Greenland Paper Mills Ltd vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No. 3-ST-TVM-2007 dated 25/03/2008 passed by CCE(Appeals), Kochi]

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?

GREENLAND PAPER MILLS LTD AP 1/34A, KUMMALLOOR, ADICHANALLOR, KOLLAM, KERALA STATE Appellant(s)

Versus

Commissioner of Central Excise, Customs and Service Tax TRIVANDRUM NULL T.C.NO.26/334(1&2), I.C.E BHAVAN,PRESS CLUB ROAD, TRIVANDRUM - 695001 KERALA Respondent(s)

Appearance:

Shri G. SUBRAMANIAN ADV C/O. CENTAB, KARIMPATTA RAOD, KOCHI-16 COCHIN - 682016 KERALA For the Appellant

Shri A.K. Nigam, Addl. Commissioner(AR) For the Respondent

Date of Hearing: 27/03/2015

Date of Decision: 27/03/2015

CORAM:

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

Final Order No. 20884 / 2015

Per : B.S.V. MURTHY

The appellants have been manufacturing kraft paper and have been dispatching these to their customers both on freight paid and freight to pay basis by road, through transport agencies. As per the Service Tax Rules, 1994 as amended, in respect of goods transport by road service, for specified categories (including partnership firms and corporate), the consignor or the consignee, whoever pays the freight to the transport agency had to remit the service tax involved and submit the returns. The appellants had been following these instructions and were not paying service tax involved in respect of goods sent on freight to pay basis the consignee had to pay the service tax involved.

2. In some cases of freight to pay basis, to ensure continued patronage and business, the appellant used to reimburse the freight to the consignees. The Department was of the opinion that in such cases of reimbursement, in effect, the appellant had to be considered as having paid the freight and demanded payment of service tax involved. The appellant pointed out that, in such cases, freight is paid to the transport agency by the consignees and the appellant had only been reimbursing the same to some consignees, to keep up the relations. However, the liability for payment of service tax is on the consignee only as they are the one who paid the freight to the transport agencies. The appeal is in the above context.

3. The learned counsel submitted that the law does not require the appellant who is the consignor to produce evidence of service tax payment. It is for the Department to show that appellant had borne the freight and according to the provisions of Rule 2(1)(d)(v), between the consignor and the consignee, the person who pays the freight and falling under one of the category mentioned therein, he is liable to pay service tax as receiver of service and therefore the evidence should have been produced by the Revenue that appellant has borne the freight as consignor before demanding service tax. Nevertheless he submits that three certificates were received from their customers. All of them have certified that the service tax on freight was borne by them and not by the appellant. In fact right through the litigation course, it has been the claim of the appellant that despatches are made by the appellant on freight to pay basis and in some cases to retain customer relations, they issued credit notes to the extent of freight paid but that does not mean that they have borne the freight. In view of the evidence in the form of certificates submitted by the appellant now and in view of my observation that the Revenue should have discharged the burden showing that the freight was paid by them either in the form of statement or in the form of consignment note or any other evidence, in my opinion, based on the submissions made, appeal has to be allowed. Accordingly the impugned order is set aside and the appeal is allowed.

(Order pronounced and dictated in open court)

B.S.V.MURTHY TECHNICAL MEMBER

Raja.

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