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TMI Blog2024 (5) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... as CENVAT credit or otherwise and if already passed on, order the recovery of the same." 2.1 Appellant is registered as "Input Service Distributor" with the department. A intelligence was gathered by Directorate General of Central Excise Intelligence (DGCEI, in short) Ahmedabad that appellant have not paid appropriate service tax on the "banking and financial services" received by them from M/s Jefferies International Ltd., London (JIL, in short), as the service provider were not having any office in India. On inquiry, vide letter dated 23.07.2007 of DGCEI, appellant informed that 8050 bonds for USD 80.50 Million were issued by them and the amount was received by them between 21st September, 2005 and 4th October, 2005 and they had paid underwriting fee/ placement fee, overheads, legal fees and other charges to M/s JIL. 2.2 Appellant vide their letter dated 30th November, 2007 informed that they were engaged in the manufacture of Soda Ash which is an excisable product falling under Chapter heading 2836 of Central Excise Tariff Act 1985. They had issued Foreign Currency Convertible Bonds (FCCB) in overseas markets during the period 29.09.2005 to 4.10.2005 for raising a loan amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em in lieu of taxable services, received by them in the ST- 3 returns filed by them 2.8 A show cause notice dated 01.10.2007 was issued to the appellant asking him to show cause as to why : (i) Service Tax amounting to Rs. 1,29,31,229/- (Rupees One crore twenty nine lacs, thirty one thousand two hundred twenty nine only ( Service Tax of Rs. 1,26,77,675/- and Education Cess of Rs 2,53,554/-) short paid by them, should not be demanded and recovered from them under section 73 of the Finance Act, 1994 by invoking the extended period of five years as per proviso to sub section (1) of said section 73; (ii) The amount of Service Tax of Rs. 1,29,31,2291-( Service Tax of Rs.1,26,77,675/- and Education Cess of Rs. 2,53,554/-) already paid by them, under protest should not be appropriated towards their aforesaid liability; (iii) Interest at the appropriate rate under section 75 of the Finance Act 1994 should not be recovered from them from the due date on which the Service Tax and Education Cess was liable to be paid to till date; (iv) Penalty under Sections 76 and 78 of the Finance Act, 1994 should not be imposed upon them. (v) They should not be allowed to pass on the service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following findings: "5.15 Subsequently, CBEC vide its Circular No. 276/8/2009-CX. 8A dated 26.09.2011 clarified as under:- "F. No. 276/8/2009-CX8A Government of India Ministry of Finance Department of Revenue ( Central Board of Excise & Customs ) **** New Delhi, dated the 26th September, 2011 TO, 1. All the Chief Commissioner of Central Excise/LTU 2. All Commissioner of Central Excise/Service Tax Sir/Madam, Sub : Applicability of service tax on taxable services provided by a non- resident or a person located outside India to a recipient in India-reg Kind attention is invited to instruction F No, 275/7/2010-CX8A, dated 30.6.2010, wherein the Board had communicated its view that services tax on a taxable service received in India, when provided by a non-resident/ person located outside India, would be applicable on reverse charge basis with effect from 1.1.2005, and that the ratio of judgement in M/s Indian National Shipowners Association (INSA) case [2009 (13) STR 235 (Bom)] would not apply to such cases. Further, direction was issued to field formations to defend the levy of service tax on such services for the period on or after 1.1.2005, as post I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the levy of service tax on such services w.e.f. 1-1-2005, have been dismissed recently (subsequent to the issuance of said instruction dated 30-6-2010 in the following cases (i) SLP (C) No. 29539 of 2010 in CCE v. Bhandari Hosiery Exports Ltd, [2010 (20) S.T.R. (J99) (S.C.)] (ii) SLP (C) No, 18160 of 2010 in CST v. Unitech Ltd (iii) SLP (C) No, 34208/09 of 2010 in UOI v. S.R. Badiboi & Co (iv) SLP (C) No, 328/332 of 2011 in U01 v. Ernst & Young (v) SLP (C) No. 25687-25688/2011 in CE v. Needie Industries (vi) SLP (C) No. 25689-25690/2011 in U01 v. SKM Engg Products Further, Review Petition No. 1686 of 2011 filed in the case of Bhandari Hosiery has also been dismissed by the Hon‟ble Supreme Court vide order dated 18-8-2011 5.18 Therefore, the service tax would not be leviable on the services provided by M/s JIL to M/s GHCL before 18.04.2006 5.19 It has also been alleged in SCN that the CENVAT Credit for the amount of service tax paid under protest would not be admissible to M/s GHCL. It was alleged that services provided by M/s JlL in respect of collection of funds through FCCB, were to be utilized by M/s GHCL for acquisition of soda ash plant at Romania & ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d taken the credit of the same and distributed the same to their manufacturing units as input service distributor for utilizing the same for payment of central excise duty on the clearance of excisable good manufactured and cleared from their manufacturing units. Appellant have filed this appeal only against that part of the order by which Commissioner has disallowed such distribution of cenvat credit taken by them of the said amount paid under protest and ordered for its recovery. 4.4 As per the impugned order the demand of service tax made against the appellant has been dropped. They had deposited the amount demanded in show cause notice during the course of investigation under protest and are entitled to refund of the same along with the interest as prescribed in law. However while depositing the said amount appellant had taken the cenvat credit of the same and as they are registered as input service distributor distributed the same to their manufacturing units. 4.5 Undisputedly during the course of investigation appellant had paid the amount as service tax, which was subsequently held to be not payable by them. However they took the credit of the same and distributed it in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow cause notice or the impugned order, the impugned order to this extent cannot be upheld. We would rely upon the decision of the Hon'ble Allahabad High Court in the case of HCL Comnet System & Services Ltd. [2017 (12) TMI 1661 Allahabad High Court] observing as follows : "There is no dispute on facts inasmuch as that it is a matter of record that the application of the appellant for refund was rejected by the authority by way of an order dated 23.01.2014. Against the order rejecting the refund, the assessee had filed an appeal, which was allowed in part. Thereafter the assessee filed an appeal before the Tribunal. The Tribunal vide its impugned order has come to the conclusion that no valid show cause notice was issued to the appellant to recover the CENVAT credit before disallowing the refund claimed by the assessee. The Tribunal has placed reliance on Rule 14 of the CENVAT Credit Rules, 2004, which reads as under: "RULE 14. Recovery of CENVAT credit wrongly taken or erroneously refunded.- Where the CENVAT credit has been taken and utilised wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and took the same. Accordingly it is situation revenue neutral. Hence, the appellant is not liable to reverse the cenvat credit availed of service tax which was not liable to pay service tax. Accordingly, the impugned order is not sustainable." 4.9 In case of Sundaram Clayton Ltd [2014 (33) STR 414 (T)] following has been held: "2. I find, in the first place, that since the warehouses were hired in the USA beyond the jurisdiction of the Indian authorities, no Service Tax can be levied and collected on such services rendered and received abroad. Since tax was not, in the first instance, payable and the appellants merely have taken credit of what was not payable by them, the impugned demand cannot be justified. For the same reason, there is no justification for imposition of penalty and recovery of the interest amount. As such, the impugned order is set aside and the appeal is allowed. It is noted in passing the order that the appellants are not paying Service Tax on such services availed for the subsequent period and the learned consultant states that the impugned amount in this case was paid out of confusion at the initial stage itself." 4.10 In view of the discussions as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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