M/S. Berger Paints India Ltd vs Cce-Kol-Ii

(Arising out of Order-in-Appeal No.86/KOL-II/2012 dated 20.9.2012 passed by the Commissioner(Appeals) of Central Excise, Kolkata-III.)

FOR APPROVAL AND SIGNATURE

HONBLE DR. D.M. MISRA, MEMBER(JUDICIAL)

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 Authorative report or not?

3. Whether Their Lordship wishes to see the fair copy of the Order?

4. Whether Order is to be circulated to the Departmental Authorities?

M/s. Berger Paints India Ltd. Applicant (s)/Appellant (s)

Vs.

CCE-KOL-II

Respondent (s)

Appearance:

Shri Gopal Agarwal, C.A. for the Appellant (s)

Shri A.K.Biswas, Supdt.(AR) for the Revenue (s)

CORAM:

Honble Dr. D.M. Misra, Member(Judicial)

Date of Hearing/Decision :- 28.8.2015 Date of Pronouncement :- 28.8.2015

ORDER NO.FO/A/75459/2015

Per Dr. D.M. Misra.

1. Heard both sides.

2. This is an Appeal filed against Order-in-Appeal No.86/KOL-II/2012 dated 20.9.2012 passed by the Commissioner(Appeals) of Central Excise, Kolkata-III.

3. Briefly stated the facts of the case are that the appellant are engaged in the manufacture of paints, thinner etc. falling under chapter 32, 38 and 39 of CETA, 1985. During the period August 2006 to January, 2007 the appellant had received services under the category of Goods Transport Agency(GTA) service which was an input service for them. Also they were required to discharge service tax for availing GTA service under the reverse mechanism method as per Sec.68(2) read with Rule 2(1)(d)(v) of the Service Tax Rules,1994, during the said period; accordingly, discharged the Service Tax on the availed GTA services by debiting their RG-23A part-II account i.e. by utilization of CENVAT Credit instead of payment through cash. However on being pointed out by the CERA Audit, the appellant had paid the said CENVAT Credit amounting to Rs.6,56,490/- vide TR-6 challan No.5 dated 30.3.2007 and also deposited Rs.33,066/- towards interest. Demand notice was issued on 15.9.2008 for wrong utilization of the CENVAT Credit in discharging the service tax on GTA Service. On adjudication, the said demand was confirmed, amount paid through cash was appropriated and equivalent penalty was imposed under Rule 15(4) read with Sec.11AC of CEA,1944. The appellant had challenged the penalty before the ld. Commissioner(Appeals) but without any success. Hence, the present Appeal.

4. The ld.C.A. for the appellant submitted that as soon as it was pointed out by the department, the entire credit amount have been deposited through TR-6 Challan along with interest. There was no intention, whatsoever, in discharging the Service Tax liability by debiting their CENVAT Credit account. It is his submission that therefore no penalty is warranted for initial payment of service tax on GTA Services through CENVAT Credit account and later through cash. He submits that the Honble Gujarat High Court in the case of Commissioner of C.Ex. & Customs vs. Panchmahal Steel Ltd.  2015 (37) S.T.R. 965(Guj.), Delhi High Court in the case of Commissioner of Service Tax vs. Hero Honda Motors LTd.  2013 (29) S.T.R. 358(Del.), Madras High Court in the case of Commissioner of Central Excise, Salem vs. Cheran Spinners Ltd.  2014 (33) S.T.R. 148(Mad.) and Chhattisgarh High Court in the case of UOI vs. Mohini Industries  2015 (37) S.T.R. 979 (Chhattisgarh) have held that payment of Service Tax on GTA services by utilizing CENVAT Credit account cannot be construed as an irregular payment.

5. The ld.AR for the Revenue reiterated the findings of the ld. Commissioner(Appeals).

6. I find that soon after being pointed out by the CERA audit, the appellant had discharged the Service Tax on GTA services availed through TR-6 challan and also the interest on such amount of service tax. On going through the orders of the adjudicating authority as well as the ld. Commissioner (Appeals), I do not find any reasoning/ observation whereby it could be inferred that the appellant had deliberately defied the provisions of law in discharging the service tax. On the other hand, now it is a settled position of law that the liability for payment of service tax towards GTA service under the relevant provisions could be discharged from the CENVAT Credit account. In the result, imposition of penalty on the Appellant is devoid of merit, accordingly the order impugned to the extent of imposition of penalty is set aside. Appeal is disposed off as above.

(Pronounced and dictated in the open court.)

SD/

(D.M.MISRA) MEMBER(JUDICIAL) sm

4 Appeal No.EA-744/12