Pradeep Jain - Chartered Accountant

PJ/Case Laws/2009-10/32

Case Laws

Prepared by:

CA Pradeep Jain

Sukhvinder Kaur

Bharat Rathore

Vaibhav Neb

Ghanshyam

Deepak Mohonot

Central Excise Section:

Case: - Dey’s Medical v/s Commissioner of C. Ex., Allahabad

Citation: - 2010 (250) E.L.T. 379 (Tri.-Del.)

Issue: - Whether interest and penalty are payable if the credit is wrongly taken on photocopy invoice and subsequently it is debited without utilization?

Brief Facts: - Appellant had availed cenvat credit on the basis of photocopy invoice by mistake. Afterwards the appellant willingly debited the same and the credit was also not utilized. The Adjudicating Authority imposed penalty alongwith interest. The Commissioner (Appeal) reduced the penalty. The Commissioner (A) had observed that there was no suppression or mala fide intention to evade payment of duty. Aggrieved the appellant has filed appeal before the Tribunal.

Appellant’s Contentions: - The appellant contended that wrong credit taken on photocopy invoice was not utilised. They have also presented the certificate of Chartered Accountant for the same. It was merely a mistake.

Reasoning of Judgment: - The Tribunal considered the finding of the Commissioner (A) that there was no mala fide intention on appellant’s part and there was no suppression. So, the penalty provisions of Rule 13(2) of Cenvat Credit Rules, 2002 read with Section 11AC of Central Excise Act, 1944 are not attracted. It is well settled that credit taken, but not utilised, is not liable to pay interest. It is clear that appellants had not utilised the credit and it was not refuted in the impugned order. The Tribunal also noted that the appellant had voluntarily debited the credit. Therefore, the imposition of penalty and interest is not sustainable and are set aside.

Decision: - Appeal allowed.

Comments: - Good decision. The interest is not payable when the credit is not utilised is settled by Punjab and Haryana High Court in case of Maruti Udyog’s case. The SLP to the same has been dismissed by Apex Court. But the Board has come with the Circular that the above case was related to old Rule 57 I and it is not applicable in case of new Rule. This decision is related to new rules only. But the controversy has started and it will not settle before Apex Court. Some learned authors have demanded solution of the same in forthcoming budget.

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Case: - Commissioner of C. Ex., Chandigarh v/s Tyre Tops

Citation: - 2010 (250) E.L.T. 338 (H.P.)

Issue: - Whether Cenvat credit is required to be reversed by the manufacturer, which is lying at the time the final product became exempt from payment of duty?

Brief Facts: - Respondent-assessee had opted for Cenvat Credit scheme in 2002 and obtained Cenvat credit of VAT paid on inputs and raw material lying with them on the said date and started paying the central excise duty at tariff rate. Thereafter in 2003, he had gone for taking the benefits of SSI exemption whereby the finished goods are exempted from payment of excise duty. The details of closing stock of finished goods/semi-finished goods/raw material lying with them on 31.03.2003 was given to the department. The Department asked the respondent for reversal of Cenvat credit taken in respect of inputs which were used in production of exempted goods or they were lying with closing stock. The respondent relying upon the several judgements of Larger Bench and High Courts contested the notice. The Assistant Commissioner confirmed the demand and also imposed penalty. In appeal, the Commissioner (A) held that the assessee was not required to reverse the credit involved on stocks lying in the factory when the appellant opted to avail the SSI benefit and opted out of the Cenvat Credit scheme. Against this decision, Revenue filed appeal before the Tribunal. The Tribunal rejected the appeal on the ground that a 5 member bench of the Tribunal in the case of Commissioner of Central Excise, Rajkot v/s Ashok Iron & Steel Fabricators [2002 (140) ELT 277] had taken the view that the assessee in such circumstances is not required to reverse the credit.

Appellant’s Contentions: - Revenue contended that in the case of Ashok Iron & Steel Fabricators, the Tribunal held that there was no rule which permitted the department to seek reversal of the Modvat credit. Reliance was placed on Rule 9 (2) of the Cenvat Credit Rules, in this behalf.

Reasoning of Judgment: - The High Court considered the judgment given by the Apex Court in the case of Collector of Central Excise, Pune and others v/s Dai Ichi Karkaria Ltd and others [1999 (112) ELT 353 (SC)] wherein the similar question relating to reversal of modvat credit under Central Excise Rules, 1944 and had held that “the assessee is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the rules which provides for a reversal of the credit by the Excise Authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or if utilised, has to be paid for. As the credit was taken validly, the same was indefeasible.”

The High Court followed the judgement of Rajasthan & Kerala High Courts and held that since the language of Rule 9(2) of Cenvat Rules is identical to Rule 57H(5) of the Excise Rules, the interpretation given by the Apex Court has to apply and therefore even though the final product may be exempt from payment of excise, the assessee cannot be asked to reverse the Cenvat Credit already taken by it. Question answered in favour of the assessee and against the Revenue.

Decision: - Appeal dismissed accordingly.

Comments: - Very good decision in favour of assessee. There is dispute on the same in current time also but it has been decided by the Tribunal as well as by High Courts in favour of assessee.

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Case: - Himachal Wire Industries Pvt. Ltd. v/s Commissioner of C. Ex., Chandigarh

Citation: - 2010 (250) E.L.T. 381(Tri.-Del.)

Issue: - Whether the input Cenvat credit is required to be reversed which was taken on dutiable finished goods which became exempted?

Brief Facts: - Appellants are the manufacturer of steel wires (coated and uncoated, stay stranded wire, barbed wire). They started to avail the benefit of Cenvat credit on finished goods which was laying in the closing stock under Notification no. 50/2003, dated 10.06.03. Afterwards such finished goods became exempted. Department sought recovery of credit attributable to inputs, inputs contained in the semi-finished or finished goods on which credit was availed and utilised and which were lying in the factory as closing stock as on 31.10.04. The Adjudicating Authority confirmed the demand and also imposed penalty. Appellant went in appeal before the Commissioner (Appeal) which was rejected. Thus, the appellant is before the Tribunal.

Appellant’s Contention: - Appellant-assessee contended that same issue involving the Notification No. 50/2003, dated 10.06.03 has been dealt with by the Tribunal vide Final order No. 315-316/06-Ex dated 5.5.2009 in Appeal No. E/863/06 and 306/07. It was held therein that credit taken to avail during the period was valid and therefore, the same should not be ordered to be recovered. They also relied upon the decision given in HMT v/s CCE, Panchkula [2008 (232) ELT 217 (Tri-LB)].

Respondent’s Contention:- Revenue contended that it was well settled that once the goods are exempted, the question of allowing the credit on the inputs does not arise as settled by the Apex Court in Chandrapur Magnet Wires (P) Ltd v/s CCE, Nagpur [1996 (81) ELT 3 (SC)]. Reliance was also placed on judgments given in Tractors and Farm Equipments Ltd v/s CCE, Madurai [2007 (212) ELT 223 (Tribunal)] and in H.M.T. v/s CCE, Panchkula [2008 (232) ELT (Tri-LB)].

Reasoning of Judgment: - The Tribunal noticed that the decision given in the case of Tractors and Farm Equipment Ltd has been overruled by the decision of the Larger Bench in the case of HMT. The interpretation of the decision in HMT case adopted by the Revenue that the same applies only in respect of input credit legally taken and utilised on the dutiable final products. This interpretation is not correct. In the decision of HMT case it has been held that when the credit has been taken legally and utilised legally, there is no scope for recovery of the same. Even in respect of inputs lying as such, when the credit has been taken legally and utilised, the question of recovery of credit alleging that the same was taken illegally and improperly or utilised illegally and improperly, does not arise. The Tribunal has relied upon the case of M/s. Purewal and Associates Ltd. wherein it is held that there is no need of reversal of duty when the party has picked for Notification no. 50/2003 from a prospective date. It was further held that the fact of this case is as same as in M/s. Purewal And Associates Ltd’s case. Impugned orders of lower authorities set aside.

Decision: - Appeal allowed.

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Case: - German Dyes & Chemicals & ors.

Citation: - 2009 (95) RLT 338 (CESTAT-Del.)

Issue: - Whether Cenvat credit is disallowed on inputs used in manufacture of final product and lost their identity during process of manufacture and were not present in final product?

Brief Facts: - Appellant is manufacture of Cable Filing Compound. And were availing Cenvat credit of inputs used in their final product. As per Intelligence report that some of the declared inputs namely LDPE, LLDPE, Atatic P.P. copolymer, DBP Plasticzer Penta Erythrotal were not being actually used by the appellants in or in relation to the manufacture of their final product.

The Department has issued three Show Cause Notices for different periods but it was related to same issue. The Adjudicating Authority confirmed the demand with interest and imposed equal amount of penalty against firm and personal penalty against Partners of the firm. Appellant have challenged the same.

Appellant’s Contentions: - Appellant contended that as per first chemical test report does not disclose actual utilization of input but the second test report read with cross- examination of the experts clearly shows the relation to the utilization of such input in or in relation to manufacture of final product. Appellant submit that the department having not been able to establish non utilization of such inputs. Appellant further submit that there was no allegation of use of input in clandestine removal from the appellant’s premises. The purchase invoices clearly disclosed the total stock of inputs in question procured by the appellants and the stock register reveal the balance of the stock of inputs left in the premises on the day of inspection by the authorities. He further submitted that, neither the provisions of Rule 209 A were attracted nor there could have been independent imposition of penalty against the partner and authorised signatory, once the partnership firm is subjected to imposition of penalty.

Respondent’s Contentions: - Revenue contended that as per first chemical test report clearly establish the case of the Department that the final product manufactured by the appellant did not disclose utilization of the inputs in question either in or in relation to manufacture of such final product.

Reasoning of Judgment: - The Tribunal considered that department having failed to establish non utilization of the product in question in or in relation to the manufacture of the final product by the appellant and on the contrary, the appellants having established from the materials placed on record the utilization of such product in the process of manufacture of the final product for the relevant period. Hence, the contention about unauthorized availment of the credit cannot be accepted and for the same reason confirmation of the demand of duty also cannot be sustained. Being so, the impugned order in that regard is liable to be set aside. Once the duty liability cannot be established, question of imposition of penalty does not arise.

Decision: - Appeal allowed with consequential relief.

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Case: - M/s Vishwanath Sugars Ltd Belguam v/s Commissioner of Central Excise, Belguam

Citation: - 2010-TIOL-264-CESTAT-Bang

Issue: - Whether the complete credit can be disallowed on common inputs if during a particular period only the exempted goods are manufactured?

Brief Facts: - Appellant were engaged in the manufacture of exempted rectified spirit and dutiable denatured Ethyl Alcohol. They were taking credit on the common inputs used to manufacture these both products and were reversing 8% of the sale price of exempted rectified spirit in accordance with Rule 57-CC and Rule 6 of the Cenvat Credit Rules, 2001. During a visit of Excise Officers on 14.05.2004, it was observed that appellant were engaged in the manufacture of rectified spirit and had availed inadmissible input credit of duty paid on Molasses, Furnace Oil and Yeast. The Commissioner adjudicated the SCN issued to them and disallowed cenvat credit under Rule 12 of the Cenvat Credit Rules, 2001/2002. As the appellant had already reversed an amount of Rs. 1,45,29,161/- on clearance of rectified spirit, the Commissioner appropriated the balance credit of Rs. 83,56,155/-. The disputed period in this case is September 2001 to 14^th May 2004.

During this period, Appellant had manufactured and cleared a quantity of Rs. 40000 Ltrs of the denatured spirit on the payment of duty. The Commissioner gave a finding that the denatured spirit cleared had been obtained by mixing rectified spirit with toxin in the transporter’s tanker brought by the buyer of denatured spirit. At the time of the visit of the officers, there was no stock of the denatured spirit and the appellant has not maintained the RG 1 Account showing production and clearance of denatured spirit. Though the appellant had furnished the RG 1 return with the department, they had failed to submit the said return with the department; they had failed to submit the said return regularly as prescribed. There was no separate storage tank for production of denatured spirit as it had cleared the same. Appellant had not manufactured denatured spirit and availed Cenvat Credit on inputs received by it suppressing the above fact. Appellant is in appeal against the impugned order.

Appellant’s Contentions: - Appellant contended that the Denatured Spirit was cleared on payment of duty under cover of proper Central Excise invoices. If no manufacture was involved in the process of production of denatured spirit, the department should not have collected the duty on its clearance. It was also submitted that when department has accepted the duty paid by the appellants on the goods, one has to admit that they were the manufacture of the said goods. In support of this, the appellant has relied upon the judgment given in Sunpra Energy & Recovery Engg. Pvt. Ltd. vs. CCE [1996 (88) ELT 551], Biotech Synergy Ltd. vs. CCE [2004 (171) ELT 400] and in Natural Vitamins Ltd. vs. CCE [2005 (179) ELT 326]. It was contended that they were following the procedure laid down in Rule 57CC and Rule 6. Reliance was placed on decision in the case of Rochi Ram & Sons vs. CCE, Jaipur [2003 (155) ELT 96 (Tribunal-Del)] in support of the claim that when the appellants intended to manufacture both the exempted and dutiable goods, credit should not be denied if they manufactured only exempted goods for a part of the year. It was also submitted that the appellant did not stand to gain any undue benefit by taking cenvat credit on common inputs, most of which went into production of exempted goods.

Reasoning of Judgment: - The Tribunal held that finding of the Commissioner that the denatured spirit involved had not been manufactured in the factory of the appellant, cannot be agreed with. During the relevant period, 40,000 Ltrs of denatured spirit was cleared. Unless the appellant intended to clear both exempted and dutiable goods, there was no need for them to have availed credit on common inputs. Moreover, there was no loss to the Revenue if appellant had availed credit as provided in the Cenvat Credit Rules. Following the ratio laid down in Rochi Ram & Sons case, the Tribunal held that it was not necessary for a manufacturer of dutiable and exempted goods to manufacture both such goods on a day-to-day basis. The decision given in PSL Ltd v.s CCE, Vishakhapatnam was also relied upon wherein it was held that appellant therein which manufactured completely exempted products for certain period and manufactured both dutiable products in addition to exempted products for certain period and manufactured both dutiable products in addition to exempted products at other times, could not be denied cenvat credit during the period they manufactured only exempted products. These decisions completely support appellant’s case.

It was further held that the finding of the Commissioner that appellants had not manufactured dutiable denatured spirit but had made the same by mixing Ethyl Alcohol with toxin in tanker brought by the buyer is not sustainable. The Tribunal found that the process of manufacture of denatured spirit involves production of Ethyl Alcohol and that denatured spirit is not the product of only process of mixing toxin in the tanker. The appellant had followed the procedure prescribed under Rule 6 of CCR. The impugned order is set aside.

Decision: - Appeal allowed.

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Service Tax Section:

Case: - M/s Idial Security Organisation v/s CST, Ahmedabad

Citation: - 2010-TIOL-274-CESTAT-AHM

Issue: - Whether the immunity from penalty can be given under Section 80 when the service and interest is deposited immediately and assessees is a small firm?

Brief Facts: - Appellant is providing security agency services. Appellant did not pay the service tax during the period from 1.4.2000 to 31.3.2005. The Adjudicating Authority confirmed the service tax demand with interest and also imposed penalties under various Sections of Finance Act, 1994. The appellant have paid the entire service tax with interest. They are challenging the imposition of penalty. They have filed this application so that requirement of pre deposit maybe waived and the appeal itself be decided.

Appellant’s Contentions: - Appellant is not opposing the demand for the service tax and interest but seeks lenient view as regards penalty by invoking Section 80. Appellant also submits that the security service was provided by the individual who took up this job after retirement and it was very small business as can be seen that from the demand raised for the period of 5 years. It is submitted that as soon as the search was conducted and appellant was informed about his liability during the same month and in the next month the appellant has deposited the full amount of service tax and has also deposited the interest in December 2005. It is further contended that they did not deposit the service tax only because he was not aware of the provision and it was one man show run from his own house and he had not collected the service tax from the customers. Reliance has been placed upon the decision in the case of Shri Khodiyar Security Guard Training & Supplying services v/s CCE, Vadodara [2007(8) STR 22 (Tri. Ahm)]. Appellant relied upon the decision of Tribunal in the case of Infinity Credit vs CCE, Jaipur [2009 (16) STR 61 (Tri.-Delhi)] in support of his contention that prior to 2006 only commercial concern was liable which was clarified by the Board only in August 2003 and subsequently by the Tribunal in the case of CCE, Jaipur vs. R.S. Financial Services [2008 (9) STR 231 (Tri. Del.)]. It is also submitted that for imposing penalty, the fact that there were different opinions as to whether an individual can be considered as a commercial concern existed.

Respondent’s Contentions: - As per respondent the above mentioned cases cannot be relied upon in view of the fact that in the case, it was so held taking into account the fact that the service provider and receiver were located in a remote area were as in this case the service provider was located in the Ahmedabad city, which cannot be called as remote area.

Reasoning of Judgment: - The Tribunal held that from the quantum of service tax demanded, it is quite clear that the firm is a very small concern. Further, the appellant willingly had paid service tax and interest when it was pointed out to them. Even though ignorance of law is no excuse, but it can be only one of the factors while considering imposition of penalty. The Tribunal relied upon the cases submitted by the Appellant as regard invocation of Section 80. The Tribunal held that no penalty was imposable by invoking Section 80. Tribunal set aside the impugned order and the penalties imposed on the appellant.

Decision: - Appeal allowed.

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Case: - M/s Chandan Electricals v/s CCE, Ludhiana

Citation: - 2010-TIOL-259-CESTAT-DEL

Issue: - Where there are no mala fide intention and suppression of facts, and service tax liability is discharged immediately upon knowing the same, penalty is no to be levied. Section 80 will be applicable.

Brief Facts: - Appellant were providing the service of maintenance and repair. Demand for payment of service tax was raised against them. Demand was confirmed and penalty under Section 76 and 78 of the Finance Act, 1994 was imposed. In appeal, the Appellant Authority by an order dated 16.1.09 held that the appellant shall not be liable to service tax under the category of maintenance and repair services prior to 16.6.05. But he was of the view that service tax liability arising after 16.6.05 shall be liable to service tax followed by equal amount of penalty. The appellant is before the Tribunal.

Appellant’s Contentions: - The appellant is not challenging the demand of service tax with interest. Appellant submits that as the service tax liability was fixed on the appellant for the services provided after 16.06.05 then the penalty should be imposed on the service tax leviable after 16.06.05. It is submitted that out of total receipt of Rs. 2357478/-, prior period liability receipts was of Rs. 78365/- and material cost of Rs. 1709335/- if deducted, the taxable value of service comes to Rs. 169778/- and service tax thereon comes to Rs. 17318/-. If at all there shall be penalty, that shall be confirmed to Rs. 17318/-. It is further submitted that penalty has been imposed on them was on the ground that the appellant was not a defaulter and not also had willfully evaded revenue. But because the appellant had provided repair and maintenance service to National Fertilizers Limited, its liability could be determined by the concern while conducting audit of that concern. But as soon as the appellant came to know about his liability, the appellant has taken registration. Appellant prays for leniency for waiver of penalty even imposed by the Commissioner by invoking Section 80. It is also submitted that no mala fides of the appellant have come out.

Respondent’s Contentions: - Respondent agrees that Commissioner (A) has determined the liability with effect from 16.6.05. But he submits that the liability having arisen, and service tax liability not being disputed by the appellant, penal proceedings had followed.

Reasoning of Judgment: - The Tribunal held that the record nowhere reveals any mala fides attributable to the appellants for even imposition of penalty of Rs. 17318/- by the Commissioner (A) who invoked section 80 of the finance Act, 1994 for consideration of penalty issue. There is a mere allegation of suppression but the manner of proof of suppression has not been brought to record. Instead appellant’s attitude to comply with law surfaces. Penalty proceeding is a quasi criminal proceeding and the finding itself should speak reason for imposing penalty. The appellant’s conduct not being found to be contemptuous in this case, even penalty of Rs. 17318/- should not stand. Consequently the appellant succeeds partly as he is liable to service tax and interest thereon. No penalty leviable.

Decision: - Appeal partly allowed.

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Case: - Nahar Fibre v/s Commissioner of C. Ex., Jalandhar

Citation: - 2010 (17) S.T.R. 389 (Tri.-Del.)

Issue: - Whether manufacturer can take the credit of Service tax on Outward transportation of final product upto the place of removal?

Brief Facts: - Appellant had availed credit of Service Tax paid on input service of inward transportation of goods by road and also on outward transportation from their factory to their branches and other units. The Adjudication authority denied the credit and imposed penalty of equal amount, as the credit is not admissible as per Rule 3(1) of Cenvat Credit Rules, 2004, which was upheld by Commissioner(Appeals). Aggrieved the appellant has filed the appeal before the Tribunal.

Appellant’s Contentions: - The appellant contended that this issue has already been decided by the Larger Bench of the Tribunal in case of ABB Ltd. v/s CCE, Bangalore, [2009 (15) S.T.R. 23 (Tri.-LB)] in favour of assessee. He further relied upon the decision of Hon’ble Punjab & Haryana High Court in the case of Ambuja Cements Ltd. v/s UOI & Ors., [2009 (236) E.L.T. 431 (P & H)]. It is also submitted that from their branches and other units, the goods were exported from the place to other units.

Respondent’s Contentions: - Revenue relied upon the findings of the Commissioner (A). They relied upon the portion of the order wherein it was observed that the appellants failed to produce any record to show that the clearances in question made by the appellants are in respect of export on FOR/FOB basis.

Reasoning of Judgment: - The Tribunal considered the judgment given by the Larger Bench in the case of ABB Ltd wherein it was held that “the definition of input services has to be interpreted in the light of requirements of business and it cannot be read restrictively so as to confine only upto the factory or upto depot of the manufacturer. The services availed by a manufacturer for outward transportation of final products from the place of removal should be treated as an input service in terms of Rule 2(I) (ii) of the Cenvat Credit Rules, 2004 and thereby enabling the manufacturer to take credit of the servie tax and paid on the value of such services.”

Accordingly, the Tribunal held that in view of the decision of the Larger Bench of the Tribunal, impugned order cannot be sustained. Impugned order set aside.

Decision: - Both appeals allowed.

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Case: - Lanco Industries Ltd v/s Commissioner of C. Ex., Tirupathi

Citation: - 2010 (17) STR 350 (Tri-Bang)

Issue: - Service Tax paid on commission paid to the Sales agents under BAS is an input service and cenvat credit of the service tax is admissible.

Brief Facts: - The appellants are manufacturers of Pig Iron, Ductile Iron, Slag Cement. They have taken Cenvat credit on commission paid to their sales commission during the period 2004-05 and 2005-06. The service tax was paid under the category of Business Auxiliary Services. The Lower Authorities held that the credit of service tax paid on sales commission paid to the agents does not qualify to be an input service and hence availment of such credit and utilisation of the same for the discharge of duty liability on the final products by the appellant was irregular. Show cause notice was issued and reply was also filed by the appellant. The Adjudicating Authority confirmed the demand of reversal of cenvat credit with interest and imposed penalty under Rule 15. Appellant is challenging the said order.

Appellant’s Contentions: - It is contended that input services would include any services used by the manufacturer, either directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal. It is submitted that the commission agent were appointed by the them to meet the marketing and sale of the products produced by the appellant. The view taken by the Lower Authorities is narrow and totally opposed to the Cenvat Credit Rules. That for running any business, a manufacturer would be availing a number of services and the service tax involved on such services is naturally available as cenvat credit, as the entire expenditure so incurred is solely for running the business only. It is submitted that the issue is covered by decision given in Metro Shoes Pvt Ltd v/s CCE, Mumbai-I [2008 (10) STR 382 (Tri-Mumbai)].

Respondent’s Contentions: - Revenue contended that the definition of input service under Rule 2 (l) of CCR would not cover the service tax paid by the appellant on the commission given to the sales agents. It is submitted that the definition is an inclusive definition and the issue is not clear from that. That the Adjudicating Authority had clearly given exposition of the Rules 2 (l) in his order. That by no stretch of imagination, sales commission paid by the appellant can be considered as used directly or indirectly in the manufacture of final products.

Reasoning of Judgment: - The Tribunal held that with regard to issue wherein demand of excess availed cenvat credit being credit of service tax taken twice and demand of irregular availment of credit being credit of service tax paid prior to 10.9.2004 is tenable, whether penalty is leviable, it is held that the amounts had been reversed by the appellant and they claim that it was done due to mistake on their part. The part of the order is confirmed.

With regard to credit of service tax paid on BAS (Sales Agent Commission), the Tribunal has relied upon the decision given in the case of Metro Shoes Pvt Ltd and it is held that services incurred upto place of removal are to be considered as input services. Accordingly, the Tribunal held that the sales commission is only in respect of the sales made through the commission agents. The decision in Metro Shoes Pvt Ltd covers the issue in appellant’s favour. Penalty set aside.

Decision: - Appeal disposed off accordingly.

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Case: - T. G. Kirloskar Automotive Pvt. Ltd. v/s Commr. of C. Ex., Bangalore-II

Citation: - 2010 (17) STR 359 (Tri-Bang)

Issue: - Admissibility of Cenvat credit of service tax paid on transportation services provided by the assessee to their staff to pickup and drop them from residence to factory and vice-versa.

Brief Facts: - Appellant have been providing the transportation services to their staff to pickup and drop them from their residence to the factory and vice-versa. The lower Authorities denied the credit on the ground that credit is not eligible on the input service as the said service is only a facility extended to the employees of the company. In appeal, the Commissioner (A) relied upon his earlier decision given in M/s Stanzen Toyotetsu India Pvt Ltd and rejected the appeal.

Appellant’s Contentions: - The appellant contended that the decision relied upon by the Commissioner (A) has been set aside by the Division Bench in the case of M/s Stanzen Toyotetsu India Pvt Ltd v/s CC [2009 (14) STR 316 (Tr-Bang)]. It is also submitted that the issue is also covered by the decision given in CCE v/s Cable Corporation of India Ltd [2008 (12) STR 598 (Tribunal)].

Reasoning of Judgment: - The Tribunal held that the denial of credit on the transportation service rendered to the staff was not correct. The Tribunal held that since the decision relied upon by the Commissioner (A) has been set aside by the Division Bench, then the issue stands now in favour of the assessee. Thus, the issue is now squarely covered in favour of the appellant. Impugned order set aside.

Decision: - Appeal allowed with consequential relief.

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