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TMI Blog2006 (7) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... e value of the AMC into service component and cost of material sold, in their invoices raised to their customers. It was alleged that they had devised their own modality for payment of Service Tax as they mentioned the value of AMC in their invoices, but computed and charged Service Tax only on 30% of such value. It was alleged that remaining 70% of AMC value was deducted by them on their own without any legal basis. It was alleged that though the statutory rate of Service Tax was 10% the assessee did not pay the correct amount of Service Tax in accordance with statutory provisions. Further, it was stated that in terms of Notification No. 21/2002-Cus., dated 1-3-2002, parts/spares parts of specific medical equipment imported by the assessee were not to be sold. Therefore, it was alleged that the provisions of Sections 67, 68 and 70 of Finance Act has been violated. The appellants reply dated 29-12-2005 to the show cause notice has been incorporated in the impugned order, which is extracted herein below. In their reply dated 29-12-2005 to the SCN, the assessee inter alia put forth the following submissions: (1) They are engaged in importing various medical equipments and sellin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er along with the details of materials replaced are captured in the system. Invoices are thereafter generated, depending on the visits made by the service engineer. After the invoices are raised, the Service Tax and the works contract tax is paid to the respective department in the subsequent month on 30:70 basis. (4) If the customer is in Procare AMC, the cost of parts is realized from him. If the customer is in Max care AMC or Comprehensive AMC, then the parts are replaced without collecting any additional amount. The engineer diagnoses the problem and ascertains whether any part is to be replaced. The parts that are used during the AMC are imported by them by availing the benefit of Notfn. No. 21/2002-Cus., dated 1-3-2002. (5) They referred to the definition of maintenance or repair services as provided under Sec. 65(64) of the Finance Act, 1994 and stated that the service rendered by them gets covered in either part of the definition, inasmuch as there is a maintenance contract and they are also authorized person of the manufacturer to undertake such maintenance and repair. (6) They referred to Sec. 67 of the Finance Act, 1994 regarding the valuation of taxable service an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to decision in the case of Modi Xerox Ltd. v. State of Karnataka reported in 1999 (114) STC 424 (Kar) wherein the Hon'ble High Court held that when the parts were supplied during the maintenance contract, it amounted to sale. The said decision of Hon'ble High Court was upheld by the Hon'ble Apex Court - 2005 (ST3) - GJXO 143 SC. (10) Section 65(121) of the Finance Act, 1994, states that "words" and "expression" used but not defined in this chapter, but defined in Central Excise Act, 1944 or the Rule thereunder shall apply, so far as may be in relation to Service Tax as they apply in relation to duty of Excise. They referred to definition of "sale" as mentioned under Sec. 2 (h) of the Central excise Act, 1944. Relying on the definition, it was stated that transfer of possession for consideration by one person to another would constitute "sale". In their case, the possession of materials have been transferred to the customers and amount have been received in advance as consideration. Therefore, the definition of "sale" is satisfied with reference to service tax. They also cited the following case laws to corroborate their contention that transfer of possession without tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Service Tax liability of Rs. 20,69,353/-. They have paid an amount of Rs. 1, 38, 72,810/- on Maxicare and Comprehensive contracts. Hence, there is no short levy of any Service Tax. (15) There was no suppression of any information or any intention to evade payment of tax. It is a matter of legal interpretation as to whether, the value of material used can be considered as sold. The extended period is not invoçable in the absence of any deliberate intention to evade payment of duty/tax. They have been regularly filing the returns and did not suppress anything from the department. In view of the following decisions of the Hon'ble Apex extended period cannot be invoked in their case. (i) CCE v. Chemphar Drugs and Liniments - [1989 (40) E.L.T. 276 (S.C.)] (ii) Padmini Products v. CCE [1989(43)195 (S. C.)] (iii) Pushpam Pharmaceutical Company v. CCE Bombay - [1995 (78) E.L.T. 401 (S.C.)] (iv) Ugam Chand Bhandari v. CCE - [2004 (167) E.L.T. 491 (S. C.)] (v) Anand Nirishikawa Co. Ltd. v. CCE - [2005 (188) E.L.T. 149 (S.C.)] The demand made in the Show Cause Notice is required to be set aside on the ground of limitation, except for the period May, '04 - Dec.'2004. (16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r customers. But the only point now left for consideration is as to whether the appellants have correctly arrived at their deductions in terms of the invoices produced by them. The Commissioner has taken a view that there is no documentary evidence on record that invoices aggregating to Rs. 2, 70, 25,079/- had been cancelled. The Commissioner in Para 7 of the impugned order has also noted that no details were adduced by the assessee. On this point, the learned Counsel has produced enormous evidence to show that all the documentary evidence had been produced and they have correctly computed the details and the Service Tax paid by them is correct in law. On this point we have directed the Commissioner to file his comments by our Miscellaneous Order No. 442/2006, dated 16-6-2006. The learned JCDR has filed the comments on behalf of the Commissioner. In the comments besides the plea that there is no sale, they have again reiterated the plea that the details were not furnished. 5. On a careful consideration, we are of the considered opinion that the Commissioner has not applied his mind on the various submissions made by the appellants in their reply to the show cause notice, which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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