2015 (3) TMI 523 - AT - Service Tax

Denial of exemption benefit of Notification No. 32/2004-ST - Non fulfillment of conditions of Notification - Held that - conditions prescribed by the CBEC circular dated 27.7.2005 seem to go beyond the requirement of the exemption notification. It is settled law that CBEC circulars cannot restrict or expand the amplitude of an exemption notification nor can they add/subtract conditionalities thereto/there from. However, this point is not being laboured here as the decision in the case is not predicated thereon. - Decided against Revenue.

Summary

Issues:
Appeal against Order-in-Appeal allowing benefit of Notification No. 32/2004-ST, conditions of notification satisfaction, declaration by service provider in consignment notes, reliance on CBEC Circular BI/6/2005-TRU, period of case from January 2005 to July 2005, availability of Cenvat credit, belated production of declarations, validity of CBEC circular conditions.

Analysis:
The appeal was filed against Order-in-Appeal No. 7-ST/Alld/2009 dated 18.2.2009, which granted the respondents the benefit of Notification No. 32/2004-ST. Initially, this benefit was denied in the order-in-original dated 31.3.2008 due to failure in establishing conditions of the notification. The grounds for disallowance included the inability to prove that the transporter had not taken Cenvat credit on inputs or capital goods for taxable services under Cenvat Credit Rules, 2004, and the absence of a declaration in consignment notes as required by CBEC Circular No. BI/6/2005-TRU. The Revenue raised similar arguments in their appeal.

The period under consideration in this case was from January 2005 to July 2005. The CBEC circular dated 27.7.2005, a crucial piece of evidence, was issued towards the end of this period. The condition of Notification No. 32/2004 required non-availment of duty credit on inputs or capital goods or the benefit under Notification No. 12/2003-ST by the Goods Transport Agency. No evidence suggested that such credits or benefits were availed during the relevant period. The Commissioner (Appeals) noted that the appellant had fulfilled the notification conditions by submitting declarations from transporters and consignment notes, leading to the allowance of the appeal.

Referring to a previous case, CCE, Rajkot Vs. Advance Diesel Engineering (P) Ltd., the Tribunal emphasized the importance of producing declarations from transporters to avail the benefits of Notification No. 32/2004. Even though the declarations were not initially provided, their subsequent submission before the Commissioner (Appeals) led to the benefit being granted. The Tribunal found no valid grounds to interfere with the Commissioner's decision.

Additionally, it was observed that the conditions outlined in the CBEC circular of 27.7.2005 appeared to extend beyond the exemption notification's requirements. It was clarified that CBEC circulars cannot alter the scope of an exemption notification. However, this aspect did not impact the current judgment. Ultimately, the Tribunal dismissed the Revenue's appeal, citing lack of merit, and disposed of the cross objections as well.