Manthan Broadband Services Pvt. … vs Shanti Cable Network on 29 May, 2008
Bench: A Kumar
Arun Kumar, J. (Chairperson)
1. By this petition the petitioner has prayed for a direction against the respondent to pay to the petitioner a sum of Rs. 1,64,471.77 as on 31st July, 2007 alongwith interest @ 18% p.a. Further a prayer has been made that the respondent be restrained from taking signals of TV channels from any other broadcaster or MSO until it clears the dues of the petitioner. Notice of the petition was issued to the respondent. However, the respondent failed to appear in pursuance of the notice. Ultimately service was effected on the respondent by way of publication in the newspapers including a vernacular paper circulated in the locality where the respondent is working. Inspite of the said notice none appeared for respondent and the respondent was proceeded ex-parte vide order dated 21st April, 2008.
2. The petitioner is a Multi System Operator and supplies signals to the cable operators like the respondent who relay the signals further to the consumers. The respondent was a franchise cable operator affiliated to the petitioner. The petitioner has filed an affidavit by way of evidence stating therein that there was an agreement between the parties dated 3rd May, 2006 exhibited as Exhibit PW 1/2. The monthly subscription charges payable by the respondent to the petitioner worked out to Rs. 18,366.40/- besides relevant taxes w.e.f. April, 2006.
3. It is stated in the affidavit that regular invoices were being raised by the petitioner against the respondent which were being sent to the respondent for payment. Copies of the invoices are exhibited as Exhibit PW 1/3 to PW 1/17. Courier receipts evidencing delivery of the same to the respondent are exhibited as Annexure A to the additional Affidavit at page 50-51. It is stated that the respondent was irregular in making payments of the subscription charges. Some adhoc payments were made for which receipts were issued. Copies of the receipts issued to the respondent for the payments made by him are exhibited as Exhibit PW 1/19 to PW 1/26. As on 31st July, 2007, a sum of Rs. 1,64,468/- had become due from the respondent to the petitioner. A copy of the statement of account showing the aforesaid due is exhibited as Exhibit PW 1/18. Petitioner says that copy of statement of account is based on its books of account which are maintained in its ordinary course of business. Inspite of repeated requests of the petitioner, the respondent has failed to pay the said amount. A notice dated 2nd April, 2007 calling upon the respondent to clear its dues is stated to have been issued by the petitioner claiming the said amount. Copy of the notice is exhibited as Exhibit PW 1/27. Proof of service of notice on the respondent however, is not forthcoming. In any case proof of delivery of invoices to respondent is there. As per the case of the petitioner the respondent has shifted to another MSO and is taking signals from it without clearing the dues of the petitioner. The respondent must pay for the supply of signals which it has been receiving.
4. In view of the above facts, in my view the petitioner has established its case for recovery of Rs. 1,64,468/- as on 31st July, 2007. I pass a direction against the respondent for payment of the said amount to the petitioner. The respondent will also be liable to pay interest @ 12% p.a. w.e.f. 1st August, 2007 till date of payment.
1. These appeals by the Revenue are directed against the common order of the Commissioner (Appeals) dated 3.10.2007 setting aside the assessment on the Bills of Entry.
2. The respondent, M/s. Malwa Industries Ltd., is engaged in the business of textile and textile goods and in that connection imports certain goods for use as raw material in the manufacture of textile goods. It submitted Bills of Entry for clearance of Dystar Indigo VAT 40 percent SOL/Indigo Powder 90 percent Wettable falling under Tariff Heading 32041559. Additional duty (CVD) was charged on the assessable value of the goods in terms of Section 3 of the Customs Tariff Act, 1975. Feeling aggrieved and contending that the goods were not liable for excise duty under Notification No. 4/2006-CE dated 1.3.2006, the respondent preferred appeals. By the impugned order, upholding the contention of the respondent, assessment was modified deleting the additional duty (CVD), and the appeals were allowed.
3. Section 3(1) of the Customs Tariff Act, 1975 provides for levy of additional duty equal to excise duty. If the import is found to be covered under the said Notification dated 1.3.2006, the respondent would not be liable for any additional duty as the goods in question was chargeable to ‘nil’ rate of excise duty. Having regard to its significance, the provision i.e. Section 3(1) may be quoted as under:
3. Levy of additional duty equal to excise duty.- (1) Any article which is imported in India shall, in addition, be liable to a duty (hereinafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article.
Explanation – In this section, the expression ‘the excise duty for the time being leviable on a like article if produced or manufactured in India’ means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India, or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where such duty is leviable at different rates, the highest duty.
4. On a plain reading it is manifest that the goods imported into India are liable to a duty – called additional duty – equal to excise duty leviable on a like goods if produced or manufactured in India. The object underlying the provision is that an importer should not be placed at more advantageous position vis-a-vis the producers/manufacturers of similar goods in India.
5. Before referring to the respective case of the parties and the contentions advanced it would be appropriate to extract the relevant part of the Notification dated 1.3.2006 as under:
In exercise of the powers conferred by Sub-section (1) of Section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below……… as are given in the corresponding entry in column (2) of the said Table, from so much of the duty of excise specified thereon under the First Schedule to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions specified in the Annexure to this notification, and the Condition number of which is referred to in the corresponding entry in column (5) of the Table aforesaid.
Chapter or heading or sub-heading or tariff item
of the first schedule
Description of excisable goods
3204 or 3809
agents, dye carriers to accelerate the dyeing or fixing of dye-stuffs,
printing paste, and other products and preparations of any kind used in the
same factory for the manufacture of textiles and textile articles
6. The case of the Revenue is that the exemption i.e. the ‘nil’ rate of duty provided in the notification is subject to the condition that the goods are used in the same factory which means that the goods must be used in the same factory in which they were manufactured. Where the goods are manufactured but sold to some other factory or person, for whatever purpose, excise duty would be leviable. Similarly, where the goods are not manufactured in the factory where they are used, the benefit of the notification cannot be claimed. The case of the respondent is that if the expression ‘same factory’ is understood to mean the factory where the goods are actually manufactured, the notification can never be applied in the case of import of goods, for, in the case of import, there is no question of the goods being manufactured in the same factory. According to the respondent, ‘the same factory’ only means that the imported goods must be used in the factory of the importer where manufacturing activity takes place. It was submitted that in order to attract Section 3 of the Customs Tariff Act, by virtue of the Explanation to Sub-section (1), it is not necessary that there should be actual production or manufacture – as held by the Apex Court, and, therefore, where excise duty is not leviable on the manufacture of goods, the importer would not be liable to pay any additional duty for import of like goods. In support of the contention reliance was placed on Thermax Pvt. Ltd. v. CC , Hyderabad Industries v. Union of India , Plastic Processors v. Union of India and Lohia Sheet Products v. Commissioner of Customs 2008 (152) ECR 173. On behalf of the Revenue, on the other hand, reliance was placed on the larger Bench decision of the Tribunal in Priyesh Chemicals and Metals v. Collector of Central Excise, Bangalore and CCE, New Delhi v. Hari Chand Shri Gopal . It was stated that correctness of the decision in Thermax Pvt. Ltd. has been doubted in Hari Chand Shri Gopal and matter has been referred to the larger Bench.
7. It is true that the decision in Thermax Pvt. Ltd. has been doubted in Hari Chand Shri Gopal but it appears notwithstanding the reference to larger Bench vide order dated 3.10.2005, Thermax Pvt. Ltd. is still being followed, as a matter of fact, the case of Lohia Sheet Products was decided placing reliance on it. In any view, until Thermax Pvt. Ltd. is overruled by a larger Bench of the Supreme Court, it will continue to hold the field as laying down the law on the subject and we have no option but to follow it. It would not be out of place to mention that the decision in Thermax Pvt. Ltd. was quoted with approval by the Constitution Bench in Hyderabad Industries Ltd.
8. The question involved in Thermax Pvt. Ltd. was as to applicability of Rule 192 occurring in Chapter X of the Central Excise Rules, 1944 relating to concession. Dealing with the question the Apex Court observed as under:
11. It will at once be seen that there is nothing in the scheme of the rule which makes it inapplicable to an importer of goods. The assessee here has imported the goods and is selling them for use in a factory, a use which qualifies for the concession under the S.8 notifications. The types of use specified in the concessions notified could be of any kind and, even in the notifications under our consideration, they are many and varied. In respect of items falling under S.Nos. 3 and 8, in particular, the actual users may be private individuals or authorities and need not necessarily be manufacturers using the goods in question is an ‘industrial process’ in a narrow sense of that term. For instance, any computer room, hospital or factory purchasing parts of refrigerating and air-conditioning appliances and machinery for use in the computer room, hospital or factory would be entitled to claim the concession by following the prescribed procedure. Only, for claiming a concession in excise duty the user should be the manufacturer himself or he must have made the purchase from a manufacturer liable to pay excise duty on the item whereas in regard to a claim for CVD concession, the supplier will be an importer. The latter will be entitled to sell the goods at the concessional rate of duty (or at nil rate if there is an exemption) if the purchaser from him who puts the goods to the specified use (whether a manufacturer or not) fulfils the requirements of Rule 192. Since the concession under Rule 192 turns only on the nature and use to which the goods are put by the user or purchaser thereof and on whether he has gone through the procedure outlined in Chapter X, it would not be correct to deny it to a supplier of such goods on the ground that he is an importer and not a manufacturer. That aspect is provided for by Section 3(1) of C.T. Act which specifically mandates that the CVD will be equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. In other words, we have to forget that the goods are imported, imagine that the importer had manufactured the goods in India and determine the amount of excise duty that he would have been called upon to pay in that event. Thus, if the person using the goods is entitled to the remission, the importer will be entitled to say that the CVD should only be the amount of concessional duty and, if he has paid more, will be entitled to ask for a refund. In our opinion, the Tribunal was in error in holding that the assessees could not get a refund because the procedure of Chapter X of the rules is inapplicable to importers as such.
We may also notice the relevant observations in Hyderabad Industries Ltd. as under:
10. Section 3(1) of the Customs Tariff Act, 1975 provides for levy of an Additional Duty. The duty is, in other words, in addition to the Customs Duty leviable under Section 12 of the Customs Act read with Section 2 of the Customs Tariff Act. Secondly, this duty is leviable at a rate equal to the Excise duty for the time being leviable on a like article to the one which is imported if produced or manufactured in India. The explanation to this Sub-section expands the meaning of the expression ‘the Excise duty for the time being leviable on a like article if produced or manufactured in India’. The explanation to Section 3 has two limbs. The first limb clarifies that the duty chargeable under Sub-section (1) would be the Excise duty for the time being leviable on a like article if produced or manufactured in India. The condition precedent for levy of Additional Duty thus, contemplated by the Explanation is that the article is produced or manufactured in India. The second limb to the explanation deals with a situation where ‘a like article is not so produced or manufactured’. The use of the word ‘so’ implies that the production or manufacture referred to in the second limb is relatable to the use of that expression in the first limb which is of a like article being produced of (sic) manufactured in India.
11. The words ‘if produced or manufactured in India’ does not mean that the like article should be actually produced or manufactured in India As per the explanation if an imported article is one which has been manufactured or produced then it must be presumed, for the purpose of Section 3(1), that such article can likewise be manufactured or produced in India. For the purpose of attracting Additional Duty under Section 3 on the import of a manufactured or produced article the actual manufacture or production of a like article in India is not necessary. As observed by this Court in Thermax Private Limited v. Collector of Customs, Bombay that Section 3(1) of the Customs Tariff Act ‘specifically mandates that the CVD will be equal to the Excise duty for the time being leviable on a like article if produced or manufactured in India. In other words, we have to forget that the goods are imported, imagine that the importer had manufactured the goods in India and determine the amount of Excise duty that he would have been called upon to pay in that event’. To our mind the genesis of Section 3(1) of Customs Tariff Act has been brought out in the aforesaid observations of this Court, namely, for the purpose of saying what amount, if any, of additional duty is leviable under Section 3(1) of the Customs Tariff Act, it has to be imagined that the articles imported had been manufactured or produced in India and then to see what amount of Excise duty was leviable thereon.
[ Emphasis supplied]
9. The case of Lohia Sheet Products was decided following the decisions in Thermax Pvt. Ltd. and Hyderabad Industries Ltd. As the relevant term of the notification which was subject matter of consideration in that case was somewhat similar to the notification involved in the present case we may refer to the facts of that case in brief. The appellant, Lohia Sheet Products, imported scraps and claimed exemption from additional duty under Section 3 of the Customs Tariff Act on the ground that the scrap was chargeable to nil rate of duty. The goods which qualified for nil rate of duty – as described in the notification was – was copper waste and scrap used within the factory of production for the manufacture of unrefined or unwrought copper, copper sheets or circles and handicrafts. The case of the Revenue was that the expression “within the factory of production” presupposes that only such waste and scrap is exempted from payment of duty which is generated and then used within the factory of production and since, in that case, the waste and/or scrap had been imported from abroad, it cannot be said that it was to be used in the factory of production. It may be kept in mind that in the present case too the stand of the Revenue is more or less the same. Rejecting the contention of the Revenue, their Lordships held as under:
…The entry nowhere uses the word ‘generated’ or ‘imported’. The condition that only that scrap would be entitled to exemption which has been generated in the factory of production is, therefore, unwarranted and unsustainable. The word ‘within’ occurs after the word, ‘used’. The Assessing Authority as well as the Tribunal have arrived at the finding that only that scrap/waste of copper would be entitled to the exemption which had been generated in the same factory because of the word, ‘within’ used in the Heading 74.04. According to them, the word, ‘within’ pre-supposes that the copper waste and scrap was generated in the same factory. We are unable to read the entry in the manner as suggested by the Revenue.
The Court recalled the dictum laid down in Thermax Pvt. Ltd., approved in Hyderabad Industries Ltd., that “one has to forget that the goods are imported, imagine that the importer had manufactured the goods in India, determine the amount of Excise duty that he would have been called upon to pay in that event”.
10. In the case of Plastic Processors (supra), while considering the validity of a circular of the Central Government directing that the relevant exemption notifications are applicable only in respect of plastics “reprocessed in India”, it was held that for the purpose of attracting additional duty under Section 3 of the Customs Tariff Act on the import of a manufactured or produced article, the actual manufacture or production of a like article is not necessary. In essence, what has to be imagined is that the importer had manufactured the goods in India and then the amount of excise duty that he would have been called upon to pay in that event has to be determined.
11. Notification No. 4/2006 dated 1.3.2006, it may be clarified, is a notification issued under Section 5A of the Central Excise Act which empowers the Central Government to grant exemption from duty of excise in public interest. The rates of excise duty and the exemptions, if any, under Section 5A are nevertheless relevant for the purpose of levy of additional duty (countervailing duty) under Section 3 of the Customs Tariff Act. On import of any goods the importer is liable to pay, in addition to customs duty, a duty equal to excise duty applicable to goods “if produced or manufactured in India. It is, therefore, clear that the additional duty is leviable equal to, that is at the same rate, excise duty for goods if like goods are produced or manufactured in India, but as held by the Apex Court, actual production or manufacture is not necessary for levying additional duty. As observed above, the object underlying under Section 3 is to bring the importers at par with the domestic manufacturers. When no excise duty is leviable, it would follow that the importer would not be liable to pay any additional duty. The question as to whether the goods are actually produced or manufactured is not relevant at all.
12. Adverting to the present case, the words “same factory” on the first blush would appear to suggest that the goods must also be produced or manufactured in the same factory, but if that interpretation were to be given, it would render the operation of the notification impossible in the case of import, for, there is no question of the goods being manufactured and then used in the same factory in the case of import. Where the goods are imported, there is no question of their being manufactured or produced in India. They can only be used in the manufacture of some other product as raw material apart from being sold in the market. It is to be kept in mind that actual production of a like goods is not essential, and if that be so, the Revenue cannot insist that notification can be applied only when the goods (imported goods) were manufactured in India. In the case of Lohia Sheet Products, the words were “used within the factory of production”. In the present case, the words are “used in the same factory”. In our opinion, the words “used in the same factory” simply mean that the goods in question should not be used in any other factory i.e. anywhere else other than the factory for the purpose of manufacture of textiles and textile articles. The case of the respondent is that it has only one factory of production. It is not in dispute that the goods in question are ‘finishing agents’ and they otherwise conform to the description in Column 3 of the Table appended to the notification – extracted above. The conclusion is irresistible that the ‘nil’ rate of duty was chargeable and, therefore, the respondent was not liable to pay any additional/countervailing duty on the import of goods under Section 3 of the Customs Tariff Act.
13. The order in Hari Chand Shri Gopal (supra) is not final decision on the point and, in any view, from para 5 of the order it does not appear that the law laid down in Thermax Pvt. Ltd. that in order to attract Section 3 of the Customs Tariff Act, there need not be actual production or manufacture, has been doubted. Thermax Pvt. Ltd., it was observed, requires reconsideration as among other things the requirement that the applicant must obtain L-6 licence and also registration certificate for seeking remission/concession, was not taken into consideration.
14. The decision in Priyesh Chemicals & Metals was relied upon in support of the contention that the conditions laid down in the notification must be satisfied. There cannot be two opinions on this point. Having found that there need not be actual production or manufacture of the goods in order to attract Section 3 of the Customs Tariff Act, muchless in the case of import of like goods, we are satisfied that the conditions stand satisfied and accordingly the goods in question was not liable for additional duty, and the impugned order of the Commissioner (Appeals) modifying the assessment on the Bills of Entry to that extent, therefore, cannot be said to be erroneous to warrant any interference by the Tribunal.
15. In the result, we find no merit in these appeals and they are accordingly dismissed.
Cst vs Cani Merchandising Pvt. Ltd. on 26 March, 2008
Equivalent citations: 2008 14 STT 319
Bench: S Kang, Vice
S.S. Kang, Vice President
1. Heard both sides.
2. Revenue filed this appeal against the impugned order whereby rebate in respect of claim in respect of export of service under Rule 3 of Export of Service Rules, 2005 was allowed.
3. Brief facts of the case are that the respondents are registered with the Service Tax authorities as provider of business auxiliary services. The respondents filed a rebate claim in respect of service tax paid on the ground that the service was delivered outside India, therefore, service is to be treated as export of service. The adjudicating authority rejected the claim and the Commissioner (Appeals) in the impugned order held that the respondents are liable for service tax as service provider, however, they are entitled for rebate under Rule 5 of Export of Service Rules, 2005.
4. Case of the Revenue is that the respondents are situated in India and they are booking orders on behalf of the foreign supplier for supply of goods in India. The Revenue relied upon the terms and conditions of agreement entered between the respondents and the foreign supplier which is termed as Distributor Agreement. As per agreement the respondents are distributors of products of foreign supplier and they are receiving commission in respect of orders procured by them. Contention of the Revenue is that the appellants are provider of auxiliary services and this service cannot be treated as export of service as provided under Export of Service Rules, 2005. Revenue’s contention is that as per scope of export of service such service is delivered outside India and used outside India and payment received in convertible foreign exchange. In the present case service is not provided outside India and used outside India. Contention of the respondents is that they are booking orders on behalf of the foreign supplier for supply of goods and the goods are supplied on behalf of the foreign supplier. The contention is also that this aspect is not gone into by the Commissioner (Appeals) or by adjudicating authority.
5. In this case the respondents claimed the rebate as provided under Rule 5 of Export of Service Rules, 2005. Rule 5 of Rules provides that where any taxable service is provided, the Central Government may, by notification, grant rebate of service tax paid on such taxable service or service tax or duty paid on input services or inputs, as the case may be, used in providing such taxable service and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification. During the relevant period provisions of Rule 3(2)a of the Export of Service Rules, 2005 provides that any taxable service specified in Sub-rule (1) shall be treated as export of service when the following conditions are satisfied, namely:
(a) such service is delivered outside India and used outside India; and
Contention of Revenue is that service is provided in India by booking of orders for the foreign supplier for supply of goods in India. Therefore, such service is not delivered outside India and also not used outside India.
6. I find that this aspect has not been considered either by the adjudicating authority or the Commissioner (Appeals). Therefore, matter requires re-consideration by the adjudicating authority. Accordingly, impugned order is set aside and the matter is remanded to the adjudicating authority for de novo adjudication and to decide after affording reasonable opportunity of hearing to the respondents.
2. The appellant filed this appeal challenging the imposition of penalties imposed under Section 76 and 77 of the Finance Act.
3. The contention of the appellant is that the demand is made in respect of the Man Power Recruitment Agency Services. The contention is that the appellant is an individual and not a commercial concern and only with effect from 16.6.05 the definition of this service was amended and instead of commercial concern the person was substituted, therefore, the appellant being individual are liable to pay Service Tax with effect from 16.6.05 whereas in the present case the demand is made from April 2005 to September 2005. The penalty is imposed on the ground that the appellant filed necessary returns for April 2005 to September 2005 and Service Tax was paid late. The contention is that the appellant comes under the scope of Service Tax with effect from 16.6.05 when the person has been substituted in stead of commercial concern, therefore, there is no question of late filing of returns prior to this date. This aspect has not been considered by the lower authority.
4. The Revenue submitted that the appellant had not replied to any show cause notice nor appeared before the adjudicating authority to explain his position; therefore, the demand is rightly made.
5. In this case, the appellant challenged imposition of penalties imposed under the Finance Act. The penalty imposed on the ground that the appellant failed to file necessary returns for the period April 2005 to September 2005 the returns were filed late and Service Tax was also paid late. The appellant is not a commercial concern but an individual and only providing labour. The Finance Act was amended with effect from 16.6.2005 whereby the word commercial concern was substituted by any person, therefore, come under the purview of Service Tax with effect from 16.6.2005. In these circumstances, the issue of late filing of returns for the period prior to this date requires reconsideration by the adjudicating authority. The impugned order imposing penalty is set aside and matter is remanded to the adjudicating authority to decide the issue of penalty afresh after affording an opportunity of hearing to the appellant.
Speedways Tyre Service vs Cce on 27 February, 2008
Bench: S Kang, Vice, V T M.
S.S. Kang, Vice-President
1. Heard both sides.
2. The applicants filed COD applications for condoning the delay in filing the appeal filed by the appellants. In view of the reasons explained in applications delay is condoned in filing the appeals.
3. The applicants also filed stay applications for waiver of pre-deposit of service tax. The applicants are only re-treading old and used tyres. Contention of the Revenue is that the appellants are providing service of maintenance and repair under Section 65 of Finance Act which also includes re-conditioning. We find that the Tribunal has already granted stay in appellants’ another case. In view of the earlier stay order, pre-deposit of service tax in the present case is also waived. Registry is directed to list these appeals along with appeal No. ST/395-96/2007.
4. We also find that the Revenue has also filed an appeal against the same impugned order bearing appeal No. ST/615-623/07. The said appeal be listed along with present appeals.
1. In the facts of the case, the requirement of pre-deposit is waived and with the consent of parties, we take up the appeal for final hearing and disposal.
2. This appeal filed by the assessee is directed against the order-in-original of the Commissioner of Central Excise, Meerut, dated 11.10.2007 directing recovery of a sum of Rs. 55,58,884/- towards Service Tax to the tune of Rs. 54,49,842/- and education cess to the tune of Rs. 1,09,042/- from the appellant disallowing the Cenvat Credit utilized by the appellant between 01.01.2005 and 15.06.2005 in terms of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11-A of the Central Excise Act, 1944, and penalty of equal amount besides interest on the amount of Service Tax in terms of Section 11-AB of the Central Excise Act.
3. In view of the order that we propose to pass, it is not necessary to set out the facts of the case in details. Suffice it to say that the appellant availed cenvat credits in terms of the provisions of Rule 3 of the Cenvat Credit Rules, but on the ground that the payment of Service Tax under TR-6 challan cannot be treated as evidence and TR-6 challan cannot be considered as a prescribed document for the purpose of taking Cenvat Credit, the claim was rejected by the Commissioner. On behalf of the appellant, it was submitted that under Rule 9 of the Cenvat Credit Rules, Cenvat Credit can be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the documents specified in Clauses (a) to (g) of Sub-rule (1). Challan is a relevant document in terms of Clause (e). The appellant paid Service Tax under TR-6 challan and filed the challans and therefore, it was entitled to avail Cenvat Credits. We find substance in the submissions of the counsel.
4. Rule 9(1)(e) of the Cenvat Credit Rules refers to challan on the document showing payment of Service Tax. In terms of Rule 6(2) of the Service Tax Rules, 1994, the assessee is required to deposit Service Tax in Form i.e TR-6 challan and, therefore TR-6 Challans submitted by the appellant should have been taken to be adequate proof/evidence of payment of Service Tax entitling the appellant to claim cenvat credit. The impugned order of the Commissioner is, therefore, liable to be set aside on this ground alone. However, the Commissioner has not dealt with this and other aspects of the matter and we are therefore of the view that the matter should go back for fresh consideration.
5. In this regard we may point out that in terms of Rule 9(1)(b) of the Cenvat Credit Rules, it is essential that the Service Tax must have been paid by the person liable to pay Service Tax under different sub-clauses as mentioned thereunder. Rule 2(1)(d) of the Service Tax Rules defines person liable for paying the Service Tax. The provisions underwent several amendments from time to time. The amendment relevant for the present purpose was made under Notification GSR 790(c) dated 03.12.2004 w.e.f. 01.01.2005. By the said amendment, the person liable for paying Service Tax in relation to taxable service provided by Goods Transport Agency was the consignor or the consignee of the Goods Transport Agency or any person who paid or was liable to pay freight either himself or through his agent for the transportation of such goods by road or goods carriage. Sub-clause (6) was inserted in Clause (e) of Rule 9(1) of the Cenvat Credit Rules, 2004 under Notification No. 28/05-CE dated 07.06.2005 w.e.f. 16.06.2005. Thus by virtue of the said amendments in the Service Tax Rules and the Cenvat Credit Rules, payment of Service Tax under challan by the person, referred to in Rule 2(1)(d)(v) was to be treated as valid payment so as to entitle him to claim cenvat credit. As mentioned above, the said amendment in Rule 9(1)(e) took with effect from 16.06.2005. The period under dispute in the present case is 01.01.2005 to 15.06.2005. The question for consideration is whether the appellant was covered by Rule 9(1)(e) during the relevant period. We express our opinion on the point as the transactions in question have to be verified by the Commissioner for coming to the conclusion as to whether the appellant was, or not, entitled to claim cenvat credit for the period in question. In this view of the matter, we set aside the impugned order and remand the matter back to the Commissioner for fresh consideration in accordance with law after giving opportunity to the appellant.
6. The appeal stands disposed of in the above terms.
(Dictated and pronounced in the open Court on the 20th day of February, 2008)
1. This appeal filed by the Revenue is directed against the order of Commissioner (Appeals) dated 25th April 2005 setting aside the order of Assistant Commissioner dated 29/11/05 and allowing the appeal of the respondent.
2. The dispute relates to Service Tax under the Finance Act 1994. It is stated that the respondent, M/s Kamal Auto Industries, is engaged in the business of sale of Two Wheel/Four Wheel motor vehicles. Besides selling the motor vehicles it also renders the services as Direct Selling Agent and Direct Marketing Agent for financial institutions like ICICI Bank, HDFC Bank etc. viz. processing papers, evaluation of customers falling in the category of Business Auxiliary Service. For facilitating purchase of motor vehicles, it receives service charges from such financial institutions. The case of the Revenue is that the respondent is liable to pay Service Tax on the amount charged in lieu of such Business Auxiliary Service. Indeed, the respondent paid Service Tax on a part of the amount received as service charge. Show cause notice was issued to the respondent for payment of Service Tax on the whole amount of service charge and the demand was confirmed by the Assistant Commissioner vide order dated 25/11/05. In appeal which the respondent carried to the Commissioner (Appeals), it took the stand that it is not liable to pay Service Tax at all. The plea found favour with the Commissioner who passed the impugned order holding that the demand was not sustainable.
3. This appeal was taken up ex-parte. The respondent refused to accept notice issued by the registry, and therefore the hearing was taken up depriving us of the benefit of assistance from the respondent side. Sh. A.K. Madan, appearing for the Revenue fairly submitted that the issue is covered by the decision of this Tribunal in the case of Commissioner of Central Excise, Jaipur – I v. Chambal Motors (P) Ltd. and Ors. reported in 2007 (83) RLT 963 (CESTAT – Del.). He in particular invited our attention to Para ‘6’ of the judgment which reads as under:
6. It is obvious from the reasoning adopted by the Commissioner (Appeals) that he has proceeded on totally an erroneous footing that a bank cannot avail of ‘Business Auxiliary Services’ as a client. From the nature of agreements on record including the franchisee agreement in the third appeal, it is clear that the assessees were under an agreement with the bank had undertaken to provide service in relation to promotion or marketing of the ‘Banking and Financial Services’ provided by the banks. The banks were providing services under the category ‘Banking and Other financial services’ falling in Clause (12) of Section 65. In relation to those services, the respondent-assessees were providing services for promotion or marketing of the banking and other financial services provided by the banks. The banks were, therefore, their clients being recipient of such services from the respondents. It has come in evidence that the respondents were required to obtain loan applications from their customers who desired to avail loans from the banks. The respondents had undertaken to process those applications and after scrutiny forward them to the bank. Admittedly, for such services, they were paid commission by the bank, which was reflected in their account. Once consideration accrued to them, as against the services provided by them to the bank, by way of commission, it was hardly of any consequence how a portion of that commission, which as per the particulars provided by the Bank was given as “pay out” to assessees in respect of which even the TDS was deducted, was spent by them. If they chose to give some amount from that gross commission amount to their customers either directly or through the bank, it would not change the nature of the receipts in their hand.
4. Having observed thus, the Tribunal remitted the matter with a direction to the Commissioner (Appeals) to decide the case on merits as there was no finding on arrangement which existed under the agreement as to whether in reality any commission was being passed on the bank, or by the bank. It also remained to be seen whether the amount was directly given to the customers of the assesses under some tripartite agreement and whether it became actually payable to the respondents and, if so, at what stage?
5. Prima facie, the facts of the case Chambal Motors, were almost similar to the facts of this case and therefore conclusion of the Commissioner (Appeals) in the impugned order cannot be sustained and the matter has to go back for fresh decision on merit in the light of the decision in Chambal Motors case.
6. The impugned order dated 29/11/05 is accordingly set aside and the appeal is allowed by way of remand.
1. Heard ld. SDR. None appeared on behalf of the respondent in spite of notice.
2. The Revenue filed this appeal against the impugned order whereby Commissioner (Appeals) set aside the adjudication order on the ground that as per provisions of Section 73 of Finance Act the Assistant Commissioner or as the case may be the Deputy Commissioner of Central Excise is the proper officer to issue the notice for recovery of tax. In the present case show-cause notice was issued by the Supdt. of Central Excise.
3. The contention of the Revenue is that the provisions of Section 73 of Finance Act were further amended by Finance Act 2005 with effect from 13.5.05 whereby the Central Excise Officer was empowered to issue a show-cause notice in respect of Service Tax which has not been levied or short paid or which has been short levied or short paid. The contention is that the notice has been issued by the Supdt. of Central Excise who is Central Excise officer, therefore, the demand cannot be set aside on the ground that notice has not been issued by Assistant Commissioner or Deputy Commissioner of Central Excise.
4. I find that the Commissioner (Appeals) in the impugned order held that only Assistant Commissioner or Deputy Commissioner as the case may be is the proper officer to issue the notice for recovery of Service Tax. I find that the provisions of Section 73 of Finance Act were amended with effect from 13.5.05 and instead of Assistant Commissioner or Deputy Commissioner the Central Excise officer was authorized to issue notice for recovery of the Service Tax. In the present case, show-cause notice was issued on 7.6.06. In these circumstances, as the amended provisions were not taken into consideration, the impugned order is set aside and the matter is remanded to the Commissioner (Appeals) to decide the appeal afresh after affording an opportunity of hearing to the present respondent. The appeal is disposed of by way of remand.
Agrimas Chemicals Ltd. vs Commissioner Of Central Excise on 15 February, 2008
Equivalent citations: 2008 10 S T R 424
Bench: S Jha
S.N. Jha, J. (President)
1. This appeal has come up for hearing for the point of waiver. The dispute relates to Service Tax for the period May to September, 2005. The case of the appellant/assessee is that excess payment had been made in the month of April, 2005 which could be adjusted against the tax liability for the period in question and, therefore, there was nothing outstanding against the appellant. Reference was made to provisions of Sub-rule (3) of Rule 6 of the Central Excise Rules, 1994 (sic) (Service Tax Rules, 1994).
2. On behalf of the Revenue, it was submitted that the adjustment referred to in Rule 6(3) pertains to the advance payment of Service Tax where the services were not rendered. He submitted that excess payment, if any, could be refunded to the appellant, but it cannot claim adjustment.
3. The outstanding demand against the appellant is Rs. 76,825/- and I am of the view that stay of demand will not result in Revenue loss. In these circumstances, the pre-deposit of the amount is dispensed with. The application is disposed of accordingly.
(Dictated and pronoun in the open Court on the 15th day of February, 2008.)
Cce vs New India Electric Works on 29 January, 2008
Equivalent citations: 2008 13 STJ 40 CESTAT New Delhi, 2008 10 S T R 161, 2008 14 STT 263
Bench: S Kang, Vice, S T T.V.
S.S. Kang, Vice President
1. Heard learned SDR and considered the written submission submitted by the respondent vide letter dated 23rd January 2008.
2. In this case, show cause notice was issued to the respondent for demand of Service Tax on the ground that respondent provided the maintenance and repair service. The Adjudicating Authority confirmed the demand and imposed the penalties. The respondent filed appeal and Commissioner (Appeals) set aside the demand on the ground that the contract in question is only a rate contract other than the maintenance contract.
3. With the written submission, respondent filed the copies of the contract. We have gone through the contract, the contract is for routine/break down and capital maintenance of H.T. Motors and routine and break down maintenance of L.T. Motors. In the schedule of prices, it is also for maintenance of the H.T. Motors. In view of the terms contract, copy of which is produced by the respondent, the contract is not only for repair, it is a maintenance contract and as per the provisions of the Finance Act Maintenance or Repair Service means any service provided by a person under a maintenance contract or agreement or repair in respect of maintenance or repair of goods. In the present case, as service provided under a contract, which is a maintenance contract, therefore, the impugned order is not sustainable, hence set aside. The order passed by the Adjudicating Authority is restored. Appeal is allowed.