State Bank Of India vs Cce, Kanpur

Customs Excise and Service Tax Appellate Tribunal27 March 2015

CitationAppeal No. 493-ST/APPL/KNP/2010 dated 27.9.2010 passed by the Commissioner of Customs & Cen

Ratio decidendi

The rule this decision rests on

Cenvat credit distributed by a Zonal Office to the appellant bank without the distributing office having obtained Input Service Distributor registration is not to be denied merely on that ground where the surrounding circumstances are similar to those in State Bank of Patiala and Punjab National Bank, in which the Tribunal, taking an overall view of the documentary evidence and the conduct of the assessee, allowed such credit; the demand, interest and penalty relating to that credit are accordingly set aside. A service tax demand founded on Rule 6 of the Cenvat Credit Rules, 2004, for utilising Cenvat credit to pay service tax in excess of 20% of the service tax payable where the assessee was not maintaining separate accounts for input services used for taxable and exempted services, is sustained where the assessee fails to produce evidence showing the ground is unsustainable and does not deny the absence of separate accounts; the demand, with interest and penalty, is accordingly upheld.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

IN THE CUSTOMS, EXCISE & SERVICE TAXAPPELLATE TRIBUNALWest Block No. 2, R.K. Puram, New Delhi 110 066.Date of Hearing/Order : 27.3.2015No. ST/1859/2010-CU(DB)

[Arising out of Order-in-Appeal No. 493-ST/APPL/KNP/2010 dated 27.9.2010 passed by the Commissioner of Customs & Central Excise, Kanpur]

For Approval & Signature :

Honble Mr. Justice G. Raghuram, President

Honble Mr. R.K. Singh, 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?

2. Whether it would 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 of the order?

4. Whether order is to be circulated to the Department Authorities?

State Bank of India Appellant

Vs.

CCE, Kanpur Respondent

Appearance:

Ms. Surabhi Sinha, Advocate - for the Appellant

Shri Rajeev Tandan, D.R. - for the Respondent

Coram : Honble Mr. Justice G. Raghuram, President

Honble Mr. R.K. Singh, Member (Technical)

F. Order No. 51427/2015

Per R.K. Singh :

Appeal has been filed against Order-in-Appeal dated 27.9.2010 which upheld the order-in-original dated 30.11.2009 in terms of which service tax demand of Rs.10,57,275/- was confirmed holding that amount of credit taken by the appellants as inadmissible. A further demand of Rs.82,278/- was also confirmed on the ground that the said amount of service tax was paid out of the Cenvat credit account which was in excess of 20% of the service tax payable while the appellants as per law were allowed to pay out of Cenvat credit account only up to 20% of the service tax payable in terms of Rule 6 of Cenvat Credit Rules as they were not maintaining separate accounts for receipt, consumption and inventory of input service used for providing taxable and exempted services.

2. The appellants have contended that the impugned amount of Rs.10,57,275/- was transferred to them by their Zonal Office during 10.9.2004 to 31.3.205 and that its credit was denied essentially because the Zonal Office was not registered as input service distributor. They also stated that it is incorrect to say that they had utilised Cenvat credit to pay service tax in excess of 20% of the service tax payable. They drew our attention to the judgement of CESTAT in the case of State Bank of Patiala Vs. CCE, Chandigarh 2014 (34) STR 85 (NULL) wherein it was held that service tax credit should not be denied merely because it was distributed before the distributor of credit got registered as input service distributor.

3. We have considered the contentions of the appellants. We find that in the case of State Bank of Patiala Vs. CCE, Chandigarh (supra) the Tribunal, taking an overall view, dropped a similar demand on the ground that the documents produced in support of the claim are creditable evidence and also conduct of the appellant does not appear to be questionable. Similarly in the case of Punjab National Bank Vs. CCE, Meerut (MANU/CE/0691/2013-SM(BR) CESTAT taking an overall view allowed credit of Cenvat so distributed without obtaining ISD registration. As the circumstances obtaining in the present case are similar to those in the two case laws cited in this paragraph, we set aside the impugned order in so far as it relates to denial of Cenvat credit of Rs.10,57,275/- , and interest and penalties relating thereto.

4. We however find that the appellants have not been able to give any evidence to show as to how the ground on which the demand of Rs.82,278/- has been confirmed in terms of provisions of Rule 6 of Cenvat Credit Rules, 2004 is unsustainable nor have they denied the fact that they were not maintaining separate accounts for receipt and consumption of input services relating to taxable and non-taxable output services and consequently were not allowed to use Cenvat credit to pay service tax in excess 20% of the service tax payable. Accordingly, we uphold the impugned order to the extent it confirms demand of service tax of Rs.82,278/- along with interest and penalty relating thereto.

5. Appeal is disposed of on the above terms.

(Justice G. Raghuram)

President

(R.K. Singh)

Member (Technical)

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