M/S. Amrit Crane Service vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIA-VAD-EXCUS-002-APP-170-14-15 dated 16.06.2014, passed by Commissioner (Appeals) Central Excise, & S.T., Vadodara)

M/s. Amrit Crane Service : Appellant (s)

VERSUS

Commissioner of Central Excise & S.T., Vadodara : Respondent (s)

Represented by :

For Appellant (s) : Shri Vinay Kansara, Advocate For Respondent (s) : Shri S. Shukla, Authorised Representative

For approval and signature :

Mr. P.M. Saleem, Honble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of 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?

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

Yes

CORAM :

Mr. P.M. Saleem, Honble Member (Technical)

Date of Hearing / Decision : 30.10.2015

ORDER No. A/11589 / 2015 Dated 30.10.2015

Per : Mr. P.M. Saleem

The facts of the case in the present appeal are that appellant were providing taxable services of Cargo Handling Services and Supply of Tangible Goods services. It was noticed that the appellant during the quarter July 2011 to September 2011 had shown the gross value of supply of tangible goods services in ST-3 returns as Rs. 89,98,380/-, whereas the actual gross value as per the Taxation Rules, 2011, was Rs. 2,34,50,268/-. Thus, difference of gross value as per Point of Taxation Rules, 2011 vis-`-vis the gross value as shown in ST-3 return had resulted in short payment of service tax of Rs. 14,88,546/-. It was also noticed that the appellant had paid the differential service tax amount of Rs. 96.821/- through GAR-7 Challan and the remaining amount of Rs. 13,91,725/- was paid by way of making debit entry in their cenvat credit account accumulated during the period from October 2011 to December 2011 (the Cenvat credit account was nil as on 30.09.2011). The department was of the opinion that the appellant had wrongly utilised the cenvat credit accumulated after 30.09.2011, the last of the quarter, for the payment of service tax due for the quarter July 2011 to September 2011 in terms of Rule 3(4) of Cenvat Credit Rules, 2004. A show cause notice dated 17.4.2013 was issued to the appellant. The adjudicating authority vide impugned order-in-original confirmed demand of Rs. 13,91,725/- along with interest and imposed penalty of equal amount under Section 78 of the Finance Act, 1994. A penalty of Rs. 2,000/- was also imposed under Section 77 of the Finance Act, 1994. The appellant filed appeal against the said order-in-original before the Commissioner (Appeals), who by the impugned Order-in-Appeal, rejected the appeal and upheld the order-in-original. Aggrieved by the same, appellants are before us.

2. Heard both sides and perused the records. The learned counsel for the appellant submits that they have initially paid the service tax by way of crediting cenvat credit which was irregular and on being pointed out they made good by making payment through cash. He submits that they had requested the adjudicating authority and the Commissioner (Appeals) to allow them to re-credit the cenvat credit, once they paid the duty amount by cash. However, this plea of the appellant was not accepted neither by the original adjudicating authority nor by the Commissioner (Appeals). He submits that once they have discharged the tax liability by way of payment through cash, the initial payment made by way of cenvat credit should be allowed to be re-credited. He also fairly concedes that they are liable to pay interest, but the same should be limited from the date of liability to the date of payment of tax by way of cenvat credit. He submits that had they not utilised the cenvat amount for payment of tax in the instant case, they could have utilised the cenvat credit elsewhere. Therefore, the cenvat credit was blocked, and in effect the department had received the same. He also pointed out that the law was amended in July 2011 and the appellants were not aware of and they discharged the tax liability in November and December 2011 as soon as they become aware of the amended provisions. Therefore, there was no intention to evade payment of tax and hence equivalent penalty imposed on the appellants should be set-aside. He also pleads that this is a fit case for waiving of penalties altogether under the provisions of Section 80 of the Finance Act, 1994.

3. On the other hand, learned Authorised Representative for the Revenue in addition to reiterating the findings of the lower authorities, submits that appellant had not paid the amount by cash at the time of adjudication of the matter and therefore, there was no way that the original adjudicating authority could have ordered for re-credit of the cenvat credit. However, he fairly concedes that since they have paid the amount in cash subsequently, they can be permitted for re-credit of the same. Learned Authorised Representative strongly contends that as the appellant had not disclosed the details in ST-3 return filed and there was every intention to evade payment of tax and therefore, penalties are rightly imposed.

4. We find that the matter of re-crediting of cenvat account is no more res-integra. This Tribunal in the case of CCE, Mumbai vs. CEAT Limited  2010 (254) ELT 349 (Tri. Mum.), in Para 9 of the order, held that credit is to be restored. This decision of the Tribunal was upheld by the Honble High Court of Bombay, reported as 2013 (298) ELT 525 (Bom.). Further the Honble Gujarat High Court in the case of Cambay Chem Limited vs. UOI  2010 (252) ELT 359 (Guj.) held as follows:-

5.?Thus, it is apparent that the petitioner, who has already made the payment by utilising CENVAT credit is ready & agreeable to make payment in cash/from P.L. Account, if the petitioner is granted re-credit to the CENVAT account, which was utilised for making payment of identical sum relatable to months of November & December 2006.

6.?It is not necessary to enter into merits of the respective stands in light of the aforesaid fact situation. Petitioner is ready & willing to make the payment within a period of fifteen days from today by cash/from P.L. Account. The petitioner shall file an undertaking to this effect on/or before 2-4-2009 with Respondent no. 2, with a copy to be placed on record of this petition and make such payment on/or before 16-4-2009. Upon filing of such undertaking, respondent authority is directed to lift the attachment effected vide order dated 9-3-2009 within a period of three working days thereafter.

7.?The petitioner shall be allowed to take re-credit by crediting CENVAT account only after actual payment in cash/from P.L. Account is made.

5. As regards the interest, we find force in the submissions of the learned Counsel. The appellant discharged the service tax liability by way of cenvat credit, which otherwise would have been utilised for payment of dues, and hence the interest liability should be restricted to from the date the liability arose to the date of payment made through cenvat credit. This Bench, in the case of Kalp Corporation vs. CCE, Ahmedabad  2013-TIOL-1558-CESTAT-AHM, in Para 9 held as follows:-

9. As regards the interest issue. I find that there is no dispute as to discharge of duty liability by the appellant through the cenvat account which had balance. Despite the fact that the said duty liability on the finished goods cleared by the appellant has been discharged by them by utilising the cenvat credit and hence government was for all practical purposes was not deprived of the duty. The said procedural infraction of paying the amount through cenvat account has been made good by the appellant subsequently on being pointed out, through TR-6 challan. I find strong force in the argument of the learned consultant that the decision in the case of Solar Chemferts Pvt. Limited (supra( on the issue is in favour of the assessee.

6. In view of the above, we hold that the appellant is liable to pay interest from the date of liability of tax to the date of payment of same through cenvat credit. The same may be quantified by the adjudicating authority. The learned counsel for the appellant submits that the same will be paid immediately.

7. As regards penalties, it is observed that the provisions were amended in July 2011 and the appellant had discharged the service tax liability in November and December 2011 albeit, through cenvat credit. Therefore, there is force in the arguments of the learned Counsel that the appellants were not aware of the amended provisions and there was no intention to evade tax. Hence, imposition of equivalent penalty under Section 78 of the Finance Act, 1994 is not warranted and the same is set-aside.

8. In the light of the above analysis, the impugned orders is upheld with the above modifications. Appeal is disposed of in terms of the directions given above.

(Order dictated and pronounced in the open Court)

(P.M. Saleem) Member (Technical) .KL

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