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TMI Blog2024 (10) TMI 1346X X X X Extracts X X X X X X X X Extracts X X X X ..... ause Notice. Moreover, the exports were not being made by the appellant to its own goods and accounting of the same was made in the books of the appellant only. It is an admitted position in the impugned order that none of the parties were undertaking the export of goods manufactured by the other. Therefore, by exporting its own goods, the appellant has not provided any kind of support service to EPML, but the same is to themselves only. The appellant was not undertaking the activity of evaluation of prospective customers, processing of purchase orders or fulfilment of service as the Appellant and EPML were dealing in varied products and were catering to varied customers - the activity of export of goods by the appellant through their group company viz. EPML cannot be termed as business support service . Therefore, on merit, the appellant is not liable to pay Service Tax under the said category. Accordingly, the demand of Rs.1,54,77,549/- under the category of Business Support Service , is dropped. Denial of CENVAT Credit on club membership renewal fees in terms of Rule 2(l) of the CENVAT Credit Rules, 2004 - HELD THAT:- In this case, the charges paid by the Appellant were towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability has been done without any documentary evidence in terms of Rule 9 of the CENVAT Credit Rules, 2004. Rs. 1,06,839/- (along with interest and equivalent penalty) 4. Penalty has been confirmed on Intellectual Propery Service other than copyright . Rs. 1,49,822/- 2. The facts of the case are as under: - (i) Ms. Emami Limited (hereinafter referred to as the Appellant ) is the flagship company of the Emami group of Companies and is engaged, inter-alia, in the business of manufacture and sale of ayurvedic medicines and cosmetics falling under Chapter 30 and 33 of the Central Excise Tariff. The Appellant derives a significant share of its revenue from exports. Ms. Emami Paper Mills Limited (hereinafter referred to as EPML ) is one of the group companies of the Appellant and is engaged in the business of manufacture of newsprint paper. EPML primarily caters to the domestic market. During the period 2007-08, EPML availed the benefit of EPCG scheme to save duty of customs on the import of capital goods for its expansion project. The EPCG Scheme is regulated by Chapter 5 of the Foreign Trade Policy (FTP). In terms of Para 5.4 of the FTP, an EPCG license holder is required to export go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 02.01.2018. (iv) On appeal, the Ld. Commissioner (Appeals) sustained the findings of the ld. adjudicating authority vide the impugned order. 3. Aggrieved against the said order, the appellant is before us. 4. The Ld. Consultant appearing on behalf of the appellant submits as under: - I. The Appellant did not provide any service, much less business support service to EPML by undertaking export of its own goods in its usual course of business and the arrangement between the group companies was only to optimize Customs duty savings for the group. a. The Appellant has submitted that vide the understanding dated 08.02.2007, EPML and the Appellant agreed to fulfil the export obligation towards the EPCG license held by EPML and share the customs duty saved thereon. The essence of the agreement was to share the duty of customs saved at the group level in proportion to the exports undertaken by the group companies. Such an arrangement to jointly utilise resources and share the benefits accruing therefrom cannot be said to be in the nature of rendition of a service. Reliance in this regard is placed by the Appellant on the judgement of the Hon ble Supreme Court in the case of Gujarat Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Jamna Auto Industries Limited Vs. Commissioner of Customs, C. Ex and ST, Indore [(2023) 5 Centax 194], whereby, non-compete fees, which was also in the nature of providing support to business, was excluded from the meaning of Business Support Service. Business support service was not a residuary category which could have accommodated any activity, which was otherwise not taxable under any other taxable head, otherwise there would have been no requirement on the part of the legislature to introduce the negative list. Therefore, the definition of Business Support Service was an exclusive definition. Reliance in this regard is placed on the judgement of the Hon ble Tribunal, Hyderabad in the case of M/s. Shriram Chits Private Limited Vs. Commissioner of Central Excise, Customs and Service Tax [2020 (1) TMI 187] as maintained by Hon ble Supreme Court (2023) 3 Centax 12 (SC). e. Further reliance is placed by the appellant on departmental clarification bearing no. 334/4/2006 TRU dated 28.02.2006 as also on the judgement of the Tribunal, Bangalore in the case of NCR Corporation India Private Limited Vs. Commissioner of Central Tax, Bangalore North [2021 (55) G.S.T.L. 6], whereby it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e.f. 1st July 2012 under the negative list regime of taxing services a. Without prejudice, the said activity could, at best, constitute an agreement to do an act. In which case, the said activity could have been classified as declared service under the entry agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act . b. Since the impugned period is pertaining to the positive list regime, when service tax was leviable on selective approach basis, and the said declared service was introduced only with effect from 01 July 2012, under the negative list regime, no service tax could be levied on the said activity. III. The Appellant is eligible for CENVAT Credit on club membership as the same was used by the Appellant for business purpose and not for personal consumption. a. With effect from 01 April 2011, the definition of input services as contained under Rule 2(l) of the CENVAT Credit Rules, 2004 (CCR, 2004) was amended to exclude services such as those provided in relation to outdoor catering, beauty treatment, health services, membership of club etc., when such services were used primarily for personal use or consumption of any employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess during any particular month/quarter may be adjusted towards the liability in the subsequent month/quarter. d. Further, such suo-moto recredit of service tax paid twice or paid in excess of the service tax liability is duly allowed in terms of the following judgements of the Tribunal: J.K. Lakshmi Cement Limited Vs. CCE ST, Jaipur II [2015 (4) S.T.R. 618 (Tri. Delhi)] Maintained in 2018 (8) G.S.T.L. 231 (Raj) and 2019 (27) G.S.T.L. J147 (SC). Esdee Paints Limited Vs. Commissioner of Central Excise, Ahmedabad [2010 (249) E.L.T. 225 (Tri. -Ahmd.)] V. Extended period of limitation cannot be invoked in the instant case as the receipt of the duty saved amount was duly disclosed in the Balance Sheet of the company for the financial year 2011-12 as Miscellaneous Income a. The Appellant had disclosed Rs. 15,02,67,464 received in the form of EPCG benefits in the Balance Sheet for the financial year 2011-12 under Miscellaneous Receipts . The financials of the Appellant were available in the public domain. It is a settled principle in law that when the details of income and expenses are disclosed in the public documents which are available in the public domain, then the extended period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EPCG scheme. Therefore, he contended that the said activity qualifies as business support service as the appellant were providing various support services viz. evaluation of prospective customers, processing of purchase orders and fulfilment of services to their group company. 5.1. It is therefore his contention that the impugned demands are sustainable. 6. Heard the parties and considered their submissions. Issue No. I: Demand of Service Tax of Rs.1,54,77,549/- under the category of Business Support Service : 6.1. We find that the facts are not in dispute that the appellant has exported their goods through their group company namely, EPML and had to fulfil their export obligation towards the EPCG Licence held by them and by export of goods through EPML, the appellant has saved Customs Duty, which was reimbursed by EPML to the appellant, on which the Revenue has sought to charge Service Tax under the category of Business Support Service . 6.1.1. We find that as per the Export Promotion Capital Goods (EPCG) scheme, the appellant was entitled to export goods through its group company in terms of Paragraph 5.4 of the Foreign Trade Policy (FTP) pertaining to Export Obligation, which r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, [Operational or administrative assistance in any manner], formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation. For the purposes of this clause, the expression infrastructural support services includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security; 6.1.4. In the C.B.E.C. Circular No. 334/4/2006-TRU dated 28.02.2006, it has been clarified as under:- 3.13 Business Support Services : Business entities outsource a number of services for use in business or commerce. These services include transaction processing, routine administration or accountancy, customer relationship management and tele-marketing. There are also business entities which provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is an admitted position in the impugned order that none of the parties were undertaking the export of goods manufactured by the other. Therefore, by exporting its own goods, the appellant has not provided any kind of support service to EPML, but the same is to themselves only. 6.1.8. Furthermore, in terms of Paragraph 5.4 of the FTP, the export obligation could have been fulfilled by the license holder or by the group company of such license holder. The law did not permit outsourcing of fulfilment of export obligation to any other company. We find that the appellant was not undertaking the activity of evaluation of prospective customers, processing of purchase orders or fulfilment of service as the Appellant and EPML were dealing in varied products and were catering to varied customers. 6.1.9. In view of the above, we observe that the activity of export of goods by the appellant through their group company viz. EPML cannot be termed as business support service . Therefore, on merit, the appellant is not liable to pay Service Tax under the said category. Accordingly, the demand of Rs.1,54,77,549/- under the category of Business Support Service , is dropped. Issue No. 2: Denial o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly, the penalty of Rs.1,49,822/- imposed against the appellant is dropped. Limitation: 6.5. We further take note of the fact that periodical audits took place from time to time, at the premises of the appellant. Therefore, the Show Cause Notice issued on 15.12.2016 for the period 2011-12 is barred by limitation. Hence, the appellant also succeeds on the ground of limitation. 7. In view of the above discussion, we pass the following order: - (i) Demand of Service Tax of Rs.1,54,77,549/- under the category of Business Support Service is dropped. (ii) The appellant is entitled to take CENVAT Credit of club membership renewal fees to the tune of Rs.82,400/-. (iii) Demand cannot be confirmed alleging that suo moto recredit to the CENVAT Account was done without documentary evidence in terms of Rule 9 of the CENVAT Credit Rules, 2004 to the tune of Rs.1,06,839/- in case where the Service Tax was paid twice in excess of Service Tax liability. (iv) No penalty is imposable for non-payment of Service Tax on Intellectual Property Service other than copyright as the same was paid before issuance of the Show Cause Notice. 8. In these terms, we set aside the impugned order and allow the appeal ..... 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