
service tax registration nor filed any ST-3 returns,
whereas under the self-assessment procedure specified
in the statute, they were required to assess & pay their
Service Tax liability correctly, on their own. The non-
payment of Service Tax could be detected only during
the course of enquiry conducted by the Department.
Thus, it is a clear case of suppression of facts and
contravention of the statutory provisions, with intent to
evade payment of Service Tax. Thus, I find that
extended period of limitation has been rightly invoked
in this case for confirming the demand of Service Tax
and imposing penalty under Section 78 of the Act.
12 Service Tax Appeal No.70100 of 2022
Further, I also observe that the appellant has failed to
take service tax registration in due time, failed to
maintained proper records & also failed to furnish the
information/documents to the department, therefore,
penalties imposed by the adjudicating authority under
Sections 77(1)(a), 77(1)(b) & 77(1)(c) of the Act are
justified. The appellant has never filed ST-3 returns,
therefore, penalty imposed by the adjudicating
authority for non-filing of ST-3 returns for the period
April 2013 to June 2017 under section 77(2) of the Act
is also justified."
4.3 I take note of the order of the Commissioner (Appeals) in
the case of Alpha Cable Network [Order in Appeal No [83-
25/ST/ALLD/2019 dated 22.04.2019] wherein following has been
held:-
"4.2.6 I also find that Hon'ble CESTAT in the case of Universal
Communication vs. Commr. of C. Ex., Cus, & S.T., Nagpur
2016 (45) S.T.R. 80 (Tri.-Mumbai), inter alia, held, as
under:-
Valuation (Service Tax) - Cable Operator Service -
Deduction of Entertainment Tax - Notwithstanding
that said Tax not shown separately in invoice as
stipulated in C.B.E. & C. circular dated 1-8-2002,
deduction of said tax from assessable value allowable
if its payment otherwise established - in view of
appellant submitting details of its payment to
Government account through banking channel, matter
remanded to adjudicating authority to verify payment
particulars and if found in order, not levy any Service
Tax on it - Section 67 of Finance Act, 1994.
4.3 Regarding the submission of the appellants for extending
the benefit of cum-tax value, it is observed that it is not the
case of the Department that the appellants had charged &
collected Service Tax, from their customers, on the amount
worked out on the basis of Entertainment Tax, without
13 Service Tax Appeal No.70100 of 2022
depositing such service tax in the Government account. Thus,
I find that in this case, the appellants are entitled for the
benefit of cum-tax value as per Section 67(2) of the Act.
4.4 As regards to the submission of the appellants that they
are eligible for the benefit of threshold exemption of Rs. Ten
lakh specified under the small service provider exemption
Notifications No.06/2005-ST dated 01.03.2005 & 33/2012-ST
dated 20.06.2012. It is observed that the Hon'ble CESTAT,
Chandigarh in the case of M/s Blue Star Communication vs.
Commissioner of C.Ex. & S. Tax, Ludhiana, vide the Final
Order No.A/60167-60171/2019 dated 22.02.2019, has, inter
alia, held that the local cable operators providing cable
service to the subscribers, on the basis of transmission signal
received from the MSO, are not providing any branded
service and thus, they are eligible for the benefit of the
aforesaid notifications.
4.4.1 Thus, applying the aforesaid Final Order dated
22.02.2019 of the Hon'ble CESTAT. Chandigarh, to these
appeals, I find that the appellants did not provide any
branded service and as such, they are entitled for the benefit
of the aforesaid notifications.
4.5 Regarding the submission of the appellants that the
demands of Service Tax have been wrongly computed by
applying the rate of Service Tax (including Cesses) as 14.5%
for the whole year 2015-16 & as 15% for the whole 2016-17,
it is observed that the rate of Service Tax was 12.36% till
31.05.2015, 14% from 01.06.2015 to 14.11.2015, 14.5%
from 11.2015 to 31.05.2016 and 15% w.e.f. 01.06.2016.
Thus, I find merit in the submission of the appellants.
4.6 So far as the submissions of the appellants about
invocation of extended period of limitation and imposition of
penalties are concerned, it is observed that the Hon'ble
CESTAT, Chandigarh, vide the aforesaid Final Order dated
22.02.2019, has held that extended period of limitation was
not invokable and no penalty was imposable, as the
14 Service Tax Appeal No.70100 of 2022
appellants were under bona fide belief that they were not
liable to pay Service Tax and there was confusion in the
industry.
4.6.1 Thus, applying the aforesaid Final Order dated
22.02.2019 of the Hon'ble CESTAT, Chandigarh, to these
appeals, I find that extended period of limitation is not
invokable and ne penalty is imposable upon the appellants."
4.4 I find that Chandigarh Bench has in the order relied upon
in the case of Alpha Cable Network (Supra) held that extended
period could not have been invoked. As facts of the present case
are exactly identical to the case of Alpha Cable Network(Supra)
or that decided by the Chandigarh Bench, I do not find any
merits in the impugned order to the effect it upheld the demand
for extended period of limitation. The demand should be
restricted to normal period of limitation. Thus the matter needs
to be remanded to the Original Authority for determination of the
quantum of taxes for normal period.
4.5 As observed by in the impugned order Appellant is
claiming Cenvat credit in respect of documents which are much
older than period prescribed for availing the credit as per Rule 4
(7) of the CENVAT Credit Rules, 2004. I do not find that this
issue was considered by the Commissioner (Appeals) in case of
Alpha Cable Network(Supra) or the Chandigarh Bench in case of
Blue Star. Rule 4 (7) of CENVAT Credit Rules is reproduced
below:
(7) The CENVAT credit in respect of input service shall be
allowed, on or after the day on which the invoice, bill or, as
the case may be, challan referred to in rule 9 is received:
....
Provided also that the manufacturer or the provider of output service shall not take CENVAT credit after one year of the date of issue of any of the documents specified in sub-rule (1) of rule 9, except in case of services provided by 15 Service Tax Appeal No.70100 of 2022 Government, local authority or any other person, by way of assignment of right to use any natural resource:
4.6 This proviso to Rule 4 (7) is parimateria to the proviso to Rule 57 G (2) of the Central Excise Rules, 1944 which was inserted by Notification No. 28/95-CE (NT) dated 28.06.1995.
The said proviso is reproduced below:
"Provided further that the manufacturer shall not take credit after six months from the date of issue of any of the documents specified in the First proviso to this Sub-Rule."
This proviso was considered by the larger bench of CESTAT in the case of Kusum Ingots & Alloys Ltd. [2000 (120) E.L.T. 214 (Tri.-LB.)]. Larger Bench held as follows:-
"11. The contention of the appellant is that some reasonable period should have been given to the manufacturer who were having duty paying documents which were more than six months old on the date of amendment and no credit was taken on them, to take credit on such documents, the appellant replied upon the Hon'ble Supreme Court case Union of India v. Harnam Singh (Supra). We find that Hon'ble Supreme Court in the case of Miles India Limited v. Assistant Collector of Customs, reported in 1987 (30) E.L.T. 641 (S.C.) and in the case of Collector of Central Excise, Chandigarh v. Doaba Co-operative Sugar Mills, reported in 1988 (37) E.L.T. 478 (S.C.) held that authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation, prescribed in the Act will prevail. We find no such provisions under the Central Excise Act or under the Rules where the Tribunal can issue such directions as given by the Hon'ble Supreme Court in the case of Union of India v. Harnam Singh (Supra). Therefore there is no merit in this plea of the appellants. The appellants also relied upon the decision of the Hon'ble Supreme Court in the case of Eicher Motors Ltd. v. Union
16 Service Tax Appeal No.70100 of 2022 of India, reported in 1999 (106) E.L.T. 3 (S.C.) = 1999 (30) RLT 829 (S.C.) to say that Section 37 of Central Excise Act does not empower the Revenue to make such rule, as the Clause XVI (a) of Sub-Section 2 of Section 37, only enable the Government to make rules which provides for credit of duty paid on the goods in or in relation to the Excise Rules.
12. We find that after the decision of the Hon'ble Supreme Court in the case of Eicher Motors Ltd. v. Union of India (Supra), Sub-Section XXVIII is introduced in Section 37 to provide for Rules which empower the Government to make rules for not allowing credit to be utilised for payment of duty on excisable goods, by Section 131 of Finance Act, 1999. Therefore, after this amendment reliance by the appellants on the decision in the case of Eicher Motors Ltd. v. Union of India will not help them. If a manufacturer wants to avail the benefit of Modvat credit in respect of inputs used in or in relation to the manufacture of final product on payment of duty on such final products under Rule 57A of the Central Excise Rules, he should follow the procedure laid down under the Modvat Scheme. The contention of the appellants is that if on the inputs the manufacturer had already paid the duty on the basis that when the goods are utilised in the manufacture of final product then tax on these goods are to be adjusted and this right accrued to the manufacturer on the date when they paid the tax on the inputs. The right will continue till the facility is available. A manufacturer who is working under the Modvat Scheme can certainly utilise the credit of the duty paid on the inputs used in or in relation to the manufacture of final product for payment of duty on such final product; but he has to take credit on such inputs within six months from the date of issue of the duty paying documents. After the amendment credit cannot be taken on duty paying documents which are more than 6 months old."
17 Service Tax Appeal No.70100 of 2022 4.7 The decision in case of Osram Surya (P) Ltd. which was approved by the Larger Bench has been affirmed by the Hon'ble Supreme Court reported as 2002 (142) E.L.T. 5 (S.C.) observed as follows:-
"7. Having heard the arguments of the parties and after considering the rule in question, we think that by introducing the limitation in the said proviso to the rule, the statute has not taken away any of the vested rights which had accrued to the manufacturers under the Scheme of Modvat. That vested right continues to be in existence and what is restricted is the time within which the manufacturer has to enforce that right. The appellants, however, contended that imposition of a limitation is as good as taking away the vested right. In support of their argument, they have placed reliance on a judgment of this Court in Eicher Motors Ltd. v. Union of India [1999 (106) E.L.T. 3 (S.C.)] wherein this Court had held that a right accrued to an assessee on the date when it paid the tax on the raw-materials or the inputs would continue until the facility available thereto gets worked out or until those goods existed. In that background, this Court held that by Section 37 of the Act, the authorities concerned cannot make a rule which could take away the said right on goods manufactured prior to the date specified in the concerned rule. In the facts of Eicher's case (supra), it is seen that by introduction of Rule 57F(4A) to the Rules, a credit which was lying unutilized on 16-3-1995 with the manufacturer was held to have lapsed. Therefore, that was a case wherein by introduction of the rule a credit which was in the account of the manufacturer was held not to be available on the coming into force of that rule, by that the right to credit itself was taken away, whereas in the instant case by the introduction of the second proviso to Rule 57G, the credit in the account of a manufacturer was not taken away but only the manner and the time within 18 Service Tax Appeal No.70100 of 2022 which the said credit was to be taken or utilized alone was stipulated. It is to be noted at this juncture that the substantive right has not been taken away by the introduction of the proviso to the rule in question but a procedural restriction was introduced which, in our opinion, is permissible in law. Therefore, in our opinion, the law laid down by this Court in Eicher's case (supra) does not apply to the facts of these cases. This is also the position with regard to the judgment of this Court in Collector of Central Excise, Pune & Ors. v. Dai Ichi Karkaria Ltd. & Ors. [1999 (7) SCC 448].
8. It is vehemently argued on behalf of the appellants that in effect by introduction of this rule, a manufacturer in whose account certain credit existed, would be denied of the right to take such credit consequently, as in the case of Eicher (supra), a manufacturer's vested right is taken away, therefore, the rule in question should be interpreted in such a manner that it did not apply to cases where credit in question had accrued prior to the date of introduction of this proviso. In our opinion, this argument is not available to the appellants because none has questioned the legality, or the validity of the rule in question, therefore, any argument which in effect questions the validity of the rule, cannot be permitted to be raised. The argument of the appellants that there was no time whatsoever given to some of the manufacturers to avail the credit after the introduction of the rule also is based on arbitrariness of the rule, and the same also will have to be rejected on the ground that there is no challenge to the validity of the rule."
4.8 In view of the above discussions, I do not find much merit in the submissions to the effect that Cenvat credit in respect of these documents should be allowed for computation of the demand. However in the remand proceedings while working out the demand for normal period Adjudicating Authority should take 19 Service Tax Appeal No.70100 of 2022 into consideration if any document against which the credit has been claimed was within the period as prescribed by proviso to Rule 4(7) of the Cenvat Credit Rules, 2004 as amended from time to time.
5.1 Appeal partly allowed in above terms. Matter remanded to the Original Authority for computation of the demand for the normal period of limitation after taking note of observations made in para 4.8 above.
5.2 Matter being substantially old to be decided within three months from the date of receipt of this order.
(Dictated and pronounced in open court) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) Nihal