Cargotec India Pvt. Ltd vs Commissioner Of Service Tax ...

[Arising out of Order-in-Appeal No. 08/2014 dated 01/01/2014 passed by Commissioner of Central Excise and Service Tax , BANGALORE-II( Appeal) ]

For approval and signature:

HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER

1 Whether Press Reporters may be allowed to see 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 of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Cargotec India Pvt. Ltd 10-B, Peenya Industrial Area, 2nd Phase, Peenya SSI BANGALORE - 560071 KARNATAKA Appellant(s)

Versus

Commissioner of Service Tax Bangalore-service Tax 1ST TO 5TH FLOOR, TTMC BUILDING,above BMTC BUS STAND,DOMLUR BANGALORE, - 560071 KARNATAKA Respondent(s)

Appearance:

Mr. L. S. Karthikeyan, Advocate V. LAKSHMIKUMARAN & V. SRIDHARAN WORLD TRADE CENTRE NO.404-406, 4TH FLOOR, SOUTH WING BRIGADE GATEWAY CAMPUS NO.26/1, DR. RAJKUMAR ROAD, MALLESWARAM, BANGALORE - 560 055 KARNATAKA For the Appellant

Mr. Pakshi Rajan, (AR) For the Respondent

Date of Hearing: 20/02/2015

Date of Decision: 20/02/2015

CORAM:

HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER

Final Order No. 20437 / 2015

Per : B.S.V.MURTHY

The appellant was functioning as M/s. Kalmar India Pvt. Ltd. in the year 2006 and had two premises one in Mumbai and another in Bangalore. In March 2006, the Bangalore premises cleared inputs as such and reversed equivalent credit of Rs.24,83,035/-. The inputs were received in Mumbai and in the ST-3 returns in May 2006, the amount reversed by the Bangalore unit was shown as opening balance in the Cenvat credit account by the Mumbai unit. An audit objection was raised taking a view that there was no document for availment of credit by the Mumbai unit. However, before action could be taken on the audit objection, the appellant got merged into the present appellant-company and they took centralized registration in Bangalore in October 2008. Thereafter proceedings were initiated against the Bangalore centralized registered unit. In the show-cause notice, it was alleged that the appellant did not clear the inputs as such under a proper invoice and on this ground, the CENVAT credit of Rs.24,83,035/- has been held to be inadmissible and demanded with interest and penalties under Sections 76, 77 & 78 of the Finance Act, 1994 have been imposed.

2. After hearing both the sides I found that the appeal itself can be decided. Accordingly, the payment of pre-deposit is waived and appeal is taken up for final decision.

3. The only ground on which CENVAT credit has been denied and demanded is that the appellant should have reversed it and transferred it under a proper invoice. As a result of merger, what has happened is that all the credit has come into one book of account only. As a result, the transferred credit also has come back to the original unit and with the centralized registration, the question arises whether credit taken gets regularised. Even if it is held that stock transfer should not have taken place when a proper invoice is not issued, appropriate action should have been taken against Mumbai unit and because of merger no action could have been initiated against Mumbai unit since it ceased to exist. Since there is no dispute that the Bangalore unit had reversed the credit while transferring the inputs, the impugned order taking a view that the credit has to be denied and demanded cannot be sustained. At the same time it has to be taken note of fact that the procedure followed by the appellant for transferring the stock of inputs just by reversal without raising a proper invoice to their Mumbai Unit was not in accordance with the law. Since the denial of credit cannot be sustained, the demand for CENVAT credit availed with interest and penalty under Section 78 on the appellant cannot be sustained. Further, penalty of Rs.10,000/- has been imposed under Section 77 of Finance Act,1 994 for contravention of Rule 3(5) and Rule 9(1)(f) of CENVAT Credit Rules, 2004. In my opinion, this penalty is sustainable since the appellant failed to issue a proper invoice and that was required in accordance with law.

3. In the result, the demand for CENVAT credit and interest thereon and penalty under Section 78 are set aside and penalty of Rs.10,000/- (Rupees Ten Thousand Only) imposed under Section 77 is upheld.

(Order pronounced in open court)

B.S.V.MURTHY TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER rv 3