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TMI Blog2024 (8) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the total amount confirmed. I alsc impose penalty amounting to Rs. 1,27,94,087/- upon M/s LG Electronics (India) Pvt Ltd., Plot No. 51, Udyog Vihar, Greater Noida under the provisions of Section 78 of Chapter V of the Finance Act, 1994 (ii) I order to demand and recover the interest amounting to Rs. 7,97,345/- from M/s LG Electronics (India) Pvt. Ltd., Plot No. 51, Udyog Vihar, Greater Noida under the provisions of Section 75 of the Finance Act, 1994: (iii) l disallow the inadmissible Cenvat Credit of service tax amounting to Rs 2,24,08,117/- availed on "Maintenance and Repair Services' provided by their Authorized Service Centres and order to recover the same along with interest at the appropriate rate as applicable from time to time from M/s LG Electronics (India) Pvt. Ltd., Plot No. 51, Udyog Vihar, Greater Noida under the provisions of Rule 14 of the Cenvat Credit Rules 2004 read with Section 11A and 11AB of the Central Excise Act, 1944. I also impose a penalty of Rs. 2,24,08,117/- under Rule 15 of the Cenvat Credit Rules, 2004 `read with Section 11AC of the Central Excise Act upon M/s LG Electronics (India) Pvt. Ltd., Plot No. 51, Udyog Vihar, Greater Noida for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Noida/LG/13/ 07/1554-58 dated 30.12.2016, a corrigendum to the show cause notice was issued and matter has been adjudicated by the Commissioner (Audit). 2.1 Appellant is engaged in the manufacture of electronic and electrical goods. They also undertake sale and installation of the Air Conditioner imported by them. They pay appropriate taxes and duty as leviable under the Finance Act, 1994 and Central Excise Act, 1944. They are availing the credit of taxes and duties paid by them on inputs, input services and capital goods. 2.2 During course of audit of the records of the Appellant for the period July 2004 to August 2005 following irregularities were observed: S No Issue Amount 1. Service Tax on GTA Services through CENVAT Account 12794087 2. Availed CENVAT Credit on invoices of Authorized Service Stations for the services provided during the Warranty Period 22408117 3. Wrongly Availed the benefit of Notification No 19/2003-ST in respect of installation services provided for imported AC 26925575 4 Not paid service tax on Design and Development Fees 42989553 5 Not paid Service Tax on Royalty paid 62537216 6 Not paid service tax on export commission 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as have been held in following cases: * Oundh Sugar Mills Ltd. [2017 (52) STR 353 (ALL)] * Panchmahal Steel Ltd [2014 (34) STR 351 (T-LB)] affirmed in [2015 (37) STR 965 (Guj)] * Pallipalyam Spinners Pvt Ltd [2008 (9) STR 544 (T-Chennai)] affirmed in [2014 (36) STR J20 (Mad)] * Mccann Erickson (India) Pvt Ltd [2019 (30) GSTL 425 (Del)] * Godrej & Boyce Mfg Co Ltd [Order dated 24.06.2019 in Central Excise Appeal No 23/2019] * Trinayani cement Pvt Ltd. [2017 (47) STR 91 (T-All)] * As appellant was not required to pay the said amount in cash demand for interest needs to be set aside. * Services provided by ASC are input services for the appellant and appellant is entitled to avail CENVAT credit of service tax paid on such services as have been held in the following cases:- * Carrier Air conditioning & Refrigeration Ltd. [2016 (41) STR 1004 (Tri.-Del.)] * Delta Electronics India Pvt. Ltd.[Appeal no. 50801 of 2020 [DB]] * Leroy Somer India Pvt. Ltd. [2015 (39) S.T.R. 466 (Tri. - Del.)] * o Mahindra & Mahindra Ltd. [2012 (28) S.T.R. 382 (Tri. - Mumbai)] * Danke Products [2009 (16) S.T.R. 576 (Tri. - Ahmd.)] * Johnson Controls Hitachi Air Conditioning India Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service. 6. The view of the Punjab and Haryana High Court in the case of M/s. Nahar Industrial Enterprises Ltd. (supra) was taken into account by the Delhi High Court in the case of Hero Honda Motors Ltd. (supra). While pursuing the same line, Delhi High Court also placed heavy reliance on Section 68 of the Finance Act, 1994, and in particular sub-section (2) thereof. Sub-section (2) of Section 68 of the Finance Act, 1994, provides that every person providing taxable service to any person shall pay service tax at the rate specified in Section 66 in the same manner and within such period as may be prescribed. Sub-section (2) of Section 68, however, provides that notwithstanding anything contained in sub-section (1) in respect of any taxable service notified by the Central Government, the service tax thereon shall be paid by such person in such manner as may be prescribed at the rate specified in Section 66, and all the provisions of said Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service. In view of such statutory provisions, Delhi High Court rejected the Revenue's appeal observing as under:- "6. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorized Service Stations for the services provided during the Warranty Period This issue is also no longer res-integra. In case of Escorts Construction Equipment Ltd, supra after taking note of previous decisions on the issue Chandigarh Bench has observed as follows: "6. After considering the submissions of both the parties and perusal of material on record, we find that the issue involved in the present case has been considered in the appellant's own case for a different period by this Bench of the Tribunal and vide its order dated 05.07.2018 cited (supra), it has been held as under:- "As the issue has already been settled by this Tribunal that the free service sale services of the vehicle provided during warranty period is an input service for the manufacturer i.e. the appellant in this case. Therefore, we do not find any merit in the impugned order, the same is set-aside." 6.1 Further, we find that this issue has also been considered by this Tribunal recently in the case of JCB India Ltd. cited (supra) wherein this Tribunal on identical facts has considered various decisions rendered on the issue of cenvat credit of service tax paid on repair and maintenance service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;" (emphasis supplied) 22. "Input service' either prior to 01.04.2011 or w.e.f. 01.04.2011 means any service used by the manufacturer, whether directly or indirectly, or in relation to the manufacture of final products. The appellant is under an obligation to provide after sale service on the final products manufactured by it. The dealers provide the services and the appellant pays service tax on the amount paid by it to the dealers. The service is provided free of cost by the dealers during the warranty period but the appellant makes payment to the dealers for the services they provide to the customers. The repair and maintenance services are, therefore, linked to the sale. The services are, therefore, used indirectly in relation to the manufacture of final products. 24. Further, we also find that the department has filed appeals before the Hon'ble High Court wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered appropriate to follow the three decisions rendered by the Tribunal in Carrier Airconditioning & Refrigeration, Honda Motorcycle and Samsung India Electronics in preference to the later decision rendered on 24.11.2017, which has distinguished these three decisions on a non-existent ground. This is what was observed by the Supreme Court in Babu Parasu Kaikadi and the relevant portion is reproduced below: "18. Furthermore, this Court, while rendering judgment in Dhondiram Tatoba Kadam vs. Ramchandra Balwantrao Dubal15 was bound by its earlier decision of a coordinate Bench in Ramchandra Keshav Adke vs. Govind Joti Chavare. We are bound to follow the earlier judgment which is precisely on the point in preference to the later judgment which has been rendered without adequate argument at the Bar and also without reference to the mandatory provisions of the Act." 42. In this view of the matter, the appellant correctly availed CENVAT credit on the amount of service tax paid for the services provided by the dealers to the customers on behalf of the appellant for fulfilling the warranty obligations of the appellant. 43. The order dated 25.05.2018 passed by the Commissioner (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso irrelevant that they were not liable to pay service tax in the period under examination because there was no 'works contract. It is important to mention here that the business activity undertaken by the party has to be tested under the existing law at the material time and Erection of plant, machinery or equipment was taxable since 10.09.2004 whereas Commissioning or installation of plant, machinery or equipment was already taxable from 01.07.2003 under the Finance Act, 1994. Therefore, I do not find force in above averments put forth by the party. 30. In their submissions, the party have contended that "The SCN merely mentions that the Noticee was having a Centralized accounting system for both manufacturing and service activities and that the Noticee was in general availing Cenvat credit on inputs and capital goods. It is submitted that the Noticee was availing Cenvat credit only on inputs and capital goods which were used for manufacturing other dutiable products or for providing taxable services. The Noticee was not availing Cenvat credit on inputs and capital goods used for providing erection, commissioning service" It or installation iS observed that at one place th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to commissioning or installation. With effect from 10.09.2004, the definition stands amended, so as to read as 'any agency providing the services in relation to erection, commissioning or installation'. Thus, I find that the services provided by the party were well covered under the then existing 'Erection commissioning or installation' service and their plea that "the Noticee was not liable to pay any service tax under 'erection, commissioning or installation service" is not tenable 33. Further, it is observed that during the period under examination there was an optional exemption by Notification No. 19/2003 dated 21.08.2003 wherein it was provided that in case of a contract which involves the commissioning or installation service along with supply of plant, machinery or equipment, service tax will be payable only on 33% of the gross amount charged for commissioning or installation and supply of plant, machinery or equipment It was optional for the assesse to avail of this notification. It is emphasized under this notification that the gross amount shall include the value of the plant, machinery, equipment, parts and any other material sold by the service p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of clause (105) of section 65 of the Finance Act " specified in the corresponding entry in column (2) of the said Table, from so much of the service tax leviable thereon under section 66 of the said Finance Act, as is in excess of the service tax calculated on a value which is equivalent to a percentage specified in the corresponding entry in column (5) of the said Table, of the gross amount charged by such service provider for providing the said taxable service, subject to the relevant conditions specified in the corresponding entry in column (4) of the Table aforesaid Table S. No Sub-clause of clause (105) of Section 65 Description of taxable service Conditions Percentage (1) (2) (3) (4) (5) 5 (zzd) Erection, commissioning or installation under a contract for supplying a plant, machinery or equipment and erection, commissioning or installation of such plant, machinery or equipment. This exemption is optional to the commissioning and installation agency. Explanation. The gross amount charged from the customer shall include the value of the plant, machinery, equipment, parts and any other material sold by the commissioning and installation agency, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The party had to adduce material evidences to corroborate their claim. The burden of proof regarding the admissibility of Notification No. 19/2003-ST dated 21.08.2003 and also Notification No 01/2006 dated 01.03.2006 was on the party as they were availing the benefit of these notifications. There is catena of judgements wherein even the Hon'ble Apex court has stated that it is upon them to establish that all the conditions to avail the benefit have been completely fulfilled. 37. In the case of COLLECTOR OF CUSTOMS Versus PRESTO INDUSTRIES 2001 (128) E.L.T. 321 (S.C.)], the Apex Court held that onus of proof of fulfilment of condition subject to which an exemption may be admissible lies on the assessee or upon a party claiming benefit under the notification ⁃ Where condition precedent is not fulfilled before claiming any exemption such benefit would not be admissible. Also, in the case of HOTEL LEELA VENTURE LTD. Versus COMMISSIONER OF CUS (GEN.), MUMBAI [2009 (234) E.L.T. 389 (S.C.)] again it was held that burden or importer to prove satisfaction of terms and conditions of exemption notification ⁃ Section 25 of Customs Act, 1962. Again, in the case of COMMISSIONE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lief as prayed for cannot be granted. In the case of Commissioner of Central Excise, Bangalore v. Brindavan Beveragaes (P) Ltd. & Ors. [(2007) 5 SCC 388], the Apex Court held that as no sufficient material much less any material has been placed on record to substantiate the stand of the appellant, the conclusions of the Commissioner as affirmed by the CEGAT cannot be faulted. This judgement was also relied upon by Hon'ble Supreme Court in the case of VINOD SÓLANKI Versus UNION OF INDIA [2009 (233) E.L.T. 157 (S.C.)]. 39. In the light of the above discussions and pronouncement of the highest court of the land I find that the party could not make their case. Therefore, the SCN sustains and the party is liable to pay the differential amount of Service Tax amounting to Rs 2,69,25,575/- along with interest at the appropriate rate as applicable from time to time " under the provisions of Section 73 and 75 of the Act. The party had availed the abatement under Notification No. 19/2003-ST in respect of Erection, Commissioning and Installation service by concealing the facts in respect of availment of facts regarding availment of cenvat credit against inputs, Capital Goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably show that what is referred to in the charging provision is the taxation of service contracts simpliciter and not composite works contracts, such as are contained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of property in goods transferred in the execution of a works contract. 25. In fact, by way of contrast, Section 67 post amendment (by the Finance Act, 2006) for the first time prescribes, in cases like the present, where the provision of service is for a consideration which is not ascertainable, to be the amount as may be determined in the prescribed manner. 42. It remains to consider the argument of Shri Radhakrishnan that post 1994 all indivisible works contracts would be contrary to public policy, being hit by Section 23 of the Indian Contract Act, and hit by Mcdowell's ..... X X X X Extracts X X X X X X X X Extracts X X X X
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