2019 (8) TMI 1680 - AT - Central Excise

SSI Exemption - clubbing of clearances - clubbing with an independent separate entity which exist for a period of only three months and thereafter it has closed its operations - GTA Services - CENVAT Credit - reverse charge mechanism. SSI Exemption - Clubbing of the clearances of M/s Suparash Electro Product Co. a proprietorship firm with the appellant for determining the exemption limit under N/N. 8/2003-CE dated 1 March 2008 - HELD THAT - M/s Suparash Electro Product Co. has worked from the same manufacturing premises for a brief period between April 2016 to June 2016 and effected clearances of excisable goods valued at 29, 55, 128/- and availed SSI exemption Notification 8/2003-CE. The appellant have taken over the manufacturing unit from M/s Suparash Electro Product Co. on lease basis and started manufacturing from October 2016 - both the firms are independent and they have no dealings in terms of the finance or otherwise with each other. It is a settled principal that the appellant being independent manufacturer although they had used the manufacturing unit of M/s Suparash Electro Product Co. these clearances to be independently taken into consideration for deciding the SSI exemption benefit - thus the clearances of M/s Suparash Electro Product Co. cannot be added to the clearances of the appellant for determining the turnover for exemption under the Notification No. 8/2003-CE. CENVAT Credit - GTA Services - reverse charge mechanism - HELD THAT - Since the appellant was not having any evidence to show whether the service provider has availed the Cenvat credit on any of the inputs the service tax has been confirmed by the lower authorities including the learned Commissioner (Appeals). N/N. 26/2012 dated 20 June 2012 was amended by Notification No. 8/2014 w.e.f. 11 July 2014 whereunder the previous notification was amended and as a result the condition of Cenvat credit availment was made applicable only with respect to the service provider. A prudent analysis of the above-mentioned notifications and their amendments lead to the conclusion that the condition of non-availment of the Cenvat credit is required to be satisfied by the service providers only and service recipient will not be required to establish the satisfaction of this condition - the appellant have rightly discharged their service tax liability on the charges paid by them on availing the goods transport agency service and therefore the impugned order-in-appeal is without any merit and need to be set aside. The demand on both the counts is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Clubbing of clearances for determining exemption limit under Notification No. 8/2003-CE.
2. Alleged short payment of service tax on transport of goods by road service under reverse charge mechanism.

Analysis:

Issue 1: Clubbing of Clearances for Exemption Limit Determination
The case involved a small-scale industry registered with the Central Excise Department accused of irregularly availing SSI exemption and not paying central excise duty. The dispute arose from the Department's view that the appellant did not pay duty and service tax due to the alleged clubbing of clearances with another party, M/s Suparash Electro Product Co., which operated from the same premises. The appellant contended independence from M/s Suparash Electro Product Co., highlighting the latter's cessation of operations and the appellant's subsequent takeover. The Tribunal, citing precedents and confirming the independence of the two entities, ruled in favor of the appellant, emphasizing that clearances should be independently considered for exemption determination. The Tribunal's decision aligned with previous judgments and established principles, ultimately setting aside the Commissioner (Appeal's) order on this issue.

Issue 2: Short Payment of Service Tax on Transport of Goods
Regarding the alleged short payment of service tax on transport of goods by road service, the appellant had paid service tax on a reverse charge basis. The dispute centered on the condition of Cenvat credit availment under Notification No. 26/2012. The lower authorities upheld the service tax demand due to the appellant's inability to prove the service provider's Cenvat credit status. However, the Tribunal noted the amendment through Notification No. 8/2014, which shifted the burden of proving non-availment of Cenvat credit solely to the service provider. Consequently, the Tribunal ruled in favor of the appellant, stating that the service recipient need not establish the service provider's compliance with this condition. As a result, the Tribunal found the service tax liability discharged by the appellant and set aside the impugned order-in-appeal on this issue.

In conclusion, the Tribunal found the demands on both counts unsustainable, leading to the allowance of the impugned appeal. The detailed analysis and legal reasoning provided clarity on the issues of clubbing clearances for exemption determination and the alleged short payment of service tax, resulting in a favorable outcome for the appellant.