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TMI Blog2014 (3) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... rity in the de novo proceedings. - Appeal No. 94-95 of 2007 - Misc. Order No. ST/233/2011-CU(DB), - Dated:- 15-12-2011 - Ms. Archana Wadhwa and Shri Mathew John, JJ. For the Appellant : Shri Bipin Garg Sh. Mayank Garg, Advocates For the Respondent : Shri K.K. Jaiswal, SDR JUDGEMENT Per Mathew John: In this proceedings two appeals are being decided because the two matters arise on account of service tax for service rendered under identical contracts entered into by the Appellants with M/s Chambal Fertilizers and Chemicals Ltd., Kota (CFCLfor short) 2. During the period Aug 2002 to July 2004, the Appellants were providing certain services to CFCL. The services were rendered through the employees of the Appellants working in the factory premises of M/s Chambal Fertilizers and Chemicals Ltd. The different items of work done are listed below:- S. No. Job Description Job Code Unit Unit Rate 1. UREA PRODUCT HANDLING BAGGING Bagging and stitching-including checking 570101101100 METRIC TONN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 570104101101 METRIC TONN 5.52 10. UREA PRODUCT HANDLING BAGGING Unloading of Wagons/Trucks Reloading of the filled bags to the wagon/trucks including tally checking 570104102101 METRIC TONN 5.52 11. UREA PRODUCT HANDLING BAGGING Empty Bags Handling Empty Bags Unloading from the Trucks, inspection and stacking in the empty bags storage on the area specified by the Shift in-charge/Plant in-charge-HDPE/PP bags (500 bags per bale) 570105101101 PER BALE 1.25 12. UREA PRODUCT HANDLING BAGGING Empty Bags Handling Empty Bags lifting from the Main store to the sub store in Bagging floor and distribute to the running slats with the help of EOT Cranes/Hoist/Manually)-(100 Bags per bale) 570105102101 PER BALE 2.00 13. UREA PRODUCT HANDLING BA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing area. 570107104102 Months 39164 20. UREA PRODUCT HANDLING BAGGING Miscellaneous Jobs- Housekeeping and cleaning of track to keep track free from coal/debris 570107104103 Days 920.00 21. UREA PRODUCT HANDLING BAGGING Miscellaneous Jobs- Manpower assistance for misc. petty jobs. 570107105101 Mandays 66.75 22 UREA PRODUCT HANDLING BAGGING Miscellaneous Jobs- Standardizing of urea spillage changing of cut and tom bag material to the new bags weighing to 50 kgs as required. 570107106101 Metric Tonn 26.70 2. Revenue was of the view that the above services rendered by the Appellants would fall under the entry of Cargo Handling Services as defined in Finance Act, 1994 and the Appellants had to pay service tax. Since the Appellants were not paying such service tax on such servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Finance Act, 1994. They rely on the following decisions of the Apex Court: (i) Pahwa Chemicals Private Limited Vs. CCE, Delhi 2005 (189) ELT 257 (SC); (ii) CCE Vs. Chemphar Drugs and Chemicals 1989 (40) ELT 276 (SC). Thus the counsel argues that the demand is not sustainable both on account of merits and on account of time-bar. 4. The Ld. DR, on the other hand places reliance on the contract between the Appellants and the CFCL which shows details of work done as given in the table in para 1 above. He points out that the entries in the table specifying the jobs to be done as specified at S. No. 1 to 11 are clearly jobs relating to loading of cargo into wagons or trucks and there were separate rates specified for such items of work. Even items at S. No.13 to 17 are also relating to cargo. He argues that since most of the items of work specified in the contract are in relation to cargo handling and the contract is essentially for cargo handling. 5. We have considered arguments on both sides. Now, it is well settled by various decisions of the Tribunal and the different High Courts that handling of goods within a factory does not amount to Cargo Ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of Notification No. 175/86-C.E. as amended by Notification No. 1/93-C.E. The view taken by the Appellants had, in some cases, been approved by the Tribunal which had held that mere use of the name of a foreign party did not dis-entitle a party from getting benefit of the Notifications. It is only after Larger Bench held in Namtech Systems Limited v. Commissioner of Central Excise, New Delhi reported in 2000 (115) E.L.T. 238 (Tribunal) that the position has become clear. It is settled law that mere failure to declare does not amount to wilful mis-declaration or wilful suppression. There must be some positive act on the part of the party to establish either wilful mis-declaration or wilful suppression. When all facts are before the Department and a party in the belief that affixing of a label makes no difference does not make a declaration, then there would be no wilful mis-declaration or wilful suppression. If the Department felt that the party was not entitled to the benefit of the Notification, it was for the Department to immediately take up the contention that the benefit of the Notification was lost. 7.2 Paras 2 to 4 of the decision relating to Chemphar Drugs read as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Q of the Central Excise Rules, 1944 for having cleared the goods without payment of duty in contravention of Rule 173Q (a) and (d) of the Central Excise Rules. 7.3 In the context of the above facts the findings of the Honourable Court in para 8 of the order is reproduced below: 8. Aggrieved thereby, the revenue has come up in appeal to this Court. In our opinion, the order of the Tribunal must be sustained. In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months. Whether in a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the appellants. Under the Notification No. 111/78, dated 9th May, 1978, the appellants were exempted from licensing control. That is the case of the appellants. 7.5 The sentence underlined in the extracts of the case of Chemphar Drugs (Supra) and similar observations in the case of Padmini Polymers (Supra) are being pointed out generally to argue that if an assessee does not do anything to discharge his duty/tax liability and simply keeps quite, it is not suppression. The interpretation canvassed is probably that unless the assessee has underground factories it cannot be considered as suppression. In the case of service tax it cannot probably be done under cellars. But it is quite often argued that the assesse was not aware of service tax or read the law and thought he did not have to take out registration or intimate department and if he acted so it cannot be a positive act of suppression. 7.6 Against this background let us examine some decisions wherein the Apex Court held that there was suppression. A few decisions are examined below. 7.7 Usha Rectifier Corpn. (I) LTD.Vs. CCE-2011 (263) E.L.T. 655 (S.C.) (Information taken by Department from Balance Sheet- Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receiving inputs from Bajaj at an undervalued landed cost by not including expenses on account of sales tax, octroi, freight, insurance, loading unloading charges and handling charges, and that Bajaj was charging only the basic price of such inputs equal to the basic price charged by the original manufacturers of the said inputs to Bajaj, and since the additional cost of loading-unloading, freight etc. was not included in the input supplied to Anurang, there was consequent reduction in the landed cost of such inputs. It was also alleged that the price charged by Bajaj was depressed price although the same was coloured as negotiated price and the price indicated in the purchase orders was influenced by the supply of inputs by Bajaj at a lower landed cost and by this business arrangement, Bajaj had compensated Anurang for depressed prices of Anurangs finished goods supplied to Bajaj. 16. In our view, on a reading of the relevant provision the extended period of limitation as provided by the proviso to Section 11A(1) of the Act, can only be invoked when there is a conscious act of either fraud, collusion, wilful mis-statement, suppression of fact, or contravention of the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2 If there cannot be general rule, the rule of positive act of suppressionitself cannot be a general rule for reasons as explained below. 8.3 Suppression with intent to evade payment of duty is seldom done by actions leaving trails and therefore the positive actthat the Apex Court was referring to is not something which can always be demonstrated through existence of a physical thing or document. It is about a state of mind. This is to be judged from the facts of the case. 8.4 All the cases pointed out were with reference to a registered assesse and before self-assessment system came into existence. With the scheme of self-assessment the onus on the part of the assessee to disclose information to the department has become all the more important. The first step in such disclosure is taking registration. The second step is in filing returns filling all columns in the return in a bonafide manner and not in a clever manner. 8.4 Section 11A of Central Excise Act and section 73 of the Finance Act, 1994 tries to strike a balance between the requirement to collect tax through a self-assessment scheme and the requirement not to slap an unforeseen levy on a bonafide assesse. (The m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding of cargo. Some of the other items of work also have nexus to such cargo handling. The definition of the relevant entry in Finance Act, 1994 covers loading as also of unloading of cargo. By a simple understanding of the matter the activity will be covered by the definition. The question whether loading through automated systems would be covered arises out of a legal interpretation. By simple understanding of the definition if the service is covered it is necessary that the service provider discloses the facts to the department and seeks clarification. If the person concerned just waits for the department to come and knock at his door it is a mental state demonstrating suppression with intention to evade. It is not necessary that such state of mind is demonstrated by an act like displaying a board or having a letter head holding out his activity to be just trading (just as an example of an activity not subjected to service tax) with no mention of his main activity of cargo handling, though such an act will show a higher level of culpability. In such a situation also it can be argued in defence of the assesse that there was no positive act since he did not state anywhere that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r carries bags and loader machines are in the ownership of CFCL and they have no control on the said machinery. Packing and loading activity was, in fact, continuous process to the manufacturing of Urea and the labourer provided by the appellant were just overseeing and guiding these activities. Automatic machine itself fills the bags, the conveyor caries bags upto and into the railway wagon and or through loader machine the bags were loaded on the trucks. It is only when the loader machines are not reaching to the trucks, the work was carried out manually. They have specifically contested that they have only supplied the man power to do above job and mere man power supply would not come into the category of cargo handling services. It stands contended by them that if the labour is provided for carrying construction activity, the same would not be covered by the construction category. They have specifically relied upon the Boards circular No.B-11/1/2002-TRU dt.1.8.02 clarifying that individual undertaking who hires labourers for loading of goods in their individual capacity will not come under the purview of service tax as cargo Handling Agency. 16. Learned Advocate appearing fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic ground, was raised in the memo of appeal. 19. Learned Advocate appearing for the applicant has strongly contested the demand on the point of limitation by submitting that the extended period of limitation is available to the Revenue in case fraud, collusion, mis-statement or suppression of facts or contravention of any provisions with intention to evade payment of duty. Neither of the lower authorities have referred to any evidence attributable to the appellants so as to give finding of suppression or mis-statement against them with intention to evade payment of duty. It stands strongly contended before us that merely non intimation to the Revenue about existence of the appellant and about the fact of providing services cannot be held to a ground for invoking longer period inasmuch as the same is not specified ground in the provision of section 73 of Finance Act. In any case, it stands contended by referring to Honble Supreme Courts decision in the case of Pahwa Chemicals Private Limited vs. CCE, Delhi-2005 (189) ELT 257 (SC) as also in the case of CCE vs. Chemphar Drugs Liniments-1989 (40) ELT 276 (SC) as also to the decision of Supreme Court in the case of Padmini Product ..... X X X X Extracts X X X X X X X X Extracts X X X X
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