Godrej Consumer Products Limited Vs Commissioner of Central Excise (CESTAT Chennai)
CESTAT Chennai held that as the demand was raised on the basis of the books of accounts which was not hidden from the department, there was no wilful suppression or mis-statement of facts with intent to evade tax and hence invocation of extended period not justified.
Facts- The appellant is engaged in the manufacture of shoe care, body care and personal care products such as hair cream, shoe polishes and floor cleaners, etc. By a scheme of amalgamation, as approved by the Hon’ble Bombay High Court, with effect from 01.04.2008, M/s. Sara Lee Household and Body Care Limited (SLH&BC) merged with M/s. Godrej Sara Lee Limited (GSLL) and the noticee had thereafter obtained Central Excise registration.
Appellant had agreed with M/s. Buttress B.V., Netherlands, for obtaining the licence to use the know-how, formula and trademarks for the manufacture, packing, sale and distribution of personal care products in India, for which the appellant had obtained firm permission from the Reserve Bank of India for payment of Royalty for the licence of know-how, formulae and trademarks, as above, under the Foreign Exchange Regulations Act, 1973.
The Show Cause Notice was issued proposing demand of Service Tax on the Royalty fees paid by the appellant for the period from 1997–98 to December 2001 at 5% of the payment made to the foreign company under the heading “consulting engineers” services in terms of Section 73 of the Finance Act, 1994. The Show Cause Notice also contained various other proposals like demanding appropriate interest and penalties under various sections of the Finance Act, 1994.
Adjudicating Authority confirmed the same. Commissioner of Central Excise (A) allowed the appeal preferred by the appellant. Being aggrieved, the present appeal is filed.
Conclusion- Held that the contentions of the appellant that the demand was raised based on the transactions recorded in their books of accounts and nothing was hidden from the Department and as such, no wilful suppression or mis-statement of facts with an intent to evade tax is attributable; the services were provided by foreign service providers and their liability to pay Service Tax on reverse charge basis had always been a matter of dispute and litigation; and since the services availed from foreign service providers are input services used in the manufacture of final products, they are entitled to avail input tax credit, thereby leading to a revenue neutral situation are acceptable and so, the invocation of extended period is not justified in this case.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The appellant is engaged in the manufacture of shoe care, body care and personal care products such as hair cream, shoe polishes and floor cleaners, etc. By a scheme of amalgamation, as approved by the Hon’ble Bombay High Court, with effect from 01.04.2008, M/s. Sara Lee Household and Body Care Limited (SLH&BC) merged with M/s. Godrej Sara Lee Limited (GSLL) and the noticee had thereafter obtained Central Excise registration.
2.1 The Show Cause Notice dated 14.10.2003 is addressed to M/s. SLH&BC, and the allegations are as under: –
