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TMI Blog2024 (10) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... tput service etc., renting of immovable property. In this case, as submitted by the appellant, the definition of works contract service is quite clear and the Revenue has not been able to produce any evidence that there is any transfer of property on which VAT was paid and therefore since the allegation itself is not factually correct, the demand cannot be sustained on this ground alone. Therefore, demand confirmed on this ground itself is not tenable and liable to be set aside. Cenvat Credit availed on initial setting up of a factory amounting to Rs. 5,06,401/- - HELD THAT:- The Adjudicating Authority has observed that the assessee have not adduced evidence that there was any nexus between input services and output services, whereas, Department had proposed to deny said credit on account of it s being used for initial setting up. Hence the grounds taken for confirming demand is different than the grounds taken in show cause notice and hence this confirmation is also not tenable on this ground itself. Denial of Rs. 13,050/- on account of its having no nexus - HELD THAT:- The allegation in the show cause notice is that these services fall under the category of initial setting up of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vely for trading amounting to Rs. 2,98,630/- - HELD THAT:- The confirmation of demand is sustainable and rightly upheld by the Commissioner (Appeals). Moreover, the appellant is also not contesting this demand. Imposition of penalty - HELD THAT:- Since the demand itself has not been sustained the penalty, is not imposable and therefore liable to be set aside. As regards the demands which have been rightly upheld by the Commissioner (Appeals), penalty as imposed by Original Authority would be applicable. Though, the appellants have argued that in the given facts the penalty should not be imposed on them, for the reasons discussed in foregoing paras regarding the applicability of extended period, the imposition of penalty is justified and therefore there is no need to interfere with the imposition of penalty wherever the demand has been otherwise found sustainable. Amount already paid and appropriated would be adjusted against total demand found sustainable. The Order of the Commissioner (Appeals) is partly modified - Appeal allowed in part. - HON BLE Mr. A. K. JYOTISHI , MEMBER ( TECHNICAL ) Shri A. Sarveswar Row , Advocate for the Appellant Shri V R Pavan Kumar , Authorised Repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of input services after the amendment of Rule 2(l) of CCR with effect from 01.03.2011 vide Notification No. 3/2011- CE(NT), whereby, setting up has been omitted from the definition of input service. Therefore on this count, the appellant was not eligible for taking said Cenvat Credit. Similarly, they had taken credit of Rs. 13,050/- towards Architectural Service and Rs. 7,109/- towards False Ceiling service, both in the nature of service for initial setting up factory and since it is not covered within the definition of input service, it is ineligible. c) Cenvat Credit availed on maintenance and up-keep of roads and landscapes amounting to Rs. 8,40,44/- : In this case, the Department felt that as the service was provided outside the premises of assessee, it has no nexus with either manufacturing or with provision of output service and therefore in terms of Rule 2(l) (ii) of CCR it would not be an eligible credit. d) Cenvat Credit availed on the invoice in the name of their SEZ unit amounting to Rs. 6,917/-: In this case, as the invoice was in the name of their SEZ unit, in view of Rule 9 and Rule 4(A)(i) of CCR, this would not be an eligible credit. e) Cenvat Credit availed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service as alleged in show cause notice is not a works contract, its exclusion in view of statutory provision as relied upon by the Department is also not tenable. He further points out that the Original Authority has gone beyond the show cause notice and has confirmed the demand on the grounds that there was no nexus between input services and output service which was never alleged in show cause notice. 6. As far as the issue of inadmissible credit of Rs. 5,06,401/-/- is concerned, the Learned Counsel submitted that the appellant had provided the land with buildings to its lessee and therefore there is a clear nexus between the input service and output service provided by them. He also points out that the grounds taken for denying the admissibility of said credit in the show cause notice was that it was not covered within the definition of input services since it was meant for initial setting up whereas the same has been confirmed against the appellant by the Adjudicating Authority on the grounds that there is no nexus between the input service received and the output services provided by the appellant. Therefore, the Order has again traversed beyond the show cause notice. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input services excludes the service portion in the execution of a works contract and construction service. Therefore, it is obvious that this is a categorical ground taken by the Department in the show cause notice for denying the credit, whereas, in the Order-in-Original, Adjudicating Authority has not taken this ground for denial of credit. Therefore, it is obvious that while show cause notice proposes to deny this credit solely on the account that the work is in the nature of Works Contract Service, which is not covered within the definition of input service, whereas credit has been denied by Original Authority on the ground that this being in the nature of common service, and therefore not having an integral and essential part for providing the output service etc., renting of immovable property. In this case, as submitted by the appellant, the definition of works contract service is quite clear and the Revenue has not been able to produce any evidence that there is any transfer of property on which VAT was paid and therefore since the allegation itself is not factually correct, the demand cannot be sustained on this ground alone. Therefore, demand confirmed on this ground itsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, this demand is sustainable. 13. On the issue of limitation, the appellant have claimed that they have been filing ST-3 returns etc., furnishing the relevant information as required, therefore, longer period is not liable for invokation in their case. As against this argument, the Department vehemently argued that the appellant are required to take only eligible credit in terms of Rule 9, 5 and 6 of CCR and they despite being aware that certain credit which were clearly excluded, or not having nexus, ought not to have taken the said credit in the first place itself. Since, there is no details of the specific input service in the ST-3 returns, nor there is any separate submission of any details or letter indicating the same to the Department despite availing credit in respect of variety of services vis-a-vis the nature of service being provided, this would obviously mean that the appellants have not come out clean before the Department and therefore in the facts of the case the appellant s argument for non-invokability of the extended period is not tenable. The provisions under Rule 9(6) of Cenvat Credit Rules 2004 casts onus on the provider of the output service to ensure the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Authorized Representative, the appellants failed to prove their bona fides. Therefore, the appellants have rendered themselves liable to pay penalty under Rule 15 of the CENVAT Credit Rules, 2004. However, looking into the contradictory judgments on the issue by different Benches of the Tribunal, we find that while imposition of equal penalty would be harsh, the omissions by the appellants can be mitigated by imposition of a suitable penalty. Therefore, we reduce the penalty to about 10% of the penalties imposed. Hon ble High Court of Kerala in the case of The South India Bank Ltd., Vs Pr. CCT CE, Kochi [2023-TIOL-212-HC-Kerala-ST], interalia, held that when service tax has to be paid within the time prescribed and if it is not paid, the non-payment can be brought under Section 73(1)(B). Similarly, in the case of M/s Prathyusha Associates Shipping (P) Ltd., Vs CCE, C ST, Visakhapatnam-I [2014-TIOL-1619-CESTAT-Bang] the Tribunal held that in the service tax matters, the responsibility of the assessment is on the assessee and not on Department especially when the statute is clear and has no ambiguity. 14. Therefore, in the facts of the case, it is obvious that there was responsib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being not an eligible credit. Appellant is not contesting this demand. g) Demand of Cenvat Credit of Rs. 2,98,630/-: The confirmation of demand is sustainable and rightly upheld by the Commissioner (Appeals). Moreover, the appellant is also not contesting this demand. It is observed that the appellants have already accepted the demand of the Department and have also reversed the wrongly taken credit of Rs. 6,917/- and Rs. 2,98,630/- and the same has already been appropriated by the Original Authority. 16. On the issue of imposition of penalty, I find that since the demand itself has not been sustained for the reasons discussed in foregoing paras, the penalty on demand at (a), (b), (c) and (d), supra, is not imposable and therefore liable to be set aside. As regards the demands which have been rightly upheld by the Commissioner (Appeals), penalty as imposed by Original Authority would be applicable. Though, the appellants have argued that in the given facts the penalty should not be imposed on them, for the reasons discussed in foregoing paras regarding the applicability of extended period, the imposition of penalty is justified and therefore there is no need to interfere with the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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