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Case Law Details

Case Name : Asiatic Drugs & Pharmaceuticals Pvt Ltd Vs Commissioner CGST (CESTAT Delhi)
Appeal Number : Service Tax Appeal No. 50808 of 2021 (SB)
Date of Judgement/Order : 27/05/2022
Related Assessment Year :

Asiatic Drugs & Pharmaceuticals Pvt Ltd Vs Commissioner CGST (CESTAT Delhi)

The issue in this appeal is whether the refund claim of the appellant-asseesse have been rejected which was collected on ocean freight.

CESTAT find that the transaction value for Custom duty and Excise duty (CVD), includes the ocean freight, and accordingly I hold that the appellant has suffered the double taxation, by again paying the service tax on the ocean freight, as demanded by the Revenue.

Accordingly, CESTAT allow this appeal and set aside the impugned order. CESTAT further hold that the appellant is entitled to refund of service tax Rs. 11,31,601/- + Interest Rs. 2,91,590/- + Penalty Rs. 1,69,740/-, totalling Rs. 15,92,931/-. This amount should be refunded to the appellant within a period of 45 days alongwith interest as per the provisions Section 11BB of the Central Excise Act. Thus, the appeal is allowed.

FULL TEXT OF THE CESTAT DELHI ORDER

Heard the parties.

2. The issue in this appeal is whether the refund claim of the appellant-asseesse have been rejected which was collected on ocean freight.

3. The brief facts of the case are that the appellant is engaged in the manufacture of Cefadroxil Monohydrate Trihydrate, filed the refund claim for refund of Rs. 15,92,931/- (which included service tax of Rs. 11,31,601, interest of Rs. 2,91,590/- and penalty of Rs. 1,69,740/-) in view of facts stated below:-

a) The appellant deposited Service Tax of Rs. 11,31,601 (of which Service Tax amounts to Rs. 10,56,161/-, Swachh Bharat Cess amounts to Rs. 37,720/-, Krishi Kalyan Cess amounts to Rs. 37,720/-), along with interest of Rs. 2,91,590/- and penalty of Rs. 1,69,740/- vide challan No. 00093 dated 15.03.2018, with respect to Service tax on ‘ocean freight’ paid for transportation of goods by a vessel from a place outside India to the customs station in India, under reverse charge mechanism for the period April 2017 to June 2017.

b) As the Service Tax was paid along with interest and penalty in March 2019, the appellant was unable to either avail CENVAT Credit due to GST regime or transition of the credit, vide FORM GST TRAN-1. Thus, while the appellant has paid the Service Tax; the appellant not avail or utilize the input tax credit of the Service Tax, paid on reverse charge basis.

3. On being advised, that as the appellant has already paid customs duty, CVD etc. on the import price, which includes ocean freight, the appellant was not required to pay service tax again on the freight (under reverse charge). Accordingly, appellant filed the refund application on 06.04.2018, praying for refund of the amount of tax with interest and penalty.

4. Show cause notice dated 11.06.2018 was issued mentioning as the appellant deposited the tax with interest towards settlement of audit para and further the appellant has not claimed that they were not liable to pay service tax, as pointed by the Excise Audit team, nor they have claimed that the tax was paid erroneously. Further, the appellant have simply filed the refund claim as per provisions under Section 142(8) of CGST Act, 2017. It was further alleged in the show cause notice that the appellant have not produced any document evidencing that they have not taken credit of the said amount, therefore the refund claim appears to be bad. Accordingly, the appellant was required to show cause as to why the refund claim, not be rejected. The show cause notice was adjudicated on contest. The appellant had urged that the service tax cannot be levied on the same transaction/activity twice (ocean freight), as the value of ocean freight has already been included in the value of goods, on which customs duty and CVD has been paid. In fact, payment of service tax on the ocean freight has resulted in double taxation. It is further urged that as the service tax was paid under the provisions of service tax vide service tax challan, as per the provisions of service tax, prior to 01.07.2017, and hence the appellant could not take credit in their cenvat register, under GST provisions. The appellant also filed affidavit in support of their contentions.

5. The Adjudicating Authority recorded the finding that the appellant was importing raw material and as per Notification No. 1/2017 dated 12.01.2017-ST, exemption was withdrawn for services provided by a person located in non taxable territory to a person located in taxable territory, by way of transportation of goods from a place outside India upto customs station in India. It was further observed vide Notification No. 3/2017 read with Notification No. 15/2017, importer was liable to pay service tax under reverse charge mechanism, by amending Notification No. 30/2012-ST. The tax deposited related to the period April, 2017 to June, 2017. It is further observed, that the appellant while admitting liability to service tax, have preferred the refund claim, only on the ground that cenvat credit is not available to them, in view of the provisions of Section 142(8) of CGST Act, 2017. It is further observed that the appellant have not submitted supporting documents to substantiate their claim.

6. Being aggrieved, the appellant preferred appeal before the learned Commissioner (Appeals) who vide the impugned order dated 03.10.2019, rejected the appeal.

7. Being aggrieved, the appellant is before this Tribunal. Thus reiterate the grounds of Appeal.

10. Learned Authorised Representative appearing for the Revenue relies on the impugned order.

11. Having considered the rival contentions, I find that the transaction value for Custom duty and Excise duty (CVD), includes the ocean freight, and accordingly I hold that the appellant has suffered the double taxation, by again paying the service tax on the ocean freight, as demanded by the Revenue.

12. Accordingly, in view of my findings, I allow this appeal and set aside the impugned order. I further hold that the appellant is entitled to refund of service tax Rs. 11,31,601/- + Interest Rs. 2,91,590/- + Penalty Rs. 1,69,740/-, totalling Rs. 15,92,931/-. This amount should be refunded to the appellant within a period of 45 days alongwith interest as per the provisions Section 11BB of the Central Excise Act. Thus, the appeal is allowed.

(order dictated in open Court)

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