The appellant filed this appeal against the impugned order whereby the demand of service tax on the ground that the appellants, for the purpose of paying service tax, did not include the value of materials used by them for providing such service. The contention of the appellant is that demand is time-barred as the show-cause notice was issued on 22.9.2006 demanding service tax for the period 16.7.2001 to 31.3.2005 by invoking extended period on the ground of suppression. The appellant submitted that the Tribunal, in CCE v. R.K. Photo studio vide Final Order Nos. ST/503-504/2011 dated 25.8.2011, after taking into consideration the Board Circular F. No. 233/2/2003-CX dated 7.4.2004, held that the demand beyond the normal period is not sustainable, in such type of case.
Even if it was accepted that the canteen service provided by the assessee was necessary for improving the efficiency of the worker and the same was eligible for Cenvat credit but in terms of Larger Bench decision in the case of CCE v. GTC Industries Ltd. [2008] 17 STT 63 (Mum. – CESTAT) there is no dispute about the fact that as part of the cost of providing canteen service had been recovered from the workers and to that extent the assessee would not be eligible for the Cenvat credit.
Hon’ble Supreme Court in the case of Singh Enterprises v. Commissioner 2005 (189) ETL A-113 (SC) has held that Commissioner (Appeals) has no power to condone the delay beyond the period of 90 days. We also refer to a listed decision of the Hon’ble Supreme Court in the case of Rajasthan Mechanical Works vide which Delhi High Court judgement was upheld.
There is no dispute about role of consignment agent attributing to the promotion of the sale. Once sale promotion falls within Rule 2 (l) of Cenvat Credit Rules 2004, admissibility of cenvat credit of the service tax paid in respect of such service availed is permissible.
The appellants were engaged in the business of renting out low-floor buses to Rajasthan State Road Transport Corporation (RSTRC) on contract basis. RSTRC was using the buses as stage carriers for transportation of persons. The appellants did not pay service tax on the consideration received from RSTRC during the period 01-06-2007 to 31-12-2007.
Any order for imposing penalty specially the heavy once qas provided under Section 76 and 77, of the Act should show the reason justifying the imposition of penalty and thus following the principles of justice done. It is a fact on record that the Appellants had asked for clarification regarding availability of benefit of exemption Notification No. 12/2003 dated 20.6.03 from the department time and time again but as no response was made to their request under a bona fide belief of availability of said exemption notification had availed the benefit of said exemption notification.
The appellant has placed on record the authorization letter dated 15.3.2005 addressed by PBPL to Assistant /Deputy Commissioner, Central Excise, Varanasi authorising the appellant to manufacture biscuit on their behalf. Further perusal of the terms and conditions mutually agreed upon between PBPL and the appellant would show that as per the job work contract the appellant were required to process and manufacture biscuit, carry out inspection, packing and delivery to various depot of PBPL located all over the country as directed by PBPL.
The ld. A.R. submits that penalties have been imposed because they did not pay in time the tax due. We find that there is no case for imposing penalty for an amount more than net tax liability. So the penalty under Section 78 is reduced to Rs. 18,889/-. Further, penalty under Section 76 is waived and also the appellant is given an opportunity to pay 25% of the penalty under Section 78 in 30 days of receipt of the order. If such payment is not made in such timeframe full penalty will be payable.
Learned Advocate submits that lower authorities have also taken into account the Service Tax availed on the capital goods whereas the restriction of 20% utilisation is only in respect of the input service credit. He draws my attention to two precedent decision of the Tribunal in the same appellants case being BSNL v. CCE&C [2009] 21 STT 127 (Bang.-Cestat) and BSNL v. CCE [Final Order No. A/265/2011, dated 28-3-2011]. It stands held in the said decision that the restriction to use 20% of the credit in case of non-maintenance of separate Cenvat accounts for taxable and exempted services is only in respect of inputs service credit. Matter stands remanded to the lower authorities for segregating said credit falling on the input services as also on capital goods and to decide the matter afresh.
The Counsel for the appellant submits that for the purpose of calculation, Revenue is taking into account the entire receipts of the appellants whereas the taxable value should be taken after allowing abatement of 50% in terms of Notification No. 1/-90ST and once only taxable value is taken into account, the turnover is below the value as laid down in the small scale notification and they were eligible for exemption. The Assistant Commissioner set aside the show-cause notice but Revenue filed appeal and Commissioner (Appeals) has confirmed the demand.
