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2019 (4) TMI 1351 - AT - Service TaxNature of activity - manufacture or service? - duty paid on the C.R. coils received from Tata Steel - job-work - activity of cutting of H.R./C.R. Coils of iron or non-alloyed steel into sheets and slitting of sheets into strips - Central excise duty already paid - demand of service tax justified or not? - HELD THAT - The Revenue having collected, without any demur or reservation, central excise duty on the subject H.R. coils during the material period and having not refunded the same to TRL, cannot now turn around and contend that TRL was liable to make payment of service tax on the ground that the job of slitting/cutting of H.R. coils amounted to providing business auxiliary services within the meaning of the Finance Act, 1994. In similar circumstances pertaining to demand of excise duty vis- -vis service tax, in the case of K. R. Packaging Vs. Commissioner of C.Ex. Service Tax 2017 (2) TMI 893 - CESTAT NEW DELHI , where it was held that In the instant case, the assessee-appellants had already paid the Service Tax under the bona fide belief and the half yearly returns were also being accepted by the Department as the assessee-appellants were having the registration for the Service Tax and the payment was made for this period. No double jeopardy can be applied in this case. Demand of service tax not justified - appeal dismissed - decided against Revenue.
Issues Involved:
1. Leviability of service tax on the activity of cutting/slitting of duty-paid Cold Rolled Coils (C.R. Coils). 2. Appropriateness of the central excise duty paid on the processed C.R. Coils. 3. Utilization of CENVAT credit by Tata Ryerson Limited (TRL). 4. The impact of judicial decisions on the above matters. Issue-wise Detailed Analysis: 1. Leviability of Service Tax on Cutting/Slitting Activity: The core issue revolves around whether the activity of cutting/slitting duty-paid C.R. Coils by TRL constitutes a taxable service under the category of 'Business Auxiliary Service' as per the Finance Act, 1994. The Additional Commissioner had confirmed a service tax demand of ?26,01,069/- along with interest and penalties, arguing that TRL's activities fell under the 'Business Auxiliary Service' category. However, the Commissioner (Appeals) set aside this demand, concluding that service tax was not leviable since central excise duty had already been realized on the same activity. The Tribunal upheld this view, noting that the Department had accepted central excise duty payments without reservation, implying no service tax liability. 2. Appropriateness of Central Excise Duty Paid: The Tribunal examined the appropriateness of the central excise duty amounting to ?31.94 crores paid by TRL on the processed C.R. Coils. This payment was made following a CBEC circular which was later quashed by the Delhi High Court, and the subsequent withdrawal of the circular by CBEC. Despite this, TRL continued to pay the duty, and the Department accepted these payments. The Tribunal noted that the issue of excise duty payment was sub-judice but had been resolved by the Hon'ble Jharkhand High Court, which upheld the Tribunal's decision rejecting the Department's attempt to appropriate the duty under Section 11D of the Act. 3. Utilization of CENVAT Credit: The Tribunal also addressed the utilization of CENVAT credit by TRL. The Department had attempted to disallow CENVAT credit of ?4.32 crores and recover it, arguing that the final products were non-excisable. However, the Tribunal, supported by the Hon'ble Jharkhand High Court, rejected this attempt, affirming that TRL's utilization of CENVAT credit was appropriate and lawful. 4. Judicial Decisions Impact: The Tribunal relied on the precedent set in the case of K. R. Packaging Vs. Commissioner of C.Ex. & Service Tax, which held that an entity cannot be subjected to both excise duty and service tax for the same activity, thereby preventing double jeopardy. The Tribunal observed that TRL had paid excise duty under a bona fide belief and that the Department had accepted these payments without objection. Consequently, the Tribunal found no reason to interfere with the Commissioner (Appeals)'s order, which had set aside the service tax demand. Conclusion: The Tribunal dismissed the appeal, upholding the Commissioner (Appeals)'s order that set aside the service tax demand on TRL. The Tribunal concluded that the central excise duty paid by TRL was appropriate, the utilization of CENVAT credit was lawful, and there was no basis for levying service tax on the same activity for which excise duty had already been paid. The Tribunal's decision was consistent with judicial precedents and the factual matrix of the case.
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