9911796707
TMI Blog2022 (7) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... ification dated 10.07.2013, which superseded the earlier Exemption Notifications dated 01.03.2011 and 20.06.2012, contained similar provisions as in the earlier Notifications and also extended similar benefit by way of refund of the service tax paid on input services used for authorized operations of an SEZ Unit and that it also expressly clarified in paragraph 5 that an SEZ Unit shall have the option not to avail this exemption and instead take CENVAT credit on the specified services in accordance with the Credit Rules, but this Notification merely clarifies the position and would, therefore, be applicable retrospectively for the period when the appellant had taken the CENVAT credit of service tax paid on input services. In this connection, reliance can be placed on the judgment of the Supreme Court in BELAPUR SUGAR ALLIED INDUS. LTD. VERSUS COLLR. OF C. EX., AURANGABAD [ 1999 (4) TMI 79 - SUPREME COURT] . The issue involved was whether an assessee would be entitled to duty reduction available under an amending Notification before the date of issue of that Notification. The Supreme Court held that denial of the Exemption Notification for the period prior to the date of the amendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est before the service of the show cause notice, whether on the basis of his own ascertainment or on the basis of ascertainment by the Department - The demand of penalty under section 73(4A) of the Finance Act is, therefore, without any basis and the confirmation deserves to be set aside. Penalty imposed under rule 15(3) of the Credit Rules and interest under rule 14 of the Credit Rules - appellant had not made the payment in respect of this invoice till it accepted this mistake and reversed the CENVAT credit taken by voucher - show cause notice contained demands of interest under rule 14 of the Credit Rules read with section 75 of the Finance Act and penalty under rule 15 (3) of the Credit Rules read with section 78 of the Finance Act - HELD THAT:- It is not disputed by the Department that the appellant had reversed the CENVAT credit wrongly taken by the appellant through voucher dated 01.07.2014, and this fact is reflected in the show cause notice. It cannot also be disputed three months from the date of the invoice would expire on 01.0.2014. The appellant had, therefore, complied with the provisions of rule 4 (7) of the Credit Rules - when rule 4 (7) of the Credit Rules has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply submitted by the appellant. Appeal allowed in part and part matter on remand. X X X X Extracts X X X X X X X X Extracts X X X X ..... 15(3) of the CENVAT Credit Rules, 2004 read with 1994. Section 78 of the Finance Act, 1994 is imposed upon the party. The aforesaid amounts should be paid forthwith. The amounts already paid will be appropriated against the amounts adjudged as above. This Order is issued without prejudice to any other action that may be taken or proposed to be taken against the said persons or firms under the Finance Act, 1994, or any other law for the time being in force in the Republic of India." 2. It would be seen that this appeal has been filed against five heads of demand confirmed by the Additional Commissioner and upheld by the Commissioner (Appeals). These heads are as follows : I. Disallowance of CENVAT credit taken on service tax paid on input services received by the SEZ unit on the ground that SEZ unit could only have opted for exemption by way of refund of such service tax during the relevant period. Oct 2011 to June 2013 INR 66,36,774/- II. Service tax liability under reverse-charge mechanism on rent-a-cab services April 2013 to March 2014 INR 7,59,918/- III Penalty imposed under Section 73 (4A) of the Finance Act, 1994 April 2013 to March 2014 INR 75,555/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking the CENVAT credit is availed by an assessee, the benefit of exemption by way of refund will not be available to such an assessee and the Notifications themselves treat CENVAT credit as an alternative to refund mechanism. 7. It is for this reason that Shri Rony Oommen John, learned counsel for the appellant, submitted that the eligibility to take CENVAT credit on the service tax paid on input services received by the appellant cannot be denied on the basis of the two Exemption Notifications which were in force during the relevant period. Learned counsel pointed out that these Exemption Notifications provided SEZ units with an option to take refund of the service tax paid on input services, while recognizing the fact that some SEZ units may instead opt to take CENVAT credit of the same amount and set it off against its respective output service tax liability. Further, as the Exemption Notifications specifically prescribe a condition that the SEZ unit should not have taken CENVAT credit if it wants to claim a refund, the Central Government recognized that an SEZ unit may take CENVAT credit as an alternative benefit to the refund and such taking of CENVAT credit is a legally per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra)]. The object of the exemption notification is to grant benefit to the SSI Units for clearing goods without payment of duty up to a particular limit. 20. Both the Modvat scheme and the exemption notifications are beneficial legislation. The beneficial notification have to be strictly initially but liberally interpreted. 21. If the interpretation of the Revenue is to be accepted that there was no choice to SSI Units to either avail the Modvat Scheme or the benefit of the exemption notification, then the SSI units are prejudiced and may even become unviable. The purpose of the Modvat Scheme is to prevent and neutralise cascading effect of the duty paid on inputs. If the interpretation of the Revenue is accepted then a manufacturer not registered as a SSI unit would be entitled to benefit of the Modvat scheme for unlimited value and pass on benefit to the purchaser. But an SSI unit covered by the exemption notification would not be entitled to the benefit of the Modvat scheme but would be entitled to clear goods at nil duty or lesser duty only up to a limit. Because he cannot pass on the Modvat credit, to the purchaser, he is denied a level playing field and suffers disadvant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication and had instead taken CENVAT credit of the tax paid inputs. The relevant portion of the judgment is reproduced below : "9. A bare reading of this notification denotes that this notification is issued under Section 93(1) of the Finance Act, 1994 which exempts the taxable services of production of goods on behalf of the principal manufacturer from the whole of service tax leviable under Section 66 of the Finance Act. However, this exemption notification is subject to the condition that the said exemption shall apply only in cases where such goods are produced using raw materials or semi-finished goods supplied by the client, i.e., the principal manufacturer and goods so produced are returned back to the said client for use in or in relation to the manufacture of other goods on which appropriate duty of excise is payable. 10. Thus, this notification is condition precedent. The applicability of this notification shall be subject to the condition stipulated therein, i.e., the principal manufacturer discharging the liability of appropriate duty of excise on these manufactured goods. Any job worker who undertakes services of processing is not free to avail the benefit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orego such exemption and claim benefit of CENVAT credit on the same amount of service tax paid on input services as would have been available as refund to an SEZ Unit. 12. It is true that the Notification dated 10.07.2013, which superseded the earlier Exemption Notifications dated 01.03.2011 and 20.06.2012, contained similar provisions as in the earlier Notifications and also extended similar benefit by way of refund of the service tax paid on input services used for authorized operations of an SEZ Unit and that it also expressly clarified in paragraph 5 that an SEZ Unit shall have the option not to avail this exemption and instead take CENVAT credit on the specified services in accordance with the Credit Rules, but this Notification merely clarifies the position and would, therefore, be applicable retrospectively for the period when the appellant had taken the CENVAT credit of service tax paid on input services. 13. In this connection, reliance can be placed on the judgment of the Supreme Court in Belarpur Sugar & Allied Indus. Ltd. vs. Collr. Of C.Ex., Aurangabad [1999 (108) ELT 9 (SC)]. The issue involved was whether an assessee would be entitled to duty reduction available un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efeats the very object of the Notification." 14. Reliance placed by learned authorized representative on the judgment of the Supreme Court in Krishi Upaj Mandi Samiti is misplaced. Paragraph 8 of the judgment on which reliance has been placed as reproduced below: "8. The exemption notification should not be liberally construed and beneficiary must fall within the ambit of the exemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication" 15. In the present case, the appellant is not claiming the benefit of the Exemption Notification, but is claiming CENVAT credit on the service tax paid on input service received by the appellant. 16. In this view of the matter, the finding recorded by the Commissioner (Appeals) disallowing CENVAT credit taken on service tax paid on input services received by the SEZ unit on the ground that the SEZ Unit could only have opted for exemption by way of refund of such service tax cannot be sustained. II Service tax liability under reverse-charge mechanism on rent-a-cab services 17. The Order has confirmed the demand of Rs. 7,59,918/- of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Receiver Education Cess Secondary and Higher Education Cess Total Payment April 2013 to September 2013 64,99,222/- 7,79,906/- 15,598/- 7800/- 8,03,304/- October 2013 to March 2014 72,87,700/- 8,74,523/- 17,490/- 8,745/- 9,00,758/- 1,37,86,922/- 16,54,429/- 33,088/- 16,545/- 17,04,062/- 22. It needs to be noted that the total value of taxable services indicated in the chart submitted by the appellant to the Audit team was Rs. 3,44,67,299/-, and 40% of this amount for the purpose of abatement is Rs. 1,37,86,920/-, which is the amount on which the appellant had paid the applicable service tax. 23. It is, therefore, clear that additional demand of service tax is claimed on the amount on which service tax has already been paid by the appellant. This demand has been computed by wrongly interpreting an internal ledger item. The Commissioner (Appeals) failed to appreciate this factual position. 24. The demand made under this head, therefore, cannot be sustained. III Penalty imposed under section 73(4A) of the Finance Act 25. This demand was confirmed against the appellant on the ground that the appellant had received services from outside Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand is as under: (a) On 31.03.2014, the appellant took CENVAT credit of input tax on the strength of an invoice dated 31.03.2014 raised by M/s IP Unity Communications Ltd.; (b) The appellant had not made the payment in respect of this invoice dated 31.03.2014 till it accepted this mistake and reversed the CENVAT credit taken by voucher dated 01.07.2014. This reversal was done three months from the date of the invoice; (c) The Delhi High Court granted sanction to the Scheme of Amalgamation of the Appellant and M/s IP Unity Communications Ltd. with effect from 01.04.2014 by order dated 25.05.2015 in Company Petition No. 608/2014; (d) The show cause notice contained demands of interest under rule 14 of the Credit Rules read with section 75 of the Finance Act and penalty under rule 15 (3) of the Credit Rules read with section 78 of the Finance Act; (e) No specific allegation of fraud, collusion, wilful mis-statement, suppression of facts or intent to evade payment of service tax had been raised in the show cause notice; and (f) Specific submissions had been raised by the appellant that its case was covered by the provisions of rule 4 (7) of the Credit Rules, 2004. 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mis-statement, suppression of facts or intent to evade payment of service tax on the part of the appellant. 34. Thus, the demand of interest and penalty on the CENVAT credit taken and later reversed by the appellant in accordance with the provisions of rule 4 (7) of the Credit Rules could not have been confirmed. V Recovery of amount of CENVAT credit taken on various input services along with interest 35. During the course of the audit conducted by the Department for the year 2013-14, the CENVAT credit taken by the appellant on various input services were disputed on the ground that these were "inadmissible input services". 36. The appellant categorized the input services which were considered to be inadmissible by the Department separately and the admissibility of each category was explained therein. A table was also presented by the appellant in the reply dated 12.12.2014 to the audit objections and the reply dated 05.07.2016 to the show cause notice. 37. The disallowance of CENVAT credit appears to be in respect of five input services namely, Management or Business Consultant services (Rs. 4,66,254/-), Maintenance or repair services (Rs. 1,92,323,/-), Courier services (Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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