Pradeep Jain - Chartered Accountant

PJ/Case Laws/2009-10/05 Date: 09-08-09

CASE LAWS

EXCISE SECTION: -

Case: - Commissioner of Central Excise, Visakhapatnam v/s Rec Ispat

Citation: - 2009 (240) E.L.T. 101 (Tri. - Bangalore)

Issue:- Cenvat credit availed by the assessee on invoices issued in name of registered dealer who supplied the goods, whether admissible?

Brief Facts:- Assessee has availed Cenvat credit against an invoice which was in the name of registered dealer who had supplied the goods to the assessee. The Adjudicating Authority as well as the Commissioner (Appeals) has accepted the assessee’s plea for granting Cenvat credit. The Revenue’s appeal arises from the order in appeal.

Appellant’s Contention:- The Revenue herein as appellant argued that the invoice is not issued in the name of assessee and hence, the Cenvat credit is required to be denied.

Respondent’s Contention:- The Assistant Commissioner was duly satisfied about the duty paying nature of the goods and the invoice containing the assessee’s name as consignee, the learned Council submits that there was no irregular availment of the Cenvat credit and prays for dismissal of the revenue’s appeal.

Reasoning of Judgment:- The Tribunal held that the facts of the case were verified by the Range Superintendent and he had issued Annexure ‘D’ verification certificate and the concerned Range Superintendent has confirmed the payment of duty in respect of the invoices mentioned in the show cause notice. The Adjudicating Authority was duly satisfied about the duty paying nature of the goods and the invoice containing the assessee’s name as consignee. In view of the above facts, there is no merit in the revenue’s appeal. Impugned order set aside.

Decision:- Appeal dismissed.

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Case: - Vamsadhara Paper Mills v/s Commissioner of Central Excise, Visakhapatnam

Citation: - 2009 (240) E.L.T. 114 (Tri. - Bangalore)

Issue:- Whether non maintenance of separate accounts for dutiable and exempted products requires reversal of input credit of 8% of sale value of exempted goods even if Cenvat credit attributable to exempted product is reversed.

Brief Facts:- Appellant was manufacturing only one product which was dutiable. On 01.03.2000, vide Notification No. 6/2000 the said product was exempted from duty. Hence, the goods were cleared without payment of duty by the appellant. However, he took care to reverse the credit attributable to the inputs in the products cleared by them. Department contended that the appellant is not following the provisions of Rule 57CC of Central Excise Rules, in maintaining separate accounts for exempted and dutiable products, hence appellant is required to pay amount equal to 8% of the value of the exempted goods.

Appellant’s Contention:- The Appellant argued that they were manufacturing only one product, hence Rule 57CC will not be applicable and demand was not justified. It was argued that once the Cenvat credit is reversed in terms of the Apex Court judgment given in Chandrapur Magnet Wires case [1996 (81) ELT 3 (SC)], it is not correct to deny the credit.

Respondent’s Contention:- The appellant did not follow the provisions of Rule 57CC of Central Excise Rules, in maintaining separate accounts of inputs in respect of dutiable and exempted products. As such, the only option is to reverse the Cenvat credit @ 8% under Rule 57CC of Cenvat credit Rules.

Reasoning of Judgment:- There is no justification for demanding 8% of the sale value of the exempted goods as Rule 57CC would not at all be applicable in a situation when the appellant is manufacturing only one product. As the appellant had already reversed the Cenvat credit attributable to the input used in the product, the impugned order has no merit and the same is set aside.

Decision:- Appeal allowed with consequential relief.

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CASE: - Jindal Stainless Ltd. & Anr v/s Commissioner of Central Excise, Rohtak

CITATAION: - 2009 (090) RLT 0704 (CESTAT – Del.)

Issue: - Denial of Credit on inputs used in generation of electricity cleared to State Electricity Board.

Brief Facts: - The appellants set up a captive power plant for generation of electricity to be used in the manufacture of excisable goods. However, the electricity generated was of fluctuating type and could not be used in the Arch Furnace, Strip mill and grooming mill installed in Appellant’s factory. The appellants entered into an agreement with the State Electricity Board to provide them with power generated from their captive power plant and the appellants were to receive the equal quantity of electricity from the State Electricity Board to maintain uniform frequency which was used in the manufacture of excisable goods. The appellants purchased furnace oil for use in Captive plant. The department has denied Cenvat Credit for the same on the basis that the electricity produced from such inputs are cleared to State Electricity board without payment of duty.

Appellant’s Contention: - The contention of the appellants is that the entire quantity of fuel on which credit has been availed has been used for generation of electricity. In view of the jerking load poor Quality of electricity is generated, therefore, they were forced to clear part of quantity of electricity generated in the captive power plant to state electricity Board as per agreement known as ‘Wheeling Agreement’. The appellants received equal quantity of electricity which has wheeled out from electricity Board and the same is used in the manufacture of excisable goods. The contention is that since electricity generated by captive power plant had been used within the factory of production for manufacture of dutiable goods, therefore, credit cannot be denied.

Respondent’s Contention: - The contention of Revenue is that as the appellants’ availed credit in respect of inputs used in generation of power and the part of power so generated was cleared to the Electricity Board outside the factory of production, therefore, credit was rightly denied.

Reasoning of Judgment: - The Tribunal held that the arrangement was made by the appellant with the Electricity Board because the electricity generated in the captive power plant was of fluctuating type and as such power could not be used in the Arch Furnace, Strip mill and grooming mill. The agreement with the Electricity Board was to maintain uniform frequency of electricity. In this situation, as the inputs used in generation of electricity which was cleared to the State Electricity Board and the same quantity was received back from the Electricity Board and used in the manufacture of excisable goods cleared on payment of duty, the contention of the Department is not sustainable.

Decision: - Appeals allowed.

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CASE: - Steel Authority of India Ltd v/s Commissioner of Central Excise, Ranchi

CITATAION: - 2009 (239) E.L.T. 75 (Tri. – Kolkata)

Issue: - Whether MODVAT Credit can be allowed on an invoice actually “Quadruplicate for Assessee” which have been prominently rubber stamped as “DUPLICATE FOR TRANSPORTER”? Secondly, whether the credit on Furnace oil used for generation of electricity can be allowed if the part of the same is transferred to township and proportionate reversal has been done on the same?

Brief Facts: - Three separate issues are involved in this case. Firstly, Modvat credit has been disallowed on Oil and Grease on the ground that the duplicate copy of the invoice has not been produced by the appellants for taking such credit. Secondly, Modvat credit has been denied in respect of furnace oil because (1) it was used to generate electricity which was also partly supplied to a township and (2) The invoices were not proper as they were not pre-authenticated and ‘duplicate copy for transporter’ was not mentioned on such invoices.

Appellant’s Contention: - For the first case, appellant contended that the on the invoices it was printed “Quadruplicate for Assessee” but the same was prominently scored out and the invoices were stamped as “DUPLICATE FOR TRANSPORTER” by rubber stamp. That the appellants had no control over the fact that the impugned goods were sent under rubber stamped invoices. The appellant have relied upon the case of Larsen & Turbo Ltd v/s Collector of C. Excise, Bhubaneshwar [1994 (72) ELT 948 (Tribunal)] in which it was held that rubber stamped are also valid for obtaining credit. Further, the receipt of goods under such rubber stamped invoices was not in doubt and subsequently a certificate has been obtained from the supplier public sector undertaking which was duly verified by the Jurisdictional Inspector and Superintendent, certifying that the impugned nine invoices were the duty paying document under which the goods were carried and that there is no doubt that such rubber stamped invoices were issued by the supplier company.

For the second case, the appellant contended that the furnace oil in question was used for producing steam which was partly used for producing air used in the manufacturing process and 51.79% of the same was used in the Turbine Generator for captive production of electricity. The captively produced electricity and electricity purchased from D.V.C. were fed to a common grid for supply to the factory as well as to the township. They have ascertained that for the impugned period 9.78% of total electricity from grid was used in the township. The appellants have done a proportionate calculation and have reversed credit for 2.43% of the furnace oil in question making a reasonable assumption that the electricity was supplied to the township in the same proportion from captive generation and from outside purchase.

For pre-authentication of invoices, the appellant has contended that the supplier unit has issued invoices directly to the appellants and such invoices were not pre-authenticated at that time as a general practice. He has cited no. of cases in which the Tribunal has held that non pre-authentication was only a procedural lapse.

For non-mention of the “duplicate for transporter” on the invoices, the appellant has contended that such a requirement was stipulated through amending Notification No. 2/95-CE(NT) dated 19.01.95 and the impugned invoices were mostly issued during the period prior to 01.01.95 and a few were issued immediately thereafter. It is submitted that considering the fact that the change in Rule was not immediately implemented by the supplier public sector unit, the appellants should not be denied credit. The appellants cited the cases of Racold Appliances Ltd. v/s Commr. Of Cus. & C.Ex., Pune [2003 (159) ELT 321 (Tri.-Mumbai)] and Ralson India Ltd v/s Commr. Of C.Ex., Ludhiana [2004 (178) ELT 1045 (Tri.-Del.)].

Reasoning of Judgment: - On the first issue, the Tribunal held that, considering the fact that the goods have been actually transported under impugned invoices, which have been prominently rubber stamped as “DUPLICATE FOR TRANSPORTER”, and the consignments have been directly consigned to the public sector company, it was a fit case for allowing credit.

For the second issue, the Tribunal held that it was satisfied that reversal of credit on furnace oil was done by the appellants on a reasonable basis and hence the entire credit on furnace oil could not be denied to the appellants.

For pre-authentication of invoices and for non-mentioning of the “duplicate for transporter” on the invoices, the Tribunal considered the contentions as well as the case cited by the appellants and held that credit cannot be denied to the appellants due to the fact that the supplier unit at the material time had not issued pre-authenticated invoices and did not mark the invoices as “duplicate for transporter”. Accordingly, it was held that the appellants were entitled for Modvat Credit on the furnace oil except to the extent reversed by them towards proportionate use for production of electricity supplied to the township. Impugned order set aside. Penalty also set aside.

Decision: - Appeal allowed accordingly.

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CASE: - Smartchem Technologies Ltd v/s Commissioner of Central Excise, Vishakhapatnam

CITATAION: - 2009 (239) E.L.T. 123 (Tri. – Bang.)

Issue: - Full credit taken by the party on imported goods when entire material has not been received. Whether allowable?

Brief Facts: - Appellants imported 600 Mt of ammonia under Bill of Entry and they availed full Credit when they had not received whole of the material. This resulted in taking of excess credit by the appellant. The appellant, however, received the excess material later on. Revenue proceeded against the appellants for excess availment of duty. Interest was demanded and penalty of Rs. 10000/- was also imposed. Appellant have come before the Tribunal in appeal.

Appellant’s Contention: - Appellant contended that this was only an inadvertent lapse and that subsequently the quality of so-called excess material has been received by them. The appellants have produced the extract of RS 23 Accounts and the Bill of Entry in their support.

Respondent’s Contention: - Revenue has contended that there is a clear violation as the appellant should not have taken the credit for excess quantity when the quantity received was less.

Reasoning of Judgment: - The Tribunal held that there appears to be a lapse on the part of the appellants in taking excess credit when the entire material has not been received. However it is seen that subsequently the material short received has been received by the appellants. In these circumstances, we do not find any revenue loss. Therefore the demand of duty is not justified. However for the lapse of taking excess credit, imposition of penalty is justified. On the facts and circumstances of the case, the amount of penalty has been reduced from Rs. 10000/- to Rs. 2000/-.

Decision: - Appeal was disposed of accordingly.

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CASE: - Big Bags India Pvt. Ltd v/s Commissioner of Central Excise, Bangalore

CITATAION: - 2009 (239) E.L.T. 42 (Tri. – Bang.)

Issue: - Whether stay can be granted when the rebate and Cenvat credit has been taken on inputs exported against DFIA licence.

Brief Facts: - Appellants obtained certain inputs, took Cenvat Credit and manufactured the final products. The final products were cleared on payment of duty by utilizing the Cenvat Credit and were exported under the DFIA Scheme. Later, they claimed rebate of duty under Rule 18 of Central Excise Rules, 2002 and the same was sanctioned. However, proceedings were initiated against the appellants on the ground that the rebate sanctioned was erroneous. The Adjudicating Authority gave a finding that condition of Notification No. 40/2006-Cus. Dated 1.5.2006 was violated because the appellants took Cenvat Credit on input used in exported goods. The said Notification of Customs prohibits:-

a.) taking Cenvat Credit on inputs procured or imported against DFIA, &

b.) claim of rebate of duty paid on inputs used in the exported goods.

Appellant’s Contention: - Appellant contented that the notification 40/2006-cus prohibits the Cenvat credit on inputs imported or procured against such authorization. But no inputs were imported against such DFIA scrips. Hence, no question of taking credit on imports against DFIA. We have done exports using Cenvat inputs procured in the normal course of business. There is no prohibition against using ordinary Cenvat inputs of DFIA exports, either in the Cenvat credit scheme. Further, the impugned notification prohibits rebate of materials used in the manufacture of resultant product. But the rebate of duty paid on final product under Rule 18 or the Notification issued there under has been claimed. Thus, there is no contravention of terms and conditions of the notification.

Respondent’s Contention:-The learned JDR contended that the para 4.4.1 of Foreign Trade policy is clear. No Cenvat facility shall be available for inputs procured indigenously or imported against such authorization. But the Cenvat credit has been taken by the appellant.

Reasoning of Judgment: - The Policy and Notification says that rebate on the inputs procured indigenously should not be taken. Further, Cenvat Credit on the input procured indigenously against the authorization should not be availed. But, in the present cases the rebate claim is only on the final products and not on the inputs. Further, the credit has been taken on the inputs procured indigenously and which are not against DFIA. We do not find any violation of either the Notification or the policy. As the appellants have a strong case on merits, the court ordered the full waiver of the pre-deposit of the duty demanded along with interest till the disposal of the appeal.

Decision: - Stay granted.

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Case: - Commissioner of C. Ex., Chennai- IV V/s Sl. Lumax Ltd.

Citation: - 2009(239) E.L.T. 491 (Tri. - Chennai)

Issue: - Is interest chargeable for delay in reversal of credit or payment of duty availed on inputs, removed as such?

Brief Facts:- Respondent had removed inputs as such. Cenvat credit was reversed not on the day of removal but on the last day of the month. Demand of interest was raised for delay in reversal of credit of duty. The Commissioner (A) held that Rule 3 (4) of Cenvat Credit Rules, 2002 required the manufacturer to pay duty equal to credit availed on inputs when such credit availed inputs were removed. It was held that there was delay in reversing the Cenvat credit availed on inputs cleared as such, therefore interest was payable for delay. However, the Commissioner (A) vacated the demand made by the Adjudicating Authority on the ground that in Kyungshin Industrial Motherson Ltd. v/s JCCE, Chennai it was held that when duty had been paid before issue of show cause notice, mandatory penalty & interest were not leviable. Appeal against the order of the Commissioner (A) was dismissed. Hence they have filed this further appeal.

Appellant’s Contention: - The appellant has contended that Section 11AB of the Central Excise Act, 1944 provided for collection of interest when duty of excise short paid is recovered with delay. It was further contended that Revenue did not file appeal against the order dismissing revenue’s appeal is because of small amount of revenue involved in that case.

It has been further contended that interest could be demanded without issue of show cause notice. Interest could be recovered by the operation of law. They have relied upon the case of CCE & C, Aurangabad v/s Padmashri V. V. Paril S.S.K. Ltd [2007 (215) ELT 23 (Bom.)] in which it was held that even if no notice was issued interest was liable to be paid for delay in payment of duty. They have also relied upon another decision in CCE v/s ITC Ltd [2008 (221) ELT 331 (Kar.)] in which it was held that the Committee of Commissioners filing the appeal instead of an officer authorised by the Committee filing the appeal was a curable defect not fatal to the appeal.

Respondent’s Contention: - It was contended that interest has been demanded without issuing a show cause notice, Section 11AB was incorrectly invoked. The said section provided for collection of interest when a short levy or non-levy of excise duty was recovered. There was no specific provision enabling the department to recover interest in the present case. The order of the Commissioner (A) was accepted by the department and the impugned order following the ratio of the said order could not be challenged. It was further contended that Committee of Commissioners and not the Central Excise Officer authorised by the Committee has filed the appeal.

Reasoning of Judgment:- The Tribunal held that Section 11AB was not applicable in the instant case, as an amount equal to the credit availed was paid on a date subsequent to date of clearance of such inputs. No provision in the Statute enables for recovery of interest in cases of delay in reversal/payment of credit relatable to inputs removed.

The Tribunal held that the impugned order was passed relying on an earlier order of the same forum which had held that interest was not payable where duty has been paid before issue of show cause notice. The Revenues contention that order of the Tribunal which affirmed the said order of the Commissioner (A) could not be followed as the same had been accepted owing to the small amount of revenue involved. The Tribunal has given the finding that the impugned order following the ratio of an order accepted by the revenue cannot be validly challenged. The instant ase also involves a small amount.

Tribunal further held that the impugned order was passed relying upon the judgments of Kyungshin Industrial Motherson Ltd. v/s JCCE, Chennai, Final order no. 980/2004, dated 10.11.04 of CESTAT and CCE v/s Machino Montell (I) Ltd, [2004 (168) ELT 466 (Tri.-LB)]. Since there is no case overruling the decisions given in these cases, appeal is not maintainable.

Decision: - Appeal dismissed.

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Case: - Essel Propack Ltd & Anr v/s CCE & C, Vapi, Daman

Citation: - 2009 (92) RLT 744 (CESTAT-Ahmd.)

Issue:- Whether the credit will be available on Supplementary invoices raised by sister concern?

Brief Facts:- A manufacturing unit was clearing its goods to their own sister units located in different places. The assessable value adopted by the manufacturing unit was on the basis of the cost of production. While arriving at the assessable value, manufacturing unit adopted the cost of raw material of previous year. During the audit, it was pointed out to them that the cost of raw material of the present financial year stands revised and as such, the higher cost of said material is required to be taken into consideration, thus, resulting in higher assessable value. Accordingly, the manufacturing unit paid the differential duty by adopting the higher assessable value and raised the separate supplementary invoices in respect of clearances effected to each of their sister concern. On the basis of the said supplementary invoices, their sister concern availed the modvat credit on differential duty paid by the appellant. Appellant also availed Cenvat credit on the basis of supplementary invoices. The Department has objected to the availment of Cenvat credit by the appellant. The Adjudicating Authority confirmed the demand in terms of provisions of Rule 7 (1) (b) of the Cenvat Credit Rules, 2004. The reasoning of the Adjudicating Authority was that there was suppression at the manufacturer end, therefore the supplementary invoices were invalid for the purpose of availing credit. Commissioner (A) confirmed the order of the Adjudicating Authority. Appellant has further filed this appeal in the Tribunal.

Appellant’s Contention: - Appellant contends that similar proceedings for denying Cenvat credit on the same supplementary invoices were initiated against the sister concerns. But the proceedings were dropped by the Adjudicating Authority on the ground that there was no suppression at the end of the manufacturing unit and supplementary invoices were valid documents for the purpose of availment of credit. It is further contended that there is no suppression of facts by the manufacturing unit as the assessable value was being adopted by them on legal understanding and with knowledge of the jurisdictional Central Excise Authorities. It is contended that they have adopted the different cost of raw material under bone fide belief and as soon as the same was pointed out to them they have raised supplementary invoice and paid the differential duty. Till date no proceedings have been initiated against the manufacturing unit alleging suppression of facts etc. The entire exercise is revenue neutral.

Respondent’s Contention: - Respondents have contended that the very fact of wrong adoption of assessable value itself is indicative of malafide intention on the part of manufacturing unit. The said under valuation was pointed out by the audit and it is not a case of suo - moto revision of assessable value.

Reasoning of Judgment: - The Tribunal held that the duty paid by the manufacturing unit was admittedly available as credit to its sister unit to whom goods have been cleared. In this scenario, there could be no motive on the part of manufacturing unit to under value the goods and to pay less duty. The Tribunal has noted that identical proceedings arising out of same set of circumstances was dropped and accepted by the department, therefore the proceedings against appellant arising out of same set of circumstances must not have been upheld. The Tribunal has also considered the information that appellant was in a position to utilise excess credit availed by them inasmuch as they were paying the duty out of PLA during the relevant period. The appellant’s case is also supported by the fact that no proceedings have been initiated against manufacturing unit alleging any suppression. As such the supplementary invoices issued by the manufacturing unit could not be held to be result of any suppression on the part of manufacturing unit, so as to make the appellant disentitled to credit of duty paid on the said invoices. Impugned order set aside.

Decision: - Appeal allowed.

SERVICE TAX SECTION: -

Case: - CCE, Vapi v/s Alidhara Textool Engineers Pvt. Ltd and vice-versa

Citation: - 2009 (92) RLT 807 (CESTAT-Ahmd.)

Issue:- Whether the credit of service tax paid on erection and commissioning undertaken at the premises of buyer can be taken by machine manufacturer?

Brief Facts: - The Appellant sold machinery to the buyer. The machine was installed at the premises of the buyer by a service provider. The price of machine included the cost of erection and commissioning of said machine and the appellant had paid duty on the said price. The appellant has availed Cenvat credit of service tax paid by them on the service of erection & commissioning received by them. The adjudicating authority has disallowed the credit. The Commissioner (A) held that no penalty was imposable as the issue involved was primarily the interpretation of statutory provisions and the charge of suppression or mis-declaration with intention to avoid duty was not sustainable in view of several judgments on the said issue. Accordingly, Cenvat credit was disallowed but penalty was set aside. Appellant has filed further appeal and Revenue has also filed appeal against setting aside of penalty by the Commissioner (A).

Appellant’s Contention: - The Appellant has contended that the service providers had provided service both at the appellant’s premises as well as at the buyer’s premises. And they have documentary evidence to show the said fact. They have submitted a detailed statement showing the details of machines sold and actual price etc., to support their contention that cost of erection & commissioning was included in the value of the machines. In this regard they have also submitted a sample contract as well as the invoices raised by them.

The Appellant’s have contended that it not provided in Rule 2 (l) of the Cenvat Credit Rules, 2004 that service has to be received in the manufacturer’s premises to be eligible for Cenvat credit of service tax paid. It is not correct to say that the activities of erection & commissioning undertaken at the buyer’s premises is post manufacturing or post removal operations in view of the fact that the assessable value includes the cost of erection & commissioning and the department had never questioned them or rejected their contention that such value was includable. It is contended that goods are cleared in SKD condition and only at the buyer’s premises they are assembled into machine.

It is further contended that as per Cenvat Credit Rules, service tax credit is available upto place of removal and in their case delivery took place only after the erection & commissioning was over.

Respondent’s Contention: - Department has contended that the service was provided to the buyer and not to the appellant. The manufacture was complete in appellant’s premises and duty was discharges at the time of removal of goods. Therefore, the subsequent activities are only post-manufacture and post removal activities and therefore, credit has been rightfully denied by the Commissioner (A). No manufacturing activity takes place at the buyer’s premises and for the activity taking place at the buyer’s premises, appellants cannot take credit. It is contended that just because duty has been paid including the value, it does not mean that Cenvat credit of service tax is admissible.

Reasoning of Judgment: - The Tribunal held that for erection & commissioning of the machine sold by the appellant to the buyer, appellant had selected the agency. And once the buyer enters into an agreement for supply of the machine including erection & commissioning charges, the responsibility of erection & commissioning is of the manufacturer. In this case, the appellant is not only selling the machine but is also providing the service of erection & commissioning. Once cost of erection & commissioning was included in the transaction value, it was a natural conclusion that process undertaken at the buyer’s premises is incidental to manufacturing activity undertaken in manufacturer’s premises. The question to be asked is whether such a service is related directly or indirectly to the manufacture of their goods in question. Thus, the erection & commissioning services provided can be said to be in relation to the manufacture, since the process in this case is complete only after the erection & commissioning takes place. Appellants have rightly pointed out that Rule 2 (l) of the Cenvat Credit Rules, 2004 does not require that service has to be received in the manufacturer’s premises to be eligible for Cenvat credit of service tax paid. Stand of the Revenue is not acceptable. What is required to be examined is whether service provided is in or in relation to manufacture.

On the Revenue’s contention that the said service was a post removal service therefore, not eligible for Cenvat credit, the Tribunal held that for service other that outward transport services, what is to be examined is whether they can be held to be rendered in or in relation to manufacture directly or indirectly. Once the whole transaction of manufacture of machine, erection & commissioning and supply is treated as one transaction and excise duty is charged on the whole transaction value, services rendered for the purpose of completion of this whole transaction has to be treated to have been rendered in or in relation to the manufacture.

The Tribunal further held that it is not acceptable that the service was provided to the buyer and therefore, credit can be availed by him and not by the appellant. Since the responsibility for erection & commissioning was on appellant and the agency providing the said service was nominated by the appellant. It can be said that they were working as sub-contractor.

The Tribunal further held that the argument that the appellant is not a service provider is not acceptable. As per the contract, providing of said service was the responsibility of the appellant. If we view the provision of service of erection and commissioning as a separate activity, the service provider would be the appellant and the receiver would be the buyer. The service provider is actually working under the manufacturer and therefore, he is a provider of service to the appellants.

Tribunal held those appellants are eligible for Cenvat credit. Impugned orders set aside.

Decision:- Appellant’s appeal allowed. Revenues appeal dismissed.

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Case: - Narayana IIT Academy v/s CCE, Jaipur

Citation: - 2009 (92) RLT 795 (CESTAT-Del.)

Issue:- Whether the rate of service tax is related to period of rendering of service or to the date of receipt of taxable amount?

Brief Facts: - Appellants are providing the service of computer training and coaching. They collected amount from their students in 2 of their units before 10.09.04. The rate of tax was 8% then and the appellants paid service tax on the said amount at that rate. The rate of tax was enhanced to 10% and education cess 2% from 10.09.04. The service was provided to the students after 10.09.04 for which advance was collected earlier. Department raised demand of tax for the differential amount of tax @ 2.2% for the provision of said services after 10.09.04. The Adjudicating Authority confirmed the demand and also imposed penalty. The said order was upheld by the Commissioner (A). Appellant have therefore filed further appeal.

Appellant’s Contention: - It was contended that amount was collected before 10.09.04 and tax was paid on the same according to the prevalent rate. Therefore, the demand was not sustainable. It was also contended that part of the demand was barred by limitation. Appellants have relied upon the decision of the Commissioner (A) in the case of Krishna Coaching Institute [2008 (11) STR 561 Commr. Appl.)]. It was also submitted that they have paid duty and file returns; therefore, penal provisions cannot be invoked against them.

Respondent’s Contention: - Revenue has reiterated the findings of the Commissioner (A). They have contended that by insertion of Explanation to Rule 6 of the Service Tax Rules on 09.07.04, the appellants were liable to pay tax at the rate prevailing at the time of rendering the service. They have contended that the issued has been settled in the final order no. ST/316/08 dated 24.10.08 given by the Tribunal in the case of CCE, Allahabad v/s Krishna Coaching Institute [2009 (90) RLT 574 (CESTAT-Del.)].

Reasoning of Judgment: - The Tribunal found that the decision relied upon by the appellants was overruled by the Tribunal in final order no. ST/316/08 dated 24.10.08. In that order, the Tribunal had held that payment of tax is related to the period of rendering service.

In the present case, the demand was justified as the service was rendered after 10.09.04 for which the amount was collected in advance. However, there is force in the appellant’s contention that there was no suppression of facts with the intent to evade duty by them. Appellants had paid tax @ 8% and filed return. Therefore, penalties are not warranted.

Demand of tax for the normal period upheld. Demand of tax for extended period of limitation and penalties set aside. Adjudicating authority directed to recalculate the tax liability after extending the cum-tax benefit within normal period of limitation.

Decision: - Appeals disposed of accordingly.

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