Shree Khedut Sahakari Khand vs Commissioners Of Central Excise
- CitationAppeal No. : E/10838/2013
Ratio decidendi
The rule this decision rests on
The Tribunal's reasoning rests on the following principles: Where the issue of liability for service tax on a particular item of credit is squarely covered by an earlier decision of the Tribunal, the assessee is bound by that decision and is not eligible to take Cenvat credit on that item. Where the credit taken was not utilised, was reversed immediately on being pointed out by the audit party, the assessee is a regular filer of returns, the credit was duly intimated to the department, and there is no record indication to the contrary, the mere taking of Cenvat credit is not, by itself, sufficient to attract liability to pay interest and penalty; following the High Courts of Madras and Karnataka, the demand of interest and penalty on such credit cannot be sustained, and it is set aside.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[ Arising out of OIA-CCEA-SRT-II-SSP-237-U-S-35A dtd 17.1.2013 Passed by Commissioners of Central Excise, Customs and Service Tax-SURAT-II ]
Shree Khedut Sahakari Khand Udyog Mandli Ltd - Appellant(s)
Vs
Commissioners of Central Excise, Customs and Service Tax-SURAT-II - Respondent (s)
Represented by :
Appellant(s) : Shri Rahul Gajera, Advocate Respondent (s) : Shri J Nair, Authorised Representative
For approval and signature :
Mr. P.M.Saleem, Hon'ble Member (Technical)
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?
No 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.M.Saleem, Hon'ble Member (Technical)
Date of Hearing / Decision : 20/07/2015
ORDER No. A/11117 / 2015 dtd 20/7/2015
Per : Mr.P.M.Saleem.
In this matter, during Central Excise EA-2000 Audit conducted in the month of April 2007 to February 2009 by the HQ, Audit Section of Central Excise Commissionerate Surat II, it appeared that the appellant had taken wrong credit of Service Tax towards various services viz., GPA unnamed policy for Farmers, Construction of Grain godown and subscription of membership for Federation of Co-op Sugar Factories etc., which do not fall under the definition of input service under the provisions of Rule 2(1) of CENVAT Credit Rules, 2004, as it is not used in or in relation to manufacture of final product. The details of the same are as under :
Sl No Document No Name of Vendor Amount of ST Credit Edu Cess S&H Cess Total Credit of ST DT Credit Entry date Description 1 2414/2008 Oriental Insurance 22469
22469 1.4.08 GPA unnaimed policy for Farmers 2 2413/2008 do 22469
22469
3 2412/2008 do 22473
22473
4 2411/2008 do 22469
22469
5 2409/2008 do 2713 2713 6
Shalvin Construction 42082 868 434 43384
7 2740/21.5.07 National Fed. Of Co-op Sugar Fac. Ltd 9796 294
10090 1.7.08 Construction of Grain Godown 8
130/8.5.08 & 3256/22.4.08 Gujarat State Fed. Of Co-op Sugar Fac. Ltd 116544
116544 1.6.07 Subscription of Membership 9 16/6.5.08 do 41437 829
42266 1.5.08
10 28/6.5.08 do 33972 679
34651
11 54/6.5.08 do 38473 769 385 39627
Total
374897
379155
Therefore, a show cause notice was issued on 21.6.2011 demanding why the wrongly availed CENVAT Credit of Rs 3,79,155/- shall not be recovered from the appellants, alongwith interest and penalty. The matter was adjudicated by the Deputy Commissioner vide order dated 25.10.2011 confirming the demand with interest, and equal amount of penalty. Subsequently, the appeal filed by the Appellants was rejected and the OIO was confirmed by Commissioner (Appeals) by the impugned order.
2. Heard both the sides. The Learned Counsel for the appellant admits that the matter on Members-ship Fees is squarely covered against the appellants by the decision on this Honble Tribunal in the case of Shree Kamrej Vibhag Sahakari Khand Undying Mandli Ltd vide order No A/10914/2015 dtd 24.6.2015. The service tax amount involved in Member-ship Fees is Rs 2,43,178/-. In respect of remaining amount, he fairly states that he is not contesting on the issue on merits, but on limitation. He also submits that the cenvat credit taken was not utilised and on being pointed by the audit party they have reversed the said credit availed, and therefore interest and penalty should be waived, in view of the decision of the Honble High Court of Madras and Honble High Court of Karnataka in the matter of CCE, Madurai vs Strategic Engg Pvt Ltd [2014(310)ELT.509(Mad.)] and CCE&ST LTU, Bangalore vs Bill Forge Pvt Ltd [2012(279)ELT.209(Kar.)] respectively.
3. The Learned Authorised Representative strongly refuted the arguments of the Learned Counsel. He submits that the present appeal has been filed with the prayer, to set aside the penalty equal to duty and allow the appellant to re-credit service tax amount amounting to Rs 2,43,178/- on Membership Fees. He also relied upon the decision of the Supreme Court in the case of Union of India vs. Ind-swift Laboratories Ltd [2012(25)STR.184(SC)].
4. On hearing the arguments of both sides and on perusal of records, it is seen that the issue of Service Tax on Membership Fees is covered by the decision of the Honble Tribunal in the case of Shree Kamrej Vibhag Sahakari Khand Undying Mandli Ltd (supra). Therefore, as far as the Service Tax amount of Rs 2,43,178/- on Membership fees is concerned, it is held that the appellants are not eligible for taking Cenvat Credit of the same.
5. As regards interest and penalty, it is observed that the matter pertains to the period April 2007 - Feb, 2009 and the show cause notice is issued only on 21.6.2011. The appellants Shree Kamrej Vibhag Sahakari Khand Undying Mandli Ltd is an assessee who regularly files monthly returns and the cenvat credit taken has been duly intimated to the Dept. It is also seen that the assessee had reversed the credit taken immediately on being pointed out by the Audit. The appellants have also reportedly submitted, from the adjudication stage onwards, that the credit taken has not been utilised. There is no indication to the contrary on the records. The Honble High Court at Madras in the case of Strategic Engineering Pvt Ltd relying upon the decision of Honble High Court of Karnataka in Bill Forge Pvt Ltd (supra) case has analysed and distinguished the decision of the Honble Supreme Court in the case of Ind-Swift Laboratories Ltd, and has held that mere taking (Cenvat Credit) itself would not sufficient for the assessee to pay interest as well as penalty.
6. In the light of the above analysis, it is held that the demand of interest and penalty in this matter cannot be sustained. Therefore the demand of the same is set aside. To that extent, appeal is allowed.
(Dictated and pronounced in the Court)
(P.M.Saleem) Member (Technical)
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