Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
Appeal(s) Involved: ST/21953/2018-SM
[Arising out of Order-in-Appeal No. MLR-EXCUS-000-APP- MSC-132-2018-19 dated 14/09/2018 passed by Commissioner of Central Tax , BELGAUM (APPEALS) ]
M/s New Mangalore Port Trust Panambur
C.E, S.T-Commissioner Of Central Excise & Central Tax, Mangalore Commissionerate
M.S. NAGARAJA, ADVOCATE, M/S. T.RAJESWARA SASTRY & ASSOCIATES, BANGALORE For the Appellant
Mrs. Kavita Podwal, Superintendent, AR For the Respondent
Date of Hearing: 12/03/2019
Date of Decision:14/03/2019
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER
Final Order No. 20262/2019
Per : S.S GARG
The present appeal is directed against the impugned order dated 14.09.2018 passed by the Commissioner (A) whereby the Commissioner (A) has rejected the appeal of the appellant.
2. Briefly the facts of the present case are that the appellants are providing ‘Port Services’, ‘Renting out of Immovable Property Services’ and ‘Mandap Keeper Services’ and are availing CENVAT credit facility under CCR, 2004. During the course of the Audit, it was noticed that they have availed CENVAT credit of Rs.30,34,650/- on ‘Rent a Cab’ and Rs.74,681/- on ‘Insurance of Vehicles’ which are not eligible. Further, they have availed CENVAT credit on certain services which were used/consumed in their facilities outside the registered premises such as NMPT colony, school etc. Therefore, a SCN dated 25.05.2017 issued to the appellant demanding for CENVAT credit of Rs.57,95,788/- along with interest and imposition of penalty. The Additional Commissioner, Central Excise & Service Tax, Mangaluru vide his Order-in-Original dated 22.12.2017 confirmed the demand of total Service Tax of Rs.42,98,250/- along with interest and imposed penalty of Rs.42,98,250/- under Rule 15(3) of the CCR, 2004 read with Rule 78(1) of the Finance Act, 1994. Also the credit reversed of Rs.30,16,763/- and Rs.3,85,839/- paid was appropriated against the demand. Aggrieved by the Order-in-Original, appellant filed appeal before the Commissioner (A) who rejected the same. Hence, this appeal.
3. Heard both sides and perused the records.
4. Learned Counsel for the appellants submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law and binding judicial precedents. He further submitted that the SCN dated 25.05.2017 was issued on the basis of Audit proposing to deny CENVAT credit on various input services viz. Rent a Cab, Insurance, Works Contract, Electrical Works, Pest Control, Event Management, Hiring of Tugs etc. The SCN proposed to disallow and demand CENVAT credit of Rs.57,95,788/- along with interest and impose penalties and appropriate the amount of Rs.34,02,602/- and interest of Rs.5,85,931/- voluntarily paid before the issue of SCN. The Learned Counsel further submitted that the adjudicating authority in Para 12 of the Order-in-Original has referred only to eligibility for CENVAT credit in respect of (i) Works Contract (ii) Electrical Works (iii) Hiring of Tugs. The credit on Hiring of Tugs was allowed and credit on other services was disallowed including those services in respect of which there is no finding. The amount voluntarily paid along with interest was appropriated. He further submitted that the Commissioner (A) in the impugned order has merely reiterated the findings of the Additional Commissioner without examining the legal position. The Learned Counsel in their written submission has given the details of the CENVAT credit demanded in the SCN, amount of CENVAT and interest paid before the issue of SCN dated 25.05.2017 and appropriated and the disputed input services in a tabular form which is reproduced herein below.
4.1. Learned Counsel further submitted that it is an admitted fact in the SCN that the appellant had paid CENVAT of Rs.34,02,602/- and interest of Rs.5,85,931/- towards Rent-a-Cab service and other services as tabulated above before the issue of SCN on 25.05.2017 and the said amounts stand appropriated in the adjudication order. He further submitted that in terms of Section 73(3) of the Finance Act, 1994, the Revenue ought not to have issued SCN to the extent of the CENVAT of Rs.34,02,602/- and interest already paid. He further submitted that it is a settled law that when the Service Tax and interest are paid and intimated to the Central Excise Officer, the SCN shall not be issued in respect of the amounts so paid in terms of Section 73(3) of the Finance Act, 1994 and Section 11A (2A) of the Central Excise Act,
1944 and in case of short payment, the Central Excise Officer shall initiate proceedings only to the extent of the amount short paid. For this submission, he relied upon the following decisions:
⦁ CCE & ST, LTU, Bangalore v. Adecco Flexione Workforce Solutions Ltd, 2012 (26) STR 3 (Kar.).
⦁ CST, Bangalore v. Master Kleen, 2012 (25) STR 439 (Kar.).
⦁ CCE, Nagpur v. Galaxy Construction Pvt Ltd, 2017 (48) STR 37 (Bom.).
⦁ CCE & ST, Pune-III v. Venkateshwara Hatcheries Pvt Ltd, 2016 (42) STR 565 (T)
⦁ Bhoruka Aluminium Ltd v. CCE & ST, 2017 (51) STR 418 (T- Bang).
4.2. He further submitted that with regard to other services for which the CENVAT credit has been denied fall in the definition of ‘input service’ but the Additional Commissioner in the Order-in- Original has considered only three services viz. Works Contract, Electrical Works and Hiring of Tugs and there is no discussion or decision in respect of the other services. Learned Counsel also submitted that all the input services on which CENVAT has been denied fall in the definition of ‘input service’ and has been held to be input service by various decisions of the Tribunal and the High Court and in his written submission, he has referred to various decisions for each input service.
5. On the other hand, Learned AR defended the impugned order.
6. After considering the submissions of both the parties and perusal of the material on record, I find that the appellant has paid CENVAT of Rs.34,02,602/- and interest of Rs.5,85,931/- towards Rent-a-Cab service and other services before the issue of SCN and the same has been appropriated in the adjudication order. Further, I find that the appellants are not contested the payment of CENVAT towards Rent-a-Cab service and interest thereon and has only prayed that under Section 73(3) penalty should be dropped. The contention of the Learned Counsel has a force and in view of the various decisions relied upon by the appellant cited supra, I hold that once the appellant has paid the CENVAT of Rs.34,02,602/- and interest of Rs.5,85,931/- towards Rent-a-Cab service and other services, the Revenue should not have issued the SCN as there was no suppression of fact with intent to evade payment of Service Tax. Therefore, I set aside the imposition of penalty equal to the CENVAT credit of Rs.34,02,602/- along with interest of Rs.5,85,931/- which is paid before the issue of SCN. As far as other input services are concerned, I find that the adjudicating authority has only considered three service viz. Works Contract, Electrical Works and Hiring of Tugs for decision on their eligibility for CENVAT credit. Further, I find that the original authority have not considered the material furnished by the appellant to prove that the said services fall in the definition of ‘input service’. Further, I find that with regard to the Pest Control service, Advertising service and Event Management service, Electrical Works, Erection, Commissioning and Installation of DG Set service, there is no finding by both the authorities. The Commissioner (A) has merely confirmed the Order-in-Original without considering the submissions of the appellant and the various case laws relied upon by the appellant in support of their submission. In view of all these, I am of the considered view that this case needs to be remanded back to the original authority for passing a de novo order with regard to all the services except Rent-a-Cab service which is not being contested and CENVAT has been paid by the appellant. Consequently, the appeal is allowed by way of remand to the original authority with direction to pass a de novo order after considering all the submissions of the appellant. The original authority will pass a reasoned order after complying with the principles of natural justice. Before passing the order, the original authority will consider the various case laws relied upon by the appellant in support of their submission. Consequently, the appeal is allowed by way of remand.
(Order was pronounced in Open Court on 14/03/2019)