Commissioner Of Service Tax vs Stock Holding Corpn.Of India Ltd

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. I

Appeal No. ST/228/10

(Arising out of Order-in-Original No. 28/STC/BR/09-10 dated 17.02.2010 passed by Commissioner of Service Tax-I, Mumbai)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

Commissioner of Service Tax, Mumbai Appellant Vs.

Stock Holding Corpn.of India Ltd.

Respondent

Appearance:

Shri K.S. Mishra, Addl. Commissioner (AR) for appellant Shri Kewal Shah, C.A. for respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of Hearing: 11.08.2015 Date of Decision: 11.08.2015

ORDER NO

Per: M.V. Ravindran

This appeal is filed by the Revenue against Order-in-Original No. 28/STC/BR/09-10 dated 17.02.2010.

2. Heard both sides and perused the records.

3. On perusal of the records we notice that the issue involved in this case is regarding the demand of CENVAT credit which has been allegedly wrongly availed by the respondent on the input service which were distributed to them from their other units. Show-cause notice was issued for demand of such CENVAT credit, on the ground of distribution of CENVAT credit to their other units without obtaining the registration for such input service distribution. The adjudicating authority after following due process of law, dropped the proceedings initiated by the show-cause notice on merits as well as on limitation. Aggrieved by such an order, Revenue has filed this appeal.

4. The main contention of the learned is that during the period in question i.e. May 2003 to March 2005 there were no provisions for registration under Input Service Distribution" and the CENVAT credit distributed by the respondent from Mumbai Division I to Mumbai Division V is correct as prior to 01.06.2005 the demand was correctly raised in the show-cause notice. It is also his submission that the provision of input service distribution was included and registration become a condition as per Rule 4A(2) of CENVAT Credit Rules, 2004. Hence no CENVAT credit availed on invoice issued by input service distributor has to be registered. On limitation it is his submission that the Superintendent of Service Tax Division V had informed the respondent as to inelibile of availing CENVAT credit and need to reverse the same on 20.06.2005. On being noticed that the respondent has not done so, show-cause notice was issued.

5. Learned Counsel on the other hand relies upon the decision of the Tribunal in the case of CCE Vadodara v. Plastichemix Industries  2013 (32) STR 383 (Tri- Ahmd.) and Pricol Ltd. - 2015 (38) STR 668 (Tri.  Chennai) for the proposition that there is no dispute as to the respondent eligible to avail CENVAT credit and the distribution of input service were only a procedural matter.

5.1 On limitation it is the submission that the show-cause notice is issued beyond the period of 1 year when the respondent had in their ST-3 returns specifically indicated that CENVAT credit is availed based upon the invoice issued.

6. The Revenues case in this appeal is basically contesting the CENVAT credit liability on the ground that there was no registration on the input service distributor during the period in question.

7. There is no dispute as to the fact that the respondent is eligible to avail CENVAT credit and there is no allegation or dispute that the respondent has availed excess CENVAT credit on input service distributed by its own unit. On this factual matrix we find that the adjudicating authority has recorded the following findings:-

4.3 I find that the Noticee has taken credit on the input services which were eligible and utilized it on the output service. The show cause notice is issued only for wrong distribution between the two units and not for wrong availment and utilization on the part of the notice, which is only a procedural mistake and there is no contravention of Rule 14 of CENVAT Credit Rules, 2004.

4.4 Further, the Noticee has taken their service tax registration of input service distributor from June, 2005 and prior to June, 2005 there was no requirement on the part of the Input Service Distributor to register with the department. The credit availed by the noticee pertains to the period from May, 2003 to March, 2005. At the stage of availment of credit, they have tried to allocate the availment which have been communicated by the assessee to each jurisdictional division at the time of filing the returns. The Noticee discontinued the practice of proportionate credit from April, 2005. From this, it is evident that the department was having all the required information viz., that the noticee were claiming proportionate credit in their two divisions i.e. Institutional Business from Mittal Court (registered with service tax division-I) and Retail Business (registered with Central Excise, Mumbai  V). The Noticee has filed ST-3 Return on 18.10.2005 (as per the written reply of the Noticee). The show cause notice is issued for wrong distribution of Cenvat credit. Therefore, the Noticee has not suppressed the facts and not contravened the provisions of Section 73(1) of the Finance Act, 1994. There is no allegation or evidence to show that the assessee is not eligible for availing the CENVAT credit.

The above reproduced findings of the adjudicating authority are not controverted by the Revenue in the Grounds of Appeal. We find strong force in the contentions raised by the respondent that this Tribunal in the case of Plastichemix Industries (supra) and Pricol Ltd. (supra) has held procedural law should not dominate over the substantial law and is applicable in this case in full force.

8. We find no merits in the appeal filed by the Revenue. Appeal is rejected. (Dictated in Court)

(C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial)

nsk

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Appeal No. ST/228/10