) S.N.I. Industries vs Commissioner Of Central Excise & St

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI

Appeal Nos.ST/205 to 208/2008

[Arising out of Order-in-Appeal No. 52/2008-(SLM) (ST) dt. 17.6.2008, OIA No.53/2008-(SLM) (ST) dt. 18.6.2008, OIA Nos.55 & 56/2008-(SLM) (ST) dt. 18.6.2008 all passed by the Commissioner of Central Excise (Appeals), Salem]

1) S.N.I. Industries 2) S.N.A Granites 3) S.N.I. Granites 4) S.N.I. Granites Appellants

Versus

Commissioner of Central Excise & ST, Salem Respondent

Appeal Nos.ST/178 to 180/2010

[Arising out of Order-in-Appeal No.184/2009, 185/2009 & 186/2009 all dt.30.12.2009 all passed by the Commissioner of Central Excise (Appeals), Salem]

Commissioner of Central Excise & ST Salem Appellant

Versus

1) S.N.A.Granites

2) S.N.I. Granites

3) S.N.I Industries Respondents

Appearance:

Shri M. Rajendran, Advocate For the Assessees

Shri M.Rammohan Rao, JC (AR) For the Revenue

CORAM :

Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member

Date of Hearing/Decision : 24.8.2015

FINAL ORDER No.41041-41047/2015

Per R. Periasami

As the issues involved in these appeals are identical, all the seven appeals are taken up together for hearing and disposal. Appeal Nos. E/205 to 208/2008 are filed by assesses against separate OIAs as above passed by Commissioner (Appeals), Salem. Appeal Nos. ST/178 to 180/2010 are filed by Revenue against the Commissioner (Appeals) orders dt. 30.12.2009.

Appeal Nos.205 to 208/2008 2. The appellants are registered with Central Excise as EOU for manufacture and export of polished granite slabs. The appellants have also obtained service tax registration for payment of service tax as recipient of GTA service on the freight paid for transport of granite from quarry to the factory and also from factory to the port of destination. They have paid service tax on 25% of value and claimed abatement of 75% as per notification 32/2004. Show Cause Notice was issued to the assesses for denying the abatement. Adjudicating authority in his order confirmed the differential service tax and also imposed penalty under Section 76 of the Central Excise Act in respect of Appeal ST/205/08 and in other three appeals ST/206 to 208/2008, the adjudicating authority imposed penalty under section 76 & section 78. On appeal, the Commissioner (Appeals) in his orders rejected the appeals and upheld the impugned orders. The appellants preferred appeals before this Tribunal and the Tribunal vide Final order No.1750 to 1753/2009 dt. 12.11.2009 set aside the impugned order and allowed the appeal. Revenue filed C.M.A before High Court against the Tribunals final order and the Honble High Court in their order dt. 26.9.2013 in C.M.A.No.1431 to 1434/2010 set aside the Tribunals order and remanded the matter back to the Tribunal for fresh consideration in accordance with law on merits. Hence the present appeals by assessees.

Appeal Nos.178 to 180/2010 3. As regards the Revenues appeals, the issues are identical and the adjudicating authority has confirmed the demand of differential service tax and also imposed penalty under Section 76 for the subsequent period. On appeal, Commissioner (Appeals) allowed the respondents appeals by setting aside the order by relying this Tribunals final order dt. 12.11.2009. The Department reviewed the said order and filed the present appeals.

4. Heard both sides. Ld. Advocate appearing for the assessees appeals submits that they have paid service tax on GTA as recipient as per the notification 32/2004 and submits that the transporters are individual truck operators and not a GTA. He submits that being a individual truck operators, they are not registered with service tax and also and not availed any cenvat credit on inputs and capital goods. As per the Finance Minister's Speech, the service tax is levied only on GTA and not on individual truck operators. They paid service tax on their own by claiming abatement of 75% in terms of the above notification. He relied Boards Section 37B order No.5/1/2007-ST dt. 12.3.2007 wherein the Board has clarified that abatement is eligible for person who is paying service tax as a recipient on GTA. Therefore, they have correctly paid the service tax. The condition of the notification is not applicable to truck operators as they have not issued any consignment notes. They also have not violated condition of the notification. He further submits that w.e.f 1.1.2010 the said condition has-been deleted and the abatement is applicable to all persons. He relied on Tribunals decision in the case of Dai Ichi Karkaria Ltd. Vs CCE Pune - 1996 (81) ELT 676 (Tribunal). He also submits that they being a EOU the service tax paid on GTA was taken as credit and claimed refund under rule 5 of CCR.

5. On the other hand, Ld. A.R reiterates the grounds of appeal filed by Revenue and submits that as per amendment of service tax rules by Notification No.35/2004-ST dt. 3.12.2004, Rule 4B has been specifically inserted wherein issue of consignment notes is specifically brought in the rule itself in relation to transport of goods by road by the GTA. He drew our attention to Boards circular dt. 27.7.2005 at para 31 of the circular wherein Board has specifically held that condition of the notification has to be complied to avail benefit of Notification 12/2003-ST dt. 20.6.03 wherein the declaration from the goods transport agency is to be taken for the purpose of availing abatement by the recipient of GTA. He also relied Boards circular dt. 23.8.2007 at para 5.1 wherein specifically it was clarified on the issue of invoice, bills, challans and consignment notes and other documents. He also submits that as per Section 37B order dt. 12.3.2007 at para-4 person who is liable to pay service tax as recipient is entitled to the benefit of Notification No.32/2004 subject to fulfilment of the condition of the notification. He submits that in the present case, there is no declaration or no proof that the condition (i) and (ii) of the notifications are complied. Therefore, the adjudicating authority and the Commissioner (Appeals) in the assessees appeals have rightly confirmed the demand and imposed penalty as the said conditions have not been fulfilled. In the case of Revenues appeals the Commissioner (Appeals) has not examined merit of the case but merely relied on Tribunals order and set aside the OIO. He submits that Hon'ble High Court in the case of CCE Vs Suibramania Siva Co-op Sugar Mills Ltd. held that definition of GTA service includes any person providing service as truck operator service and the service tax is liable to be paid by the recipient. He relied on the following citations:-

(i) Bharathi Soap Works Vs CCE Guntur 2008 (9)STR 80 (T-LB)

(ii) UOI Vs Ganesh Rice Mills 1998 (99) ELT 199 (SC)

(iii) CCE Salem Vs Suibramania Siva Co-op Sugar Mills Ltd.

2014 (35) STR 500 (Mad.)

6. Heard both sides. We have carefully considered the submissions and also perused the records. The short issue in these appeals is denial of abatement of 75% availed under Notification 32/2004-ST dt. 3.12.2004. On perusal of the SCN, OIO and the impugned orders-in-appeal, we find that the assessees engaged individual truck operator/owner for transport of granite blocks from quarry to the factory and from factory to the port of destination and paid service tax on the GTA by availing Notification 32/2004-ST. Department denied the abatement and demanded differencial dutyon the ground that the assessees not fulfilled the condition of the notification. It is pertinent to see the relevant notification 32/2004 which is reproduced as under :-

"Service tax payable on 25% of the gross amount charged by Goods Transport Agency (w.e.f. 1-1-2005) In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service provided by a goods transport agency to a customer, in relation to transport of goods by road in a goods carriage, from so much of the service tax leviable thereon under section 66 of the said Act, as is in excess of the service tax calculated on a value which is equivalent to twenty five per cent, of the gross amount charged from the customer by such goods transport agency for providing the said taxable service :

Provided that this exemption shall not apply in such cases where -

(i) the credit of duty paid on inputs or capital goods used for providing such taxable service has been taken under the provisions of the Cenvat Credit Rules, 2004; or

(ii) the goods transport agency has availed the benefit under the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 12/2003-Service Tax, dated the 20th June, 2003 [G.S.R. 503(E), dated the 20th June, 2003].

This notification?2. shall come into force on the first day of January, 2005.

[Notification No. 32/2004-S.T., dated 3-12-2004]"

The proviso to notification stipulates that this exemption is not applicable if the service provider has availed input and capital goods credit for providing GTA service and they should not have availed notification 12/2003. We find that in the present case the service providers are the transport operators. On perusal of payment vouchers dt. 25.4.2005, 3.6.2005 and 26.8.2006 issued by the appellants to various individual truck owners, we find there is no document or any consignment note by the assessee. It is pertinent to state that as per GTA rules, the GTA should issue consignment notes and not the individual truck owners. In the present case, since the individual truck operator is not registered with service tax, the question of availing input credit or capital goods credit does not arise. The Boards circular dt. 27.7.2005 and 23.8.2007 are applicable to consignment agents who issue consignment notes to, transporters and they have to declare in the invoice that they have not availed any credit. In this case, transport operators who rendered GTA service to assessee are not registered with central excise or service tax.

Therefore, it is evident that once the service provider is not registered with service tax, the fulfilment of condition of notification No.32/2004 does not arise. However, we do not agree with appellants contention that they are not liable to pay service tax as the Honble High Court in the case of CCE Salem Vs Suibramania Siva Co-op Sugar Mills Ltd. (supra) clearly held that any person who avails GTA Service from any person including individual truck operators are liable to pay service tax under section 65 (105) of the Finance Tax. Therefore, the appellant is eligible to pay service tax as a recipient and they are eligible for abatement and the appellants have rightly paid 25% service tax on the freight paid. It is pertinent to state that w.e.f 1.1.2010 both the conditions (i) & (ii) stipulated under the proviso to the said notification were deleted and the abatement is applicable without any conditions. In view of foregoing discussion, we hold that appellants are eligible for the benefit of exemption notification No.32/2004. Therefore, question of demanding differential service tax and imposition of penalty does not arise.

Accordingly the impugned orders in respect of assesses appeals are set aside and the appeals are allowed. As regards Revenues appeals, having held that the appellants are eligible for the notification benefit and consequently eligible for 75% abatement the question of payment of penalty does not arise and the Revenue's appeals are liable to be rejected. Accordingly assessees appeals are allowed and Revenues appeals are rejected.

(Dictated and pronounced in open court)

(P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER

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