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TMI Blog2025 (3) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... y, of the adjudicating authority disallowing wrongly availed and utilized input service credit and ordering its recovery along with interest and penalties imposed as indicated therein. Three Show Cause Notices (SCNs), all put together spanning the period from April 2008 to March 2011 stood adjudicated in the three impugned OIOs upheld in the aforementioned two OIAs. 2. The facts in brief are that during the period in dispute the appellants (formerly M/s. Caltex Gas India Private Limited), made bulk import of LPG and stored the same in their storage terminal located at Tuticorin. Thereafter they bottled the LPG in cylinders of varying capacities and marketed the same under the brand name 'CALTEX' in the domestic market. As bottling of LPG is not a manufacturing activity, no excise duty was paid by the Appellant. Apart from the above, the appellant also provided storage facilities for the LPG imported by M/s. Bharat Petroleum Corporation Ltd (BPCL) and discharged service tax for providing such storage service under the category "Storage and Warehousing Service". The appellants also undertook bottling of LPG for BPCL for which services they collected bottling charges and remitted ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preferred appeals which came to be rejected by the aforementioned impugned OIAs upholding the said OIOs. Assailing the impugned OIAs the appellants are before this Tribunal having preferred the subject appeals. 4. We have heard learned consultant Shri. Rajaram R. who appeared and argued for the appellants and learned authorised representative Shri. Sanjay Kakkar who appeared and argued for the respondent in these matters. We have also perused the records of both the appeals and the case laws produced as relied upon. 5. The learned consultant submits that the CCR 2004 came to be amended by Notification No.3/2011-C.E.(N.T) dated 01-03-2011 with effect from 01-04-2011 providing an explanation that the term "exempted services" includes trading and since there is no indication that it is to be applied retrospectively, during the period in dispute the CCR 2004 did not specifically designate trading as an exempted service and thus it would be unjust to impose a reversal of credit for transactions that are not explicitly covered under the exempted services during the relevant period under dispute. Without prejudice to the above, the learned consultant submits that even if for the sake o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not in or in relation to manufacture of final products and therefore there are not eligible to avail credit on the commission paid on trading goods. It was submitted that the issue again came up for elaborate discussion before the Hon'ble High Court of Madras in M/s. Ruchika Global Interlinks v The CESTAT, Chennai, [2017 (6) TMI 635- Madras High Court]: 2017 (5) GSTL 225 (Mad.), wherein it was held that the inclusion in Explanation to Rule 2(e) "trading" was, without doubt, only clarificatory. It was thereafter held that since the appellant therein had not been paying service tax on trading activity during the relevant period the apportionment as provided in Rule 6(3)(c) would get triggered and given the admitted fact that no separate accounts were maintained by the appellant therein, with regard to taxable and non-taxable services, clause (c) of sub rule 3 of rule 6 of 2004 Rules would apply. As regards the imposition of penalty, it is the submission of the learned A.R. that multiple SCNs have been issued to the Appellants for the previous period from Sept 2004 to March 2009 which were adjudicated in the year 2010 and finally confirmed by this Tribunal vide Final Order No.41930/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service Tax is leviable under Section 66 of the Finance Act Rule position with effect from 31-3-2011 Rule 2(e): "Exempted services" means taxable services which are exempt from the whole of the Service Tax leviable thereon, and includes services on which no Service Tax is leviable under Sec. 66 of the Finance Act; and taxable services whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken. Explanation. - For the removal of doubts, it is hereby clarified that "exempted services" includes trading. 10.2 Clearly, both before and after amendment, "exempted services" meant those taxable services, which were exempt from whole of Service Tax and, included those services on which Service Tax was not leviable, under Section 66 of the Finance Act. The inclusion in Explanation to Rule 2(e) "trading" was, without doubt, only clarificatory. As accepted by Mr. Jayachandran, the appellant had not been paying Service Tax on trading activity during the relevant period. 10.3 Therefore, given the rule position, what would govern the matter would be the determination of the issue as to whether or no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforementioned Final Order has been set aside and thus, inter se the parties, the same has attained finality. In such circumstances, in the light of the decisions of the Honourable High Courts of Madras and Delhi as well as the Tribunal decisions cited above, we find that the Tribunal decisions relied on by the appellants for seeking relief, cannot come to the aid of the appellants in this case. 10. Be that as it may, the appellants have sought for extending the benefit of Rule 6(5) of the CCR as was prevalent during the relevant period. We find that the said Rule 6(5) has been omitted vide Notification No. 3/2011-C.E. (N.T.), dated 1-3-2011 with effect from 01-04-2011. 11. The effect of the omission of a provision of statute came up for discussion in the decision of the Honourable Supreme Court in Shree Bhagawati Steel Rolling Mills v. CCE, 2015 (326) ELT 209 (SC) and the relevant paragraphs are reproduced below: "13. From this it is clear that when Section 6 speaks of the repeal of any enactment, it refers not merely to the enactment as a whole but also to any provision contained in any Act. Thus, it is clear that if a part of a statute is deleted, Section 6 would nonetheles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in para 24 held as under: 24. Fibre Board's case is a recent judgment which, as has correctly been argued by Shri Radhakrishnan, learned senior counsel on behalf of the revenue, clarifies the law in holding that an omission would amount to a repeal. The converse view of the law has led to an omitted provision being treated as if it never existed, as Section 6 of the General Clauses Act would not then apply to allow the previous operation of the provision so omitted or anything duly done or suffered thereunder. Nor may a legal proceeding in respect of any right or liability be instituted, continued or enforced in respect of rights and liabilities acquired or incurred under the enactment so omitted. In the vast majority of cases, this would cause great public mischief, and the decision of Fibre Board's case is therefore, clearly delivered by this Court for the public good, being, at the very least a reasonably possible view. Also, no aspect of the question at hand has remained unnoticed. For this reason also we decline to accept Shri Aggarwal's persuasive plea to reconsider the judgment in Fibre Board's case. This being the case, it is clear that on point one the present appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed at if the rule, notification or order, as the case may be, had not been amended, repealed, superseded or rescinded." 3. In view of the foregoing the question referred to the Larger Bench has to be answered in the affirmative. The appeals relating to Modvat and pending before the Tribunal are required to be disposed of on merits. Accordingly, we send the matter back to the regular Bench for hearing of the appeal." (emphasis supplied) 13. Again, in CCE Thane II v. Milton Polyplas (I) Pvt Ltd,2019 (365) ELT 962 (Bom), the Honourable High Court of Bombay was deciding whether the notice issued invoking the erstwhile Rule 57 I of the MODVAT rules demanding fraudulently availed credit during the period 1995 to 1999 would abate as contended by the Respondent-assessee therein, since the MODVAT rules were omitted and/or substituted by CENVAT Rules w.e.f 1st April 2000. The Honourable High Court negatived the contention and the relevant paragraphs are as under: 5. Re. Question (a): - (i) xxx xxxx (iv) Mr. Sridharan, Learned Senior Counsel for the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d repealed rules is subject to the caveat "unless a different intention appears", stipulated therein. However, while the Cenvat Credit Amendment Rules, 2011, notified by Notification No.3/2011-CE (NT) dated 01-03-2011, which came into effect from 01.04.2011, effected sweeping changes, we could not glean or discern a different intention to curb any right, privilege, obligation or liability acquired, accrued or incurred under any rule, notification or order so amended, repealed, superseded or rescinded, so as to deny the benefit under Rule 6(5) of the CCR that is being claimed by the appellant. 15. So, to our mind, the effect is that legal proceeding in respect of any right or liability can be instituted, continued, or enforced in respect of rights and liabilities acquired or incurred under the said Rule 6(5) of CCR, which stood omitted with effect from 01-04-2011. In sum, when we are called upon to decide such a benefit claimed for the period when the Rule 6(5) ibid was prevailing in the statute, despite the aforesaid omission, we are required to determine the same as if Rule 6(5) has not been repealed. Therefore, we do find merit in the appellants' contention that the credits in q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and utilized input service credit; which has been found to be wrongly availed and utilized and which has been ordered to be recovered by the adjudicating authority along with the consequential interest thereon, and which stands upheld by the appellate authority; is correct, and stands undisturbed. 18. However, we find that during the relevant period the issue was debatable and was being agitated in multiple judicial forums. That the dispute was on interpretational issues, is also evident from the conflicting decisions relied upon by both sides. The Honourable High Court of Madras in its decision in Asst Commr of GST & C. EX, Chennai v. Shriram Value Services Pvt Ltd, 2019 (368) ELT 928 (Mad), has acknowledged that it is possible for an assessee to entertain a bonafide belief regarding its entitlement to credit on input services used for trading activity. In these circumstances, we are of the view that the penalties imposed on the appellants vide the impugned orders in original as has been upheld in the impugned orders in appeal, cannot sustain and are liable to be set aside. We accordingly set aside the penalties imposed on the appellants. 19. Hence, the impugned orders in appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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