M/S. Hardcastle Petrofer Pvt. Limited vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIA-SKSS/134/VAPI/2010 dated 11.08.2010, Passed by Commissioner (Appeals) Central Excise, & S.T., Vapi)

M/s. Hardcastle Petrofer Pvt. Limited : Appellant (s)

VERSUS

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

Represented by :

For Appellant (s) : Shri Paritosh Gupta, Advocate For Respondent (s) : Shri K. Sivakumar, Authorised Representative

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial)

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.K. Das, Hon'ble Member (Judicial)

Date of Hearing / Decision : 26.02.2015

ORDER No. A/10186 / 2015 Dated 26.02.2015

Per : Mr. P.K. Das;

Heard both sides and perused the records.

2. The relevant facts of the case, in brief, are that appellant is engaged in manufacturing of Preparations containing by weight 70% or more of Petroleum Oils as basic constituents, Hydraulic break fluids and other prepared liquids, Lubricating Preparations etc. A show cause notice dated 02.6.2009 was issued proposing recovery of CENVAT credit of service tax amounting to Rs. 20,88,390/- alongwith interest and penalty. It has been alleged that the appellant had wrongly taken CENVAT credit of service tax on the Commission paid to the agents for sale of finished goods (Sales Commission) during the period November 2005 to November 2008. It has been further alleged that the Sales Commission paid to the agent for sale of finished goods do not fall under the preview of the definition of Input Services and not related directly or indirectly in the manufacturing activity up to the place of removal of finished goods i.e. factory gate and therefore, the appellant is not eligible to avail CENVAT credit on input services. Adjudicating authority confirmed the demand of duty alongwith interest and penalty. By the impugned order, Commissioner (Appeals) upheld the adjudication order.

3. The main contention of the learned Advocate is that the Commissioner (Appeals) has passed the order beyond the scope of show cause notice. In this connection, he drew attention of the bench to relevant portion of the impugned order. The Commissioner (Appeals) observed that, in this case the appellant is selling the goods to the dealers to make payment to the appellant, the dealers further sale the goods to their buyers, receive payment and the appellant give different types of discounts in the form of Commission to the dealers. It is further observed that the dealers are not working as Commission Agents and the amount paid to them are neither included in the assessable value of the goods nor form the cost of production of goods. Learned Advocate also contested the demand on limitation.

4. I agree with the submissions made by the learned Advocate. It is evident from the show cause notice that there is no dispute that the appellant sold the goods through Commission Agents and paid the Commission to the Agents. The dispute relates to eligibility to CENVAT credit on the service tax paid on Commission. The findings of the Commissioner (Appeals) that the appellants are selling the goods to their dealers are totally inconsistent witht the allegation in the show cause notice. Hence, such order can not be sustained in the eye of law.

5. In view of the above discussions, the impugned order is set-aside. The matter is remanded to the Commissioner (Appeals) to decide afresh on merits as well as on limitation. Needless to say that the Commissioner (Appeals) shall give proper opportunity of hearing before decision. Appeal is allowed by way of remand.

(Dictated and pronounced in the Court)

(P.K. Das) Member (Judicial) ..KL

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