Racold Thermo Ltd vs Commissioner Of Central Excise, Pune-I

(Arising out of Order-in-Appeal No. PI/VSK/57/2010 dated 29/03/2010 passed by Commissioner of Central Excise & Customs (Appeals), Pune)

For approval and signature:

Honble Mr. M.V. Ravindran, 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 : No 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?

====================================================== Racold Thermo Ltd. Appellant Vs. Commissioner of Central Excise, Pune-I Respondent

Appearance: Shri D.H. Nadkarni, Advocate for Appellant Shri Sanjay Harija, Supdt. (AR), for Respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial)

Date of Hearing : 30/10/2015 Date of Decision : ---------------

ORDER NO Per: M.V. Ravindran

This appeal is directed against Order-in-Appeal No. PI/VSK/57/2010 dated 29/03/2010.

2. Heard both sides and perused the records.

3. The issue involved in this case is whether during the period April, 2005 to March, 2008, appellant is required to reverse the cenvat credit availed on outdoor catering services. The adjudicating authority did not agree with the contention raised by the appellant, after following due process of law, he confirmed the demand of Rs. 2,71,087/- along with interest and also imposed penalty of Rs. 5000/-, dropping the proceedings for reversal of Cenvat credit availed on insurance as also from penalty under section 11AC of the Central Excise Act 1994. Appellant preferred an appeal to the first appellate authority, contesting the issue on merits as well as on limitation. The first appellate authority did not agree with the contention raised on merits, on limitation, he recorded the finding that appellant having not raised the question of limitation before the adjudicating authority, cannot raise the same before him, coming to such conclusion he upheld the order-in-original.

4. Learned counsel would submit that the show cause notice is issued on 14 January, 2009 for seeking reversal of the amount on Cenvat Credit availed by invoking extended period. He would submit that the issue is regarding availment of Cenvat Credit on the amount of Service tax paid on an amount collected by them from their employees for utilizing the Canteen Services. He would submit that on merits the issue is against them but on limitation the demand raised by invoking extended period is liable to be set aside. He would submit that the limitation issue being mixed question of facts and law, it can be raised at any point of time is the law settled and relies upon the judgment of this tribunal in the case of National Organic Chemical Inds. Ltd. 2000(126) ELT 1072. He would submit that the said judgment of the tribunal is upheld by the Apex court as reported as 2002 (142) ELT 280 had dismissed the civil appeal filed by the revenue. It is his submission that the judgment of the larger bench of the Tribunal in the case of GTC Industtries Ltd. was holding filed wherein it was held that Cenvat Credit can be availed on service tax paid on the catering services utilized for canteen in factory. It is his submission that Honble High Court of Bombay in the case of Ultratech Cement had held that Cenvat credit is impermissible on the amount of Service Tax on the amount collected from employees. He would draw my attention to order-in-original, Paragraph no. 16.2 wherein the adjudicating authority has recorded a finding that there was no mala-fide, collusion or any willful mistake or suppression of facts with intention to evade duty and hence question of limitation can be raised by the appellant.

5. Learned departmental representative on the other hand submits that the appellant has not taken the limitation point before the adjudicating authority, it is his further submission that the appellant had recovered the amount from the individual and did not deposit the same to the government treasury hence extended period was clearly invokble. He would submit that Honble High Court of Gujarat in the case of CEMA Electric Lighting Products India P. Ltd. 2015 (37) S.T.R. 718 (Guj) held that in the case of non information, the extended period was correctly invoked. It is also his submission that the High Court has correctly gone into the facts which was the same as in the case.

6. I have considered the submission made by both sides.

7. The issue involved in this case is whether the appellant has availed the Cenvat Credit of Service tax paid on the amount received by them from their employees for availing the services of canteen and whether extended period can be invoked for demand of such ineligible Cenvat Credit.

8. At the outset, I find that the issue on merits as to eligibility to avail Cenvat Credit on the Service tax paid of the amount collected from their employees, the issue is now settled by the judgment of the Honble High Court of Bombay in the case of Ultratach Cement-2010 (20) STR 577. Accordingly, on merits appellant has no case.

9. As regards limitation, I find that the appellant has correctly pointed out that during the relevant period, judgment of the larger bench of the tribunal in the case of GTC Industtries Ltd. (supra) was holding field, which held that assessee can avail the Cenvat Credit of the service tax paid on the canteen services extended to their employees in their favour. Lordships in the case of Ultratack Cement had further clarified that only that portion service tax paid by the canteen contractor is eligible to be availed as Cenvat Credit. This judgment is passed by Honble High Court in the year 2010. It is very clear that during the relevant period appellant herein had every reason to believe that they are eligible to avail Cenvat Credit of service tax paid on the amount paid for canteen services, to that extent demand which have been raised and confirmed by the lower authorities by invoking extended period is liable to be set aside and I do so, if any demand is within limitation from the date of show cause notice, it is upheld along with interest and appellant is directed to pay the same to the revenue.

10. Learned departmental representative raised an objection as to that the limitation was not contested before the adjudicating authority. I find that this argument of the departmental representative will not carry their case any further as issue of limitation is mixed question of law and facts; can be raised at any stage of proceedings is a settled law. In the case in hand as already recorded, appellant had every reason to believe that they are eligible to avail to Cenvat Credit of service tax paid on the canteen services which included an amount collected from their employs.

11. Since the issue is in hand is bona-fide belief, penalties imposed are unwanted and they are set aside.

12. The appeal is disposed of as indicated herein above.

(Operative part pronounced on -----------)

(M.V. Ravindran) Member (Judicial)

akp 1 6 APPEAL No.E/1156/10Mum