M/S. Finolex Cables Ltd vs Commissioner Of Central Excise, Pune-I

[Arising out of Order-in- Appeal No. P-I/VSK/257/2009 dated 8/12/2009 passed by the Commissioner (Appeals), Central Excise, Pune-I]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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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 : 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? =======================================================

M/s. Finolex Cables Ltd. : Appellants

VS

Commissioner of Central Excise, Pune-I : Respondent

Appearance

None for the Appellants Shri. V.K. Shastri, Asstt. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 13/5/2015 Date of decision: 13/5/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. P-I/VSK/257/2009 dated 8/12/2009 passed by the Commissioner (Appeals), Central Excise, Pune-I, wherein Ld. Commissioner(Appeals) disallowed Cenvat credit in respect of Rent a Cab. The fact of the case is that the appellant has availed Cenvat credit in respect of input service namely Air/Rail Travel Agent and Rent a Cab. The show cause notice F. No. V(Adj)/16-41/Finolex/08-09 dated 7/8/2008 was issued proposing disallowance of the said credit on the ground that the same does not qualify as input service. However in the adjudication, the adjudicating authority held that both are admissible input services and credit was partly allowed except amount of Rs. 10,332/- on rent a cab service on the ground that this amount of service tax and corresponding value of service have been recovered from employee who have been provided rent a cab service for conveyance to and fro from the factory. Aggrieved by the part of the order to the extent of 10,332/- was disallowed and penalty of Rs. 2000/- imposed under Rule 15(3) of CCR, 2004 appellant filed appeal before the Commissioner (Appeals), who has dismissed the appeal of the appellant by upholding order of the adjudicating authority, therefore the appellant is before me.

2. When the matter was called for hearing, none appeared on behalf of the appellant however I find a letter dated 1/7/2010 from the appellant requesting that appeal can be decided on merit, therefore I proceed to decide the appeal on merit.

3. Shri. V.K. Shastri, Ld. Asstt. Commissioner(A.R.)appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that adjudicating authority in principle held that rent a cab service is admissible input service however part amount of credit of Rs. 10,332/- was disallowed only on the ground that the said amount and corresponding value was recovered from the employee for whom the rent a cab service was provided. Therefore there is no error in the findings of the adjudicating authority and therefore the same was correctly upheld by the Ld. Commissioner(Appeals). Hence the appeal does not survive and the same is liable to be dismissed.

4. I have carefully considered the submission made by Ld. A.R. and gone through the appeal memorandum filed by the appellant.

5. I find that lower authorities in principle agreed with admissibility of the Cenvat Credit on services in dispute i.e. rent a cab service however credit was disallowed only on the ground that amount of value and service tax of Rs. 10,332/- was recovered from employee for whom rent a cab facility is provided therefore credit is not admissible to this extent. Ld. Adjudicating authority has given very clear findings for allowing part credit and disallowing credit of Rs. 10,332/- which is subject matter of this appeal, the same is reproduce below:

12.2 Out of Rs. 32,165/- as demanded in the show cause notice, Rs. 9,114/- pertains to Service Tax on Air/Rail Travel Agent and Rs. 23021/- on Rent-a-Cab. An amount of Rs. 23,021/- includes amount of service tax representing Rs. 1,39,325/- recovered from employees towards the facility. Service tax on Rs. 1,39,325/- works out at Rs. 10,332/- (Rs. 1,39,325/- minus 40% abatement =Rs. 83,595 x 12% + 2% + 1%), which alone is required to be disallowed in as much as services worth Rs. 1,39,325/- amounts to have been provided by the Rent-a-cab operator to the employees, who have paid cost + service tax for the said service. Thus the latter have not borne out the burden of that part of amount, which is recovered from the employees. Remembering amount of Rs. 12,689/- deserves to be allowed in view of the above discussion.

12.3 From above, it is categorically clear that the noticee has availed CENVAT credit of that portion of service tax, which they have never borne or say have recovered from the employees. Thus they availed credit of service tax amounting to Rs. 10,332/- wrongly in contravention of CCR, 2004, the noticees are liable to penalty under Rule 15(3) ibid.

In view of above findings of the original authority which was upheld by the Ld. Commissioner(Appeals) there is no dispute that certain amount of service charges towards rent a cab and its service tax have been collected by the appellant from the employee, Cenvat credit to that extent is not admissible. In view of the above discussion I agree with the lower authorities for disallowing credit of Rs. 10,332/-. In the overall facts and circumstances of the case, I waive the penalty of Rs. 2000/- imposed by the adjudicating authority and upheld by the Ld. Commissioner(appeals). In view of the above discussion impugned order is maintained except penalty part and the appeal of appellant is partly allowed.

(Dictated in court)

Ramesh Nair Member (Judicial)

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