V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 1 of 33
BRIEF FACTS OF THE CASE:
M/s. H.D. Enterprise, H.D. House, 1st Floor, Pooja Complex,
Station Road, Bhuj-Kutch (hereinafter referred to as the “Noticee”),
engaged in providing mining services to various clients, are holders of
Service Tax registration certificate No.AABFH2614QST001 under the category
of (i) “Site Formation and Clearance Service” and (ii) “Mining of Mineral, Oil
or Gas Service” as service provider and under the category of “Goods
Transport Agency Service” as service recipient, in terms of Section 69 of
Chapter V of the Finance Act, 1994 (32 of 1994) (hereinafter referred to
as the ‘Act’) and have undertaken to comply with the conditions
prescribed in Service Tax Rules, 1994 (herein after referred to as the
‘Rules’).
2/-
During the course of enquiry initiated on the basis of intelligence
that the Noticee has been wrongly availing CENVAT credit on motor vehicles,
Shri Jayesh Hansraj Patel, Manager & Authorised signatory of the Noticee, in
his statement dated 16.08.2010 recorded under Section 14 of the Central
Excise Act, 1994 as made applicable to Service Tax by virtue of Section 83 of
the Act, inter-alia, stated that the Noticee started as a Partnership firm in
the year 1991 were engaged mainly in the business of Mining Work and O.B.
Removal Work, etc.; that they were registered with service tax department
vide Registration No.AABFH2614QST001 under the category of ‘Site Formation
and Clearance Service’ and ‘Mining of Mineral, Oil or Gas Service’ as service
provider and also for ‘Goods Transport Agency Service’; that they were filing
service tax returns regularly and paying service tax; that they were taking
cenvat credits on inputs, input services and capital goods under Cenvat
Credit Rules, 2004 (herein after referred to as the ‘CCR’) and utilising the
same for discharging of output service tax liability; that they had availed
cenvat credit of Rs.2,28,27,155/- on capital goods like Excavators, Dumpers,
Tippers, Bulldozer, Motor grader, etc., during the year 2008-09 and
Rs.3,36,49,659/- in the year 2009-10; that they had provided Goods
Transport Services to GIPCL and also paid applicable Service Tax thereon;
that as per his knowledge capital goods, except Excavator, Motor Grader,
Bulldozer, Caterpiller & BML Dumpers which they had purchased from
various manufacturers were registered with respective RTOs. On being
shown the definition of capital goods as per Rule 2(a) of CCR there was a bar
on availing of credit on motor vehicles by a service provider engaged in
mining service, he stated that they had rendered services under the
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 2 of 33
category of GTA, which was an eligible category for taking cenvat credit on
motor vehicles and that he was of the opinion that mining service consists of
various services and they were eligible for cenvat credit on motor vehicles.
3/-
Shri Jayesh Hansraj Patel in his further statement dated
13.09.2010 interalia stated that he had seen his earlier statement dated
16.08.2010 and confirmed that only Motor Grader, Dumper and Tipper were
required to be registered with RTO; that other goods like Bulldozer,
Excavator, etc. were not required to be registered with RTO; they paid
service tax on free supply of diesel by adding the same with the taxable
service amount; they had transported Lignite from the feeder bracker at
Mine at village Vastan to their power plant at Village Nani Naroli which
situated at a distance of nearly 7 kms; that he would submit the copies of
consignment note issued in favour of M/s. GIPCL for providing GTA service
on which they had paid service tax during the audit of their firm in 2009-10
and presently they were also providing transportation of Lignite from KSK
Mineral Resources Mine, Gurha to VS Lignite Power Plant, Kolayat and issued
consignment notes and he submitted specimen copies of the same.
4/-
It appeared that as per Board Circular No.232/2/2006-CX.4,
dated 12.11.2007 any activity provided to mining sector including cargo
handling service and goods transport was to be classified under specific head
prior to 01.06.2007, would onwards be brought under the ambit of mining
services and hence, the services provided by the Noticee would be covered
appropriately under mining services.
5/-
As per Rule 3(1) of the CCR, the provider of output service is
entitled to take credit of duties specified therein paid on any input or capital
goods or any input services. Further, Rule 2(a) of the CCR defines capital
goods and as per clause (B) of Rule 2(a) ibid, credit of duty paid on motor
vehicles registered in the name of provider of output service, has been
allowed for providing taxable services of Courier Agencies, Tour Operator,
Rent-a-Cab Scheme Operator, Cargo Handling Agency, Goods Transport
Agency, Outdoor Caterer and Pandal & Shamiana Contractor as specified in
sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and (zzw) of clause (105) of
Section 65 of the Act respectively.
6/-
The Noticee had availed Cenvat credit of Rs.3,97,93,728/-, as
detailed in Annexure-A to the show cause notice, on various motor vehicles,
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 3 of 33
viz., Tipper, Dumper and Motor Grader during the year 2008-09 & 2009-10,
however as regards the cenvat credit of Rs.1,77,408/- out of the said
amount of credit, they had not provided documents/invoices/details on the
basis of which they had availed the cenvat credit. In terms of Rule 3(1) read
with Rule 2(a) of the CCR CENVAT credit on motor vehicles was available to
those services specified in sub-rule (B) of Rule 2(a) ibid. The Site Formation
Service and Mining Service for which the Noticee was registered were not
falling under the eligible category for taking cenvat credit on motor vehicles
at the relevant time, however the Noticee had availed and utilised the said
amount of the cenvat credit for discharging their Service Tax liability.
7/-
The Noticee had submitted that they had rendered services
under the category of GTA which they felt was an eligible category for taking
cenvat credit on motor vehicles, and they had taken registration under the
category of GTA as service recipient and paid Service Tax on the services
received by them. It appeared that the Noticee never paid the Service tax
under the category of GTA as a service provider. Further, under Rule 4B of
the Rules, it was mandatory for every goods transport agency which
provided service in relation to transport of goods by road, to issue a
consignment note containing the prescribed particulars, whereas it appeared
that the Noticee had not issued any such consignment note during the year
2007-08 to 2009-10. It also appeared that the services rendered by them in
respect of handling of coal was also very well categorized under the category
of mining services as all the services rendered in relation to mining earlier
classified in various categories had been grouped under the category of
mining service w.e.f. 01.06.07. Therefore, it appeared that the Noticee had
rendered services under the category of mining only and hence not eligible
for availing cenvat credit on motor vehicles at relevant time.
8/-
Subsequently,
Notification
No.25/2010-CE(NT),
dated
22.06.2010, effective from the date of its publication in the official gazette,
allowed cenvat credit on dumpers or trippers, falling under Chapter 87 of the
First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), registered
in the name of provider of output service for providing taxable services of
Site Formation Service and Mining Service as specified in sub-clauses (zzza)
and (zzzy) of clause (105) of Section 65 of the Act respectively. Therefore,
the benefit of the said Notification could not be extended retrospectively.
9/-
The cenvat credit on motor vehicles appeared to be allowed only
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 4 of 33
to the service providers for providing specified services supra. Therefore,
mining service was not covered under the specified taxable categories of
services during the relevant period and accordingly, the cenvat credit taken
on motor vehicles during the period 2008-09 & 2009-10 appeared to be not
eligible to the Noticee in terms of Rule 2(a) of the CCR. Thus, the cenvat
credit wrongly availed and utilised by the Noticee on motor vehicles to the
tune of Rs.3,97,93,728/- appeared to be denied and recovered from them
alongwith interest.
10/-
It also appeared that the Noticee had wilfully suppressed the
said facts that they had availed cenvat credit on the motor vehicles which
was not available to them, and the same came to the notice of the
department only during the enquiry after recoding of statement dated
16.08.2010 of the authorised signatory of the Noticee and therefore cenvat
credit amounting to Rs.3,97,93,728/- appeared to be demandable &
recovered from the Noticee under Rule 14 of the CCR readwith proviso to
sub-section (1) of Section 73 of the Act alongwith interest under Rule 14 of
the CCR read with Section 75 of the Act. It also appeared that the Noticee
had contravened the provisions of Rules 2, 3 and 4 of the CCR and hence
they had rendered themselves liable for penal action under Rule 15 of the
CCR read with Section 78 of the Act.
11/-
Hence, a Show Cause Notice No.V.ST/AR-Gnd/Commr/233/2010
dated 14.10.2010 was issued to the Noticee, asking them to show cause to
the Commissioner of Central Excise, Rajkot, as to why:
(i)
Wrongly availed and utilised cenvat credit to the tune of
Rs.3,97,93,728/- for the period from April, 2008 to March,
2010 should not be recovered from them under Rule 14 of the
CCR read with Section 73(1) of the Act;
(ii)
Interest at the appropriate rate on the said amount should
not be charged and recovered from them under Rule 14 of the
CCR read with Section 75 of the Act; and
(iii)
Penalty should not be imposed upon them under Rule 15
of the CCR read with Section 78 of the Act.
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 5 of 33
DEFENCE REPLY AND PERSONAL HEARING:
12/-
The Noticee, vide written submissions dated 13.11.2010 and
16.01.2012 while denying all the allegation raised in the show cause notice
made the following submissions:
13/-
The Noticee was engaged in providing the Mining Services, Post
Mining services, Site Preparation & Clearance service and Supply of Tangible
Goods Service and holding service tax registration No.AABFH2614QSD001
under the categories of (i) Mining Service, (ii) Supply of Tangible Goods
Service and (iii) Site Preparation and Clearance Service as service provider
while under ‘Transport of Goods by Road Service as service recipient.
14/-
They submitted that in view of ‘Mining Service’ brought within
the ambit of tax net under the clause (zzzy) of Section 65(105) of the Act
from 01.06.2007 onwards and covering a large number of inter-linked and
inter-related taxable as well as non-taxable services, CBEC, issued circular
No. 232/2/2006-CX.4, dated 12.11.2007, by acknowledging the following:
“2.
(i)
(ii)
(iii)
The mining sector (such as the coal mines, mining of ores, etc.)
mainly receive the following types of services, mostly on
contract basis:Excavation/drilling and removal of the overburdens (i.e.
stratum, layer of mud, boulders, etc. that needs to be removed
during or prior to extraction of coal/minerals).
Coal cutting or mineral extraction and lifting them up to the
pithead.
Handling and transportation of coal/mineral from pithead to a
specified location within the mine/factory or for transportation
outside the mines.”
They also submitted that, in paragraph 5 of the said circular, it was
also acknowledged that handling and transportation of mineral from pithead
to any location within the mine/factory or for transportation outside the
mines were post-mining activities and were chargeable to Service Tax under
the relevant taxable services, i.e. Cargo Handling service and Goods
Transport by Road. They added that it has also been clarified in the said
circular that for the sake of uniformity, classification of the said services,
when provided in relation to mining, would be subsumed in the “Mining
Service”. They contended that as per the clarification given by the Board,
the service of loading, unloading, handling, re-handling, transportation of
lignite/coal from pit head to stock yard, breaker feeder, conveyer belt for
power plant within or outside the mines provided by them to the clients were
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 6 of 33
post-mining activities, which were covered under “Cargo Handling Service”
and the transportation service provided by them outside the mine, as “Goods
Transport Service”, for which they submitted specimen copies of contracts
awarded to them for carrying out such activities.
They further submitted
that both ‘Cargo Handling Service’ and ‘Goods Transport Agency’ were
among the services specified in Clause (B) of Rule 2(a) of CCR for taking
Cenvat credit on the motor vehicles, and could not be divested of the said
legal right solely because the said services were rendered by them as post
mining service and were classified in accordance with the scheme laid down
by the Board; that clause (B) of Rule 2(a) of CCR cited by the Department in
the notice did not contain any legal provision to deny the cenvat credit of
duty paid on the motor vehicles used in “Cargo Handling service” and “Goods
Transport service” used for providing the post-mining activities mentioned in
the said circular dated 12.11.2007; that the said circular was issued by the
Board with a view to bring uniformity in the classification of various taxable
services
by
subsuming
the
post-mining
activities
under
the
generic
classification and therefore, it could not act as any kind of a bar against the
legal right flowing from the provisions of Rule 2(a) of CCR allowing Cenvat
credit on the motor vehicles used by the service providers of any of the
various services specified therein, if used in the post mining service; that
although there was no legal bar in clause (B) of Rule 2(a) of CCR to the
effect that if “Cargo Handling service” and “Goods Transport Agency” service
was rendered in relation to the post-mining activities, that were required to
be classified under “Mining Service” from 1.6.2007 onwards, as per the
circular-dated 12.11.2007 issued by the Board, the entitlement to Cenvat
credit on the motor vehicles would be lost, the show cause notice sought to
put such service providers like them to a gross disadvantage in comparison
with the providers of these very services which were not rendered in the
post-mining activities and thereby, did not face the identical proceedings for
denial of Cenvat credit of duty paid on the motor vehicles and it could not be
the intention of the legislature or the Board to give rise to present situation;
that the proposal to deny the Cenvat credit taken by them on the dumpers,
tippers and trucks used by them in the post-mining activities, namely,
“Cargo Handling Service” and “GTA”, alleged to be Mining Service, by citing
the extant provisions of Rule 2(a) of CCR and said circular dated 12.11.2007
should be vacated.
15/-
They submitted that Notification No. 25/2010-C.E.(N.T.), dated
22.6.2010 could be said to have been issued by the Central Government
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 7 of 33
with the sole purpose to bring an end all possible anomalous interpretations
of the provisions of Rule 2(a) of CCR which had put the mining sector to a
manifest disadvantage; that the service providers engaged in providing the
entire spectrum of services to the mining sector, including “Cargo Handling
service” and “Goods Transport by Road” service provided by using dumpers,
tippers and trucks covered by Chapter 87 of the Central Excise Tariff
Act,1985, which was also accepted by the Board as post-mining activities,
who got themselves registered with the Department under clause (xxxy) of
Section 65(105) of the Act, faced the prospect of denial of cenvat credit
solely because they provided these services to mining or power generation
sectors as post mining activities; that this anomaly stand removed with the
issuance of the said notification which enjoyed retrospective effect and in
support of their submission, they relied upon the decision of Hon. Supreme
Court in the case of Government of India v/s Indian Tobacco Association
reported as 2005(187)ELT162(S.C.) by quoting following paragraphs of the
said decision:
“27. There is another aspect of the matter which may not be lost
sight of. Where a statute is passed for the purpose of supplying an
obvious omission in a former statute, the subsequent statute relates
back to the time when the prior Act was passed [See Attorney General
v. Pougette (1816) 2 Price 381: 146 ER 130].
28. The doctrine of fairness also is now considered to be a relevant
factor for construing a statute. In a case of this nature where the
effect of a beneficent statute was sought to be extended keeping in
view the fact that the benefit was already availed of by the
agriculturalists of tobacco in Guntur, it would be highly unfair if the
benefit granted to them is taken away, although the same was meant
to be extended to them also. For such purposes the statute need not
be given retrospective effect by express words but the intent and
object of the legislature in relation thereto can be culled out from the
background facts.
29. The question has furthermore to be considered having regard to
the language and object discernible from the statute read as a whole.
The Respondents were not ineligible from obtaining the benefit. Once
they are held to be eligible for obtaining the benefit, the amended
notification being an exemption notification should receive the
beneficent construction.
30. It is not a case where the Respondents, like the cases of
Mahaan Dairies (supra) and Tata Iron & Steel Co. Ltd. (supra) were
ineligible from claiming the benefit. The subsequent notification, thus,
should receive a beneficent construction.”
16/-
They submitted that allegation regarding wrong availment of
cenvat credit on motor grader falling under Chapter 84 of the First Schedule
to Central Excise Tariff Act,1985 was unsustainable because as per Rule 2(a)
(A)(2) of the CCR, “capital goods” means all goods falling under Chapter 84
of the First Schedule to the Excise Tariff Act used for providing output
service and there was no dispute over the fact that motor grader was
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 8 of 33
classified under Chapter 84 of the First Schedule to the Central Excise Tariff
Act,1985.
17/-
They stated that one of their regular clients viz. M/s. Gujarat
Industries Power Company Ltd. (‘GIPCL’) had awarded a contract dated
10.09.2008, over & above the routine excavation work which they were
carrying out for them, for supply of excavator, dozer, trucks/dumpers and
grader on fixed per hour charges for providing the following services:
Sl.
1.
Description
Unit
Excavation of all types of strata including Per cum
Rate (Rs.)
50.75
intercalated partings between Lignite seams
up to a depth of 0 to 40 m from surface and
transportation
2.
&
stacking
thereof
designated places/in-pit dumps.
Excavation of all Lignite seams
at
from Per tonne
50.00
different horizons (at depths up to 40 m
from surface) and transportation & feeding
thereof
3.
to
the
pit-top
Lignite
Handling
System (LHS)
Lignite Pushing within reach of Stacker Rs./Cum
20.00
Reclaimer at outplant lignite stockpile for
4.
Unit 1 & 2
Loading of lignite from out-plant stock pile Rs./Cum
25.00
(maintained for Unit 1-2) & transportation
and unloading at feeder breaker at out plant
5.
lignite Handling system for unit 1-2
Loading & transportation of ROM lignite Rs./Cum
50.00
from Outplant Lignite stock pile for unit 1 &
6.
2 to inplant Lignite Handling System 1 & 2
Dewatering of monsoon water by operating Lumpsum
10,00,000/-
7.
GIPCL’s pumps at Vastan mine.
Rs./Year
Hiring of excavator (2.5-3.5 cum bucket Rs./per Hr.
3000/-
8.
capacity) with operator, fuel, etc.
Hiring of 300 HP Dozer with operator, fuel, Rs./per Hr.
4750/-
9.
etc.
Hiring
1000/-
of
Trucks/Dumpers
(25
T)
with Rs./per Hr.
operator, fuel, etc.
10. Hiring of Grader/water tanker with operator,
Rs./per Hr.
1000/-
fuel, etc.
They submitted that the requirement of excavator, dozer, trucks,
dumpers, grader, etc. covered by Sl. No. 6 to 10 was over and above the
equipments required to be used for excavation, etc. covered by Sl. No. 1 to
5 of the contract and the charges for hire were also fixed separately and on
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 9 of 33
that basis, they had arranged for supply of excavator, dumpers, tippers, offway trucks, grader, etc. to M/s. GIPCL and took Cenvat credit of the duty
paid on them. The Noticee added that they had also provided the details of
Cenvat credit taken by them on the said items in the ST-3 returns filed by
them for the period from October, 2008 to March, 2009 and from April, 2009
to September, 2009 with the jurisdictional Service tax authorities.
17.1/-
They referred to the following clarification given by the Central
Board of Excise & Customs, New Delhi, vide letter F. No. 334/1/2008-TRU
dated 29.2.2008:
“4.4 Supply of tangible goods for use :
4.4.1 Transfer of the right to use any goods is leviable to sales tax /
VAT as deemed sale of goods [Article 366(29A)(d) of the Constitution
of India]. Transfer of right to use involves transfer of both possession
and control of the goods to the user of the goods.
4.4.2 Excavators, wheel loaders, dump trucks, crawler carriers,
compaction equipment, cranes, etc., offshore construction vessels &
barges, geo-technical vessels, tug and barge flotillas, rigs and high
value machineries are supplied for use, with no legal right of
possession and effective control. Transaction of allowing another
person to use the goods, without giving legal right of possession and
effective control, not being treated as sale of goods, is treated as
service.
4.4.3 Proposal is to levy service tax on such services provided in
relation to supply of tangible goods, including machinery, equipment
and appliances, for use, with no legal right of possession or effective
control. Supply of tangible goods for use and leviable to VAT/sales tax
as deemed sale of goods, is not covered under the scope of the
proposed service. Whether a transaction involves transfer of
possession and control is a question of facts and is to be decided
based on the terms of the contract and other material facts. This could
be ascertainable from the fact whether or not VAT is payable or paid.”
They submitted that, as per paragraph 4.4.2 of the above clarification,
the supplies made by them to M/s. GIPCL constituted supply of tangible
goods defined under the provisions of Section 65(105) (zzzzj) of the Act,
which was inserted by the Act with effect from 16.05.2008.
17.2/-
They
further
F.No.137/120/2008-CX.4
submitted
dated
that
23.10.2008
the
Board,
had
vide
clarified
its
that
letter
service
provider providing supply of tangible goods for use was entitled to treat
machinery, equipment, appliances, vehicles, aircrafts, vessels, etc. supplied
on hire as ‘input’ and could claim cenvat thereon. They added that on the
basis of said clarification, Central Excise Commissionerate, Madurai had also
issued Trade Notice No. 12/2009 dated 13.3.2009 which was reproduced as
under:
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 10 of 33
“Supply of tangible goods including machinery, equipments and
appliance for use, without transferring right of possession and
effective control of such tangible goods is a taxable service in terms of
provision of Section 65 (105) (zzzzj) of the Finance Act, 1994. In
some case, vehicles, aircrafts, vessels etc., are also supplied in the
above manner and such activities also fall under the said taxable
service. In this regard, a doubt has arisen whether the credit of excise
duty / Additional duty of Customs (commonly known as CVD) paid on
such items are available to the provider of such taxable service and if
so whether such goods should be considered as ‘inputs’ or ‘capital
goods’, for the purposes of the CENVAT Credit Rules, 2004.
The matter has been examined. It is possible that some of such goods
may either fall within the definition of ‘capital goods’ or may not be
covered under the said definition. However, as these goods are
primary requirements for providing the above mentioned ‘output
services’ for such service providers, the goods including vehicles,
aircrafts, vessels etc., are in the nature of ‘inputs’. It is emphasized
here that this clarification is valid only when the output service is in
the nature of service defined under the provisions of Section 65 (105)
(zzzzj) of the Finance Act, 1994 and the goods in question are the
tangible goods supplied during the course of providing the taxable
service.”
They were therefore entitled to take Cenvat credit on dumper, grader,
tipper and truck and the show cause notice proposing to the contrary was not
sustainable.
18/-
The Noticee further submitted that they had also provided
transportation using the said dumpers/tippers/trucks to M/s. VS Lignite
Power Private Limited pursuant to contract dated 08.09.2009 awarded to
them for transportation of lignite from KSK Mineral resources mines, Gurha
to their power plant which was 7 km away from the mining area. The said
contract was awarded to them solely for providing transportation service as
specified under Section 65(105)(zzp) of the Act, which was one of service
specified in Rule 2(a)(B) of CCR even prior to issuance of Notification No.
25/2010-CE(NT) dated 22.6.2010. They had also submitted that Shri Jayesh
Patel, their Manager and Authorized Signatory had clearly stated the said
facts
in
his
statement
dated
13.09.2010
and
specimen
copies
of
consignment notes were also submitted to the concerned officers, however,
in the notice, it has been mentioned that they had not issued any
consignment note and therefore, a specimen copy of the consignment note
issued by them in this regard was resubmitted. And thus, the Noticee had
provided the service of GTA and therefore, denial of Cenvat credit taken by
them on dumper, tipper and truck was not proper. They placed reliance in
the case of Jindal Stainless Steel Ltd., 2009(245)E.L.T.244(Tri.-Bang.), by
stating that Hon’ble Tribunal had also allowed Cenvat Credit on tippers by
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 11 of 33
treating them as capital goods.
18.1/-
The Noticee further submitted that the show cause notice was
issued on 14.10.2010 whereas as per the provisions of Section 73(1) of the
Act, as made applicable to Rule 14 of CCR, it was required to be served
within one year from the ‘relevant date’ as explained in Section 75(6)(i) of
the Act to mean as the date on which the return was filed. They submitted
that they had filed ST-3 returns giving the details of cenvat credit taken on
inputs as well as capital goods and utilized, for the half year (i) April, 2008
to September, 2008, (ii) October, 2008 to March, 2009, (iii) April, 2009 to
September, 2009 and (iv) October, 2009 to March, 2010 on 24.10.2008,
29.05.2009,
25.11.2009
and
27.04.2010
respectively,
however
no
discrepancy with regard to entitlement of Cenvat credit or in any other
respect was pointed out and thus, except for the cenvat credit taken during
the last one year from the date of issuance of the show cause notice, the
notice was clearly time-barred. In support of their plea, they relied upon the
decisions in the cases of (i) Cheviot Company Ltd.-{2010 (255) ELT 139 (T)}
and (ii) PCL Oil & Solvents Ltd.-{2009 (246) ELT 528 (T)}. They further
submitted that proviso to Section 73(1) of the Act provided for invoking
extended period for issuance of notice were pari materia with Section 11A
and Section 11AC of Central Excise Act, 1944 and argued that as there was
no mention of any of the ingredients of the said provisions in the notice,
therefore, the notice was clearly time-barred and required to be vacated
insofar as the period beyond one year from the relevant period was
concerned. They placed reliance on the observation made by Hon. Supreme
Court in the case of Collector of Central Excise Vs. H.M.M. Limited{1995(76)ELT497(S.C.)} on the requirement to issue specific reasons for
invoking extended period, following which the Board had issued Circular
No.268/102/96-CX, dated 14.11.1996 stating therein that it was absolutely
necessary that the show cause notices should clearly state the grounds for
extended period of demand. They also added that in the case of Godrej
Foods Ltd. v/s Union of India-{1993(68)ELT28(M.P.)}, Hon’ble High Court
held that a mere mechanically repetition of the language of the provision in
the show cause notice would not confer jurisdiction on the Collector of
Central Excise to issue a notice under Section 11A of the Central Excise Act,
1944 beyond period of six months taking advantage of the proviso to the
Section.
18.2/-
The Noticee also submitted that on 13.08.2009, the officers of
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 12 of 33
Audit Wing, Central Excise HQ, Rajkot, had visited their office and conducted
audit of accounts/records maintained by them for the period from April,
2007 to March, 2009 and took note of the fact that during the said period
they were holding registration certificate for mining services. They added
that the audit officers had pointed out that they were required to pay service
tax of Rs.19,69,287/- on re-handling/transportation of lignite carried out by
them in Financial Year 2007-08 and 2008-09 on the ground that the same
was part & parcel of mining service, which was immediately paid by them.
By submitting a copy of Final Audit Report No.E-122/2009-10 dated
27.10.2009 issued by Assistant Commissioner (Audit), Central Excise,
Rajkot, the Noticee contended that the officers had not pressed for change in
the classification in respect of re-handling or transportation for which Service
Tax had been demanded under “Cargo Handling service” or “Goods
Transport” service on account of the fact that they had complied with the
requirement of Board’s circular No. 232/2/2006-CX.4 dated 12.11.2007.
They further added that during the course of audit, the officers also took a
close look at the cenvat account and all documents on which cenvat credit
was taken were placed before the auditors, however no objection was raised
with regard to cenvat credit taken by them on dumper, grader, tipper and
truck used by them for providing the service. They further submitted that
apart from departmental audit, the officers from the office of Principal
Accountant General, Commercial and Receipt Audit, Ahmedabad had also
carried out audit of their records maintained upto 31.03.2009, however no
objection with regard to either taking/availment of Cenvat credit or payment
of service tax was raised and therefore, none of precursor for invocation of
extended period, which were even otherwise not disclosed in the show cause
notice, were allegedly present to justify issuance of the present notice after
expiry of the normal period of limitation, for which they placed reliance on
the following case laws:
(i)
(ii)
(iii)
(iv)
18.3/-
Rohit Industries Ltd.-2009(242)ELT240(T)
Hindustan Coca Cola Beverages Pvt. Ltd.-2009(242)ELT45(T)
Sipani Fibres Limited-2007(212)ELT374(T)
Shabana Steels Pvt. Ltd.-2004(177)ELT332(T)
They further submitted that cenvat credit was taken by them on
account of their bona fide belief that they were entitled for the same as the
issue involves interpretation of law and therefore, extended period was not
invokable and thus, they were also not liable for penalty under Rule 15 of
CCR read with Section 78 of the Act, for which they placed reliance in the
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 13 of 33
cases of (i) SRV Automations -{2007(211)ELT346(T)}
and
(ii)
Piaggio
Vehicles Pvt. Ltd.-{2009(14)STR568(Commr.Appl)}. They contended that
Hon’ble Supreme Court, in the cases of Union of India v/s Rajasthan
Spinning & Weaving Mills-{2009(238)ELT3(SC)}, had clarified the scope of
Section 11A and 11AC of Central Excise Act, 1944 which were pari materia
with Section 73 and 78 as mentioned in Rule 15(3) of the CCR, and had
clearly observed that the proviso to Section 11A could be invoked only if
there was a finding that the escaped duty was the result of deception by the
assessee by adopting the means indicated in the proviso to Section 11A as
also in Section 11AC.
19/-
They also submitted that in the facts and circumstances where
demand was unsustainable, no interest under Rule 14 of the Rules readwith
Section 75 of the Act became payable.
20/-
During the personal hearing in the matter held on 17.01.2012,
Shri Chetan Dethariya, Chartered Accountant appeared on behalf of the
Noticee
and
submitted
written
defence
reply
dated
16.01.2012.
He
reiterated the contents of the said reply by emphasising that the Noticee had
also provided cargo handling service as post mining service, which has been
entitled for availing the Cenvat credit during the relevant period.
DISCUSSION AND FINDINGS:
21/-
I have carefully gone through the facts of the case and the
written and oral submissions made by the Noticee.
22/-
The issue to be decided in this case is as to whether cenvat
credit availed on Dumper, Tipper, Motor Grader, etc. utilised by the Noticee
being provider of services is available to them as per CCR during the period
2008-09 and 2009-10.
23/-
As per the show cause notice, inquiry conducted on the basis of
intelligence revealed that the Noticee were engaged mainly in the business
of Mining Work and O.B. Removal Work, etc. since 1991 and holding Service
Tax Registration under the taxable category of ‘Site Formation and Clearance
Service’ and ‘Mining of Mineral, Oil or Gas Service’ as service provider and
also for ‘Goods Transport Agency Service’ as service recipient; that they by
suppressing
the
facts
had
wrongly
availed
cenvat
credit
of
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 14 of 33
Rs.3,97,93,728/- on various motor vehicles, viz., Tipper, Dumper and
Motor Grader, during the financial years 2008-09 and 2009-10 which was
not admissible to them being provider of services under Mining Service
covering cargo handling and goods transportation as per the Board
Circular No.232/2/2006-CX.4 dated 12.11.2007, and which had not been
specified for availing cenvat credit on motor vehicles as capital goods
under rule 2(a)(B) of CCR readwith rule 3(1) ibid at the relevant time;
that subsequently the cenvat credit has also been allowed to provider of
such
mining
service
vide
Notification
No.25/2010-CE(NT),
dated
22.06.2010 prospectively w.e.f. date of its publication in the official
gazette, hence the Noticee was not eligible to avail & utilise the said
credit; that the said cenvat credit has been proposed to be recovered from
them under rule 14 of the CCR readwith proviso to Section 73(1) of the
Act alongwith interest under Section 75 ibid with consequential penalty
under rule 15 ibid readwith Section 78 ibid.
24/-
The Noticee have contested basically contending that the
services of handling & transportation of lignite/coal from pit head onwards
within or outside the mines provided by them were post-mining activities
and should be treated under cargo handling service and goods transport
agency service as per the Board Circulars No.232/2/2006/CX-4, dated
12.11.2007, which were specified in Rule 2(a)(B) of the CCR for allowing
cenvat
credit
on
motor
vehicles;
that
even
otherwise,
Notification
No.25/2010-CE(NT), dated 22.06.2010 was having retrospective effect for
allowing Cenvat credit on such post-mining services under mining service;
that apart from the said services, since they had also provided goods
transport agency service by using Dumpers/Tippers/Trucks and by issuing
consignment note, and the said service was one of the services specified in
said rule even prior to issuance of said notification, they were entitled to
take Cenvat credit under dispute; that Cenvat credit on motor grader falling
under chapter 84 of the First Schedule to Central Excise Tarrif Act, 1985 was
otherwise available as per Rule 2(a)(A)(2) of the CCR; that they had
arranged for supply of excavator, dozer, trucks/dumpers and grader, which
would be constituted as supply of tangible goods as defined under Section
65(105)(zzzzj) of the Act, as per the Board Circular No.334/1/2008-TRU,
dated 29.02.2008, and the same should be treated as input for availing
Cenvat credit, as per the Board Circular No.137/120/2008-CX.4, dated
23.10.2008 and Trade Notice No.12/2009, dated 13.03.2009 issued by CCE,
Madurai. They have further contended that the demand beyond one year
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 15 of 33
from the date of the notice was time barred on the grounds that they had
filed ST-3 returns by giving details of the Cenvat credit and no discrepancy
was pointed out by the Department; that the show cause notice did not
contain any of the ingredients of proviso to Section 73(1) of the Act which
should be required for invoking extended period in the notice as per the
judgment quoted by them and Board Circular No.268/102/96-CX, dated
14.11.1996; that they had been subjected to audit by the Department as
well as CERA (Commercial and Receipt Audit, Ahmedabad) and though on
being pointed out by department audit officers they had paid Service Tax of
Rs.19,69,287/- on their service of re-handling/transportation of lignite
treated to be part & parcel of mining service, the officers had neither
pressed for change in the classification of said activities in view of the
Board’s said circular dated 12.11.2007 nor raised any objection with regard
to such credit; that they were under bonafide belief that they were entitled
for the said credit as the issue involved interpretation of law. They have also
contested that since extended period was not invokable, they were neither
liable for interest nor for penalty under Rule 15 of the CCR readwith Section
78 of the Act. They have also cited various case laws as mentioned herein
above.
25/-
It is observed that the dispute involved in the present case is
pertaining to availment of cenvat credit by the Noticee on the motor vehicles
which has been proposed to be inadmissible to them being provider of
services under ‘Mining of Mineral, Oil or Gas Service’ as specified under
Section 65(105)(zzzy) of the Act, which was not specified for availing
cenvat credit on motor vehicles as capital goods under the Cenvat Credit
Rules at the relevant time, whereas the Notice has contested basically on
account of their services to be treated as post-mining activities under the
categories of ‘Cargo Handling Service’ and ‘Goods Transport Agency
Service’. In other words, the Noticee has mainly argued on the basis of
their services to be treated as Cargo Handling Service and Transport
Agency Service but show cause notice does not involve any dispute over
classification as it has been issued for wrong availment of cenvat credit on
motor vehicles as capital goods by the Noticee being service provider of
‘Mining of Mineral, Oil or Gas Service’. I, therefore, find that the Noticee
has tried to divert the issue of the case in hand.
26/-
Since the Noticee has raised the issue of their services to be
treated as Cargo Handling Service and Goods Transport Agency, though
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 16 of 33
classification is not the issue in the present case, I take this issue for
discussion before going into the admissibility of Cenvat credit on the items
under question.
26.1/-
It is observed that mining service has been brought under the
ambit of service tax with effect from 01.6.2007 and as provided under
Section 65(105)(zzzy) of the Act, ‘taxable services’ means any service
provided or to be provided to any person, by any other person in relation to
mining of mineral, oil or gas.
26.2/-
In this regard, the Board vide letter D.O.F.No.334/1/2007-TRU,
dated 28.02.2007 has clarified that services of same category have been
grouped together and defined as a separate taxable service and newly
specified services might contain part or whole of existing individually
specified taxable services, and the scope and coverage of taxable services
should, therefore, be interpreted for classification purposes strictly in
accordance with the statutory provisions existing during the material point of
time. In respect of taxable category of mining service, relevant text of the
said circular reads as under:
“6.2 MINING SERVICE [section 65(105)(zzzy)]: Presently, geological,
geophysical or other prospecting, surface or sub-surface surveying or mapmaking services relating to location or exploration of deposits of mineral, oil
or gas are leviable to service tax under “survey and exploration of mineral
service” [section 65(105)(zzv)]. Services such as• site formation and clearance, and excavation and earth moving, drilling
wells for production / exploitation of hydrocarbons (development drilling)
• well testing and analysis services
• sub-contracted services such as deploying workers and machinery for
extraction / breaking of rocks into stones, sieving, grading, etc.
• outsourced services,
provided for mining are individually classified under the appropriate taxable
service. Services provided in relation to mining of mineral, oil and gas are
comprehensively covered under this proposed service. With this, services
provided in relation to both exploration and exploitation of mineral, oil or gas
will be comprehensively brought under the service tax net.
6.2.1 The trend is to outsource part or whole of the mining activities. Since
exploration and mining of mineral, oil or gas are comprehensively brought
under the service tax, field formations may undertake necessary action.”
In view of the said clarification, after levy of Service Tax under
the taxable service of Mining Service w.e.f. 01.06.2007, all services such
as site formation and clearance, and excavation and earth moving, drilling
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 17 of 33
wells for production/exploitation of hydrocarbons (development drilling), well
testing and analysis services, sub-contracted services such as deploying
workers and machinery for extraction/breaking of rocks into stones, sieving,
grading, etc., outsourced services, etc., which were earlier individually
classified under the appropriate taxable service, provided or to be provided
for
or
in
relation
to
mining
of
mineral,
oil
and
gas
have
been
comprehensively covered under the said category i.e. ‘Mining of Mineral, Oil
or Gas Service’ as specified under Section 65(105)(zzzy) of the Act.
26.3/-
Further, it is observed that Section 65A of the Act provides the
principles of classification of taxable services and the classification of taxable
services should be determined according to the terms of the sub-clauses of
clause (105) of Section 65 of the Act. Under the said Section, it has also
been provided that in case of overlap, a service would be classified under the
head, (a) which provides most specific description, (b) in case of a
composite service having combination of different taxable services, the
service which give them their essential character and (c) in case the test of
(a) and (b) does not resolve, the service which comes earlier in the clauses
of Section 65 of the Act, i.e. the service that was subjected to service tax
earlier.
26.4/-
As regard the contention of the Noticee for their services to be
treated as post-mining activities under the Categories of Cargo Handling
Service and Goods Transport Agency, it is observed that though the Noticee
has claimed that they had provided Goods Transport Service and Supply
of Tangible Goods and also paid Service Tax under the said categories,
without producing any details/evidences, but on verification of the facts as
reported
by
the
jurisdictional
Range
Officer
vide
his
letter
F.No.AR/GIM/SFS-005/06-07 dated 06.02.2012, it is noticed that the
Noticee had initially applied for obtaining Service Tax Registration under the
category of Site Formation and Clearance, Excavation and Earthmoving and
Demolition Service as specified under Section 65(105)(zzza) of the Act, only
on 10th November, 2006 and the registration had been granted to them on
18th December, 2006. Subsequently, the Noticee had made application on
05.07.2007 for seeking amendment in their existing registration certificate
by incorporating/adding one more service category viz. ‘Mining of Mineral,
Oil or Gas Service’, as specified under Section 65(105)(zzzy) of the Act,
which was accordingly amended on 2nd August, 2007. Lastly, they had made
further application on 12th August, 2009 for adding two more service
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 18 of 33
categories viz. (i) Supply of Tangible Goods Service as specified under
Section 65(105)(zzzzj) of the Act and (ii) Transportation of Goods by Road
Service (as a service recipient) as specified under Section 65(105)(zzp) of
the Act, which were accordingly incorporated in the existing registration
certificate on the same day. Therefore, I find that during the Financial Year
2008-09 the Noticee was having Service Tax registration certificate for
providing services under the categories of (i) Site Formation and Clearance,
Excavation and Earthmoving and Demolition Service and (ii) Mining Service
only, whereas during the Financial Year 2009-10, in addition to said taxable
categories, they were also holding Service Tax Registration under the
categories of Supply of Tangible Goods Service as service provider while
under ‘Transport of Goods by Road Service’ as a service recipient only, as
also admitted by the Manager-cum-Authorised Signatory of the Noticee in
his statement dated 16.08.2010, however they had filed ST-3 returns for
the Financial Year 2008-09 under the categories of ‘Mining of Mineral, Oil
or Gas Service’ as service provider and ‘Transport of Goods by Road
Service’ as a service recipient, only, and for the Financial Year 2009-10, in
addition to the said categories, under the category of ‘Supply of Tangible
Goods Service’ which was too during the second half year as Nil, which
shows that the Noticee had provided services under the said category i.e.
‘Mining of Mineral, Oil or Gas Service’, only and no other services were
provided by them during the relevant period and Service Tax was paid
accordingly. I also find that as admitted by the Manager-cum-Authorised
Signatory of the Noticee in his statement dated 16.08.2010 supra, the
Noticee was mainly engaged in the business of Mining Works and
Overburden removal and was also holding Service Tax registration for
providing Mining Service. Further, as regard contention of the Noticee for
making payment of Service Tax on re-handling/transportation of minerals
i.e. lignite, on being pointed out during the audit by the departmental
officers, I find that the officers had clearly observed that the Noticee had
made short/non-payment of Service Tax on the consideration charged &
received for their activities undertaken for re-handling/transportation of
minerals i.e. lignite, for M/s. Gujarat Industrial Power Co. Ltd. (GIPCL) for
excavation and removal of lignite under a composite contract for mining,
which were part & parcel of Mining Service and by accepting/admitting the
same the Noticee had unconditionally paid the Service Tax. Therefore their
argument
that
the
officers
had
not
pressed
for
changed
in
the
classification of their said activities is not acceptable as their said activities
had been clearly considered as Mining Service and Service Tax was
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 19 of 33
demanded accordingly. Further, in support of their contention that they
had also provided transportation service and supply of tangible goods
service, the Noticee have submitted a photocopy of consignment note
bearing No.001 dated 03.03.2010 issued in favour of to M/s. VS Lignite
Power Pvt. Ltd., Kolayat, Bikaner (Rajasthan) for Goods Transport Agency
Service in pursuance of contract dated 08.09.2009, and also submitted a
copy of contract dated 10.09.2008 made between the Noticee and GIPCL,
stated for execution of work relating to excavation of minerals and for
supply of tangible goods, but I find that they have neither provided any
details of such work/services relating to goods transport service and
supply of tangible goods service undertaken/performed by them nor
documentary evidences for transaction thereof. Further, on perusal of said
contract dated 10.09.2008 it is observed that the Noticee was awarded
work for excavation of minerals namely lignite and handling & transport
thereof at Vastan Mines by deploying their vehicles/machineries viz.
excavator, trucks/dumpers, grader/water tanker, which clearly shows that
the said work was for providing mining service only as is also evident from
the ST-3 returns filed under the Mining Service for the relevant period.
Therefore, the Noticee was mainly engaged in excavation of minerals and
removal of overburden and had performed the handling and transportation
activities by loading, unloading and shifting of such minerals/overburdens
at/from pithead to stockyard wi thin Mines and not outside the mines, and
thus, the said services are essential part of mining operation and are
therefore definitely in relation to mining of minerals viz. Lignite. In view of
foregoing discussion and above said provisions of the Act, I find that since
Mining Service is more specific description, the activities carried out at Mines
by the Noticee for the consideration were found to be related to movement &
handling of the minerals i.e., Lignite, and thus, the same merits to be
classified under the taxable category of ‘Mining of Mineral, Oil or Gas
Service’. Even if one takes it as a case of a composite service having
combination of different taxable services, viz., Mining, Cargo Handling &
transportation, the fact remains that cargo handling and transportation
thereof were provided at mines and the same has also been provided in
relation to Mining of Minerals viz. Lignite and hence ‘Mining of Mineral, Oil or
Gas Service’ gives them their essential character. In view of the above
discussion, the said activities/services are apparently covered under the
taxable category of ‘Mining of Mineral, Oil or Gas Service’. Hence, I do not
find any merit in their argument that the services rendered by them were
Cargo Handling Service and Transportation Services and held that the
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 20 of 33
correct nature of the service rendered by them was Mining Service.
26.5/-
Further, as regard their arguments on the basis of the Board
circular No.232/2/2006-CX.4, dated 12.11.2007, I observe that the Board
vide the said circular has clarified regarding applicability of Service tax on
activities undertaken in mining sector before 1-6-2007 as follows:
“C.B.E. & C. Letter F. No. 232/2/2006-CX. 4, dated 12-11-2007
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject : Applicability of Service tax on activities undertaken at mines prior to enactment of the Finance
Bill, 2007 – Regarding
It may be recalled that vide appropriate entry in the Finance Act, 2007,
‘service provided by any person to any other person in relation to mining of
minerals, oil or gas’ has been comprehensively brought under the ambit of service
tax with effect from 1-6-2007. However, for the prior period, certain disputes
relating to chargeability of service tax on some of the services provided to mining
sector were reported. In this regard, a draft circular dated 9-10-06 was put up on
the official web-site, soliciting response from the stakeholders. The responses
received have since been examined.
2. The mining sector (such as the coal mines, mining of ores, etc.) mainly
receive the following types of services, mostly on contract basis :(i)
(ii)
(iii)
Excavation/drilling and removal of the overburdens (i.e. stratum, layer of mud, boulders, etc, that needs
to be removed during or prior to extraction of coal/minerals).
Coal cutting or mineral extraction and lifting them up to the pithead.
Handling and transportation of coal/mineral from pithead to a specified location within the mine/factory
or for transportation outside the mines.
3. Excavation/drilling and removal of the overburdens :
These activities are essentially in the nature of site formation, clearance,
escavation and earth-moving. As clarified earlier vide circular B1/6/2005-TRU, dated
27-7-2005 (para 6.2) [2007 (1) S.T.R. C48], the definition of site formation and
clearance, excavation and earth-moving and demolition service is an inclusive
definition and activities specifically mentioned are indicative and not exhaustive.
Prior to construction of buildings, factory or any civil structure, activity of mining or
clearance, excavation and earth moving or levelling are normally undertaken for a
consideration to make the land suitable for such activities. Such services include
blasting and rock removal work, clearance of underground, drilling and boring,
overburden removal and other development and preparation services of mineral
properties and site, and other similar excavating and earth-moving services. Hence,
these activities are taxable under the category of site formation and clearance,
excavation and earth-moving and demolition service w.e.f. 16-6-2005.
4 Coal cutting or mineral extraction and lifting them up to the
pithead :
These activities are essential integral processes and are part of mining
operations. As stated earlier, mining activity has been made taxable by legislation
under the Finance Act, 2007 (w.e.f. 1-6-2007). Prior to this date, such activities,
being part of mining operations itself are not subjected to service tax. Therefore, no
service tax is leviable on such activities prior to the said date.
5. Handling and transportation of coal/mineral from pithead to a
specified location within the mine/factory or for transportation outside the
mine :
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 21 of 33
These activities are post-mining activities and are chargeable to service tax
under the relevant taxable services, i.e., “Cargo Handling service” and “Goods
Transport by Road”. However, in case, such transportation is undertaken by
mechanical systems, such as conveyor belt system, ropeway system, merry-goround systems etc., and the same is not transported by road, no service tax would
be chargeable. Service tax is, however, chargeable under cargo handling service,
even if the loading, unloading and similar activities are done using mechanical
systems.
6. The above are the general guidelines for settlement of pending disputes.
These should be applied to individual cases keeping in view the facts and
circumstances of each case.
7. The pending cases may be resolved expeditiously.”
It is observed that the said circular clarifies regarding dispute
relating to chargeability of service tax on some of the services such as
excavation/drilling and removal of the overburdens, coal cutting or mineral
extraction and lifting them upto the pithead, handling and transportation of
coal/mineral from pithead to a specified location within the mine/factory or
for transportation outside the mines, etc., provided to mining sector for the
period prior to 01.06.2007 i.e. date on which service provided by any person
to any other person in relation to ‘mining of minerals, oil or gas’ has been
comprehensively brought under the ambit of Service Tax, and it is not
applicable for the period 01.06.2007 onwards as all such services are
essential integral processes and are part of mining operation and on or after
the said date all such services provided in relation to mining sector (such as
the coal mines, mining of ores, etc.) are chargeable to Service Tax under the
category of ‘Mining of Minerals, Oil or Gas’. Further, the Noticee was
providing services for excavation, handling and transportation of minerals
i.e. lignite at Mines, therefore such services being performed at mines are
essential & integral processes and in relation of mining operation and as
such definitely coverable under Mining Service as hold in foregoing
paragraphs. The said circular has issued general guidelines for settlement of
pending dispute related to the period prior to 01.06.2007, keeping in view
the facts and circumstances of each case. Hence, the said circular does not
provide any support to the Noticee in the present dispute.
27/-
Now I take the main issue as to whether cenvat credit availed on
Dumper, Tipper, Motor Grader, etc. and utilised by the Noticee being
provider of services is available to them as per CCR during the period 200809 and 2009-10. In this regard, it is observed that during the Financial Years
2008-09
and
2009-10,
the
Notice
has
taken
cenvat
credit
of
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 22 of 33
Rs.3,97,93,728/- on motor vehicles viz., Tipper, Dumper and Motor Grader,
and utilised the same for discharging their Service Tax liability. The said
credit has been proposed to be denied to the Noticee being provider of
services under the category of ‘Mining of Mineral, Oil or Gas Service’ as
specified under Section 65(105)(zzzy) of the Act, as the said category was
not specified for availing cenvat credit on capital goods in terms of Rule 2(a)
(B) of the CCR during the relevant period.
28/-
Further, it is observed that Rule 2(a) of the CCR defines capital
goods and as per Rule 2(a)(B) of the CCR, ‘capital goods’ means ‘motor
vehicle registered in the name of provider of output service for providing
taxable service as specified in sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and
(zzw) of clause (105) of Section 65 of the Act’.
28.1/-
It is further observed that Rule 2(a)(C) of the CCR has been
inserted in the said Rules vide Notification No.25/2010-CE(NT), dated
22.06.2010, with effect from 22.06.2010, which defines ‘capital goods’ as
‘dumpers or trippers, falling under Chapter 87 of the First Schedule to the
Central Excise Tariff Act, 1985 (5 of 1986), registered in the name of
provider of output service for providing taxable services as specified in subclauses (zzza) and (zzzy) of clause (105) of Section 65 of the Act’.
Therefore, Cenvat credit on the said dumpers or trippers for said specified
two taxable service providers has been allowed prospectively for the period
22.06.2010 onwards.
28.2/-
Further, as provided under Rule 3(1) of the CCR a manufacturer
or producer of final products or a provider of taxable service shall be allowed
to take credit of duty/duties, as specified therein, paid on capital goods
received in the factory of manufacture of final product or premises of the
provider of output service. Further, as per Rule 3(4) of the CCR Cenvat
credit shall be utilized to the extent such credit is available on the last day of
the month or quarter, as the case may be, for payment of duty or tax
relating to that month or the quarter, as the case may be. It is also observed
that as per Rule 9(5)&(6) of the CCR, the burden of proof regarding
admissibility of the cenvat credit shall lie upon the manufacturer or provider
of output service taking such credit.
28.3/-
In view of the aforesaid provisions, it is observed that credit of
duty paid on motor vehicles registered in the name of provider of output
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 23 of 33
service, has been allowed for providing taxable services of Courier Agencies,
Tour Operator, Rent-a-Cab Scheme Operator, Cargo Handling Agency, Goods
Transport Agency, Outdoor Caterer and Pandal & Shamiana Contractor as
specified in sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and (zzw) of clause
(105) of Section 65 of the Act respectively and thus, it is clear that the
taxable categories of ‘Site Formation and Clearance, Excavation and
Earthmoving and Demolition Service’ and ‘Mining of Mineral, Oil or Gas
Service’ as specified in sub-clause (zzza) and (zzzy) of clause (105) of
Section 65 ibid respectively were not specified for availing cenvat credit on
motor vehicles viz., Tipper, Dumper and Motor Grader, as capital goods
prior to 22.06.2010. Further, the Noticee had neither registered under the
services specified under Rule 2(a)(B) of the CCR nor provided any service
of such specified taxable category during the period under consideration,
and thus, the Noticee being provider of ‘Mining of Mineral, Oil or Gas
Service’ as held in foregoing paragraphs was not entitled to avail cenvat
credit of duty paid on such motor vehicles received during the relevant
period i.e. prior to 22.06.2010. I further find that the Noticee was mainly
providing
Mining
Service
at
Mines
and
not
the
cargo
handling
service/transportation service or other service, and even otherwise mere
utilisation of such vehicles in some other service also does not mean that
the nature of their service viz. Mining service has been changed and thus,
the said vehicles meant & utilised for mining services cannot be regarded
as eligible for Cenvat credit. However, they have not only availed the said
credit but also utilised the same towards their Service Tax liability during
the relevant period.
28.4/-
The cenvat credit under consideration was availed on motor
vehicles viz. Dumper, Tipper, Motor Grader, etc., and basic use of such
motor vehicles in Mining Service has not been disputed. Further, the said
motor vehicles have not been established to have been used in providing
other services namely Goods Transport Agency Service, Supply of Tangible
Goods Service, etc.. Though the Noticee has submitted to have provided
Goods Transport Agency Service, but I find that they had obtained Service
Tax registration under said taxable category as a service recipient which was
not disputed by them. However, mere obtaining registration under such
taxable service category specified under Rule 2(a)(B) of the CCR for allowing
cenvat credit does not automatically mean to become eligible for the credit.
Though the Noticee has submitted a copy of consignment note for said
service, but as discussed in foregoing paragraphs I find that they had neither
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 24 of 33
obtained Service Tax registration as Goods Transport Agency Service
provider nor filed ST-3 returns for providing such specified service.
28.5/-
As regard their contention for eligibility to avail credit on said
motor vehicles by treating them as input with reference to the contract
dated 10.09.2008, mentioned & discussed supra, in view of Trade Notice
issued by CCE, Madurai, I find that the said trade notice is not binding on
other jurisdiction and even otherwise it is clearly mentioned in the said trade
notice that the clarification was valid only when the output service is in the
nature of service defined under the provisions of Section 65 (105)(zzzzj) of
the Act i.e. Supply of Tangible Goods Service, and the goods in question
were the tangible goods supplied during the course of providing the taxable
service. Since the Notice had never provided services under the said taxable
category during the relevant period as hold supra, they were not entitled for
cenvat credit on this ground also.
28.6/-
Further, the Noticee has also contended that Cenvat credit on
motor grader falling under chapter 84 of the First Schedule to Central Excise
Tarrif Act, 1985 was otherwise available as per Rule 2(a)(A)(2) of the CCR.
In this regard, it is observed that Motor Grader has been considered as
motor vehicle which was not disputed by the Noticee and with reference to
capital goods, provisions relating to cenvat credit on motor vehicles has
been provided under Rule 2(a)(B) of the CCR whereas such provisions in
relation to goods has been provided in Rule 2(a)(A)(2) of the CCR, which
shows that Rule 2(a)(B) are specific provisions while Rule 2(a)(A)(2) are
general provisions. Since it is settled law that specific provision should
prevail over the general provisions. Hence, capital goods should be treated
as per Rule 2(a)(B) of the CCR according to which the Noticee was held to be
ineligible for cenvat credit on the said motor vehicle as per findings herein
above.
28.7/-
Further, as regards the cenvat credit of Rs.1,77,408/- out of the
said amount of Cenvat credit of Rs.3,97,93,728/- proposed to be denied for
want of said documents, I find that the Noticee has neither defended on this
issue nor provided documents/invoices/details on the basis of which they
had availed the cenvat credit, which is required as per Rule 9 of the CCR,
and hence, the said credit is also not admissible on the said ground.
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 25 of 33
28.8/-
In view of above discussion, I find that the Noticee has
wrongly availed and utilised the said cenvat credit and thus contravened
the aforesaid provisions of Cenvat Credit Rules. I find that provisions for
recovery of Cenvat Credit wrongly taken or utilised has been provided
under Rule 14 of the CCR, which reads as under:
“Where the CENVAT credit has been taken or utilized wrongly or has been
erroneously refunded, the same along with interest shall be recovered from the
manufacturer or the provider of the output service and the provisions of sections 11A
and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply
mutatis mutandis for effecting such recoveries.”
It is observed that for recovery of such wrong credit, Rule 14
of the CCR should be readwith Section 73 of the Act along with Section 75
ibid for recovery of interest. I, therefore, find that the cenvat credit of Rs.
Rs.3,97,93,728/- as demanded in the show cause notice is rightly
recoverable from the Noticee under the said provisions.
28.9/-
Further, as provided under the CCR, it was responsibility of the
Noticee himself to ensure the admissibility of the said cenvat credit. Instead
they have not only taken the said credit, which was not admissible to them,
but also utilised the same for discharging their Service Tax liability during
the relevant period, and therefore, they had not only taken wrong cenvat
credit but also utilised the same unlawfully. Further, though the Noticee has
also claimed that they had filed ST-3 returns alongwith the details of such
credit taken and utilised, but on verification of the facts as reported by the
jurisdictional Range Officer vide his letter F.No.AR/GIM/SFS-005/06-07
dated 06.02.2012, I find that the Noticee had filed ST-3 returns without
providing any such details and all such returns were filed only for providing
services under the Category of ‘Mining of Mineral, Oil or Gas Service’ and
for receiving services under ‘Goods Transportation Agency Service’.
Hence, the full facts of such Cenvat credit on Dumper, Tipper and Motor
Grader have been revealed during the investigation in the present case,
which
shows
that
they
had
suppressed
the
said
facts
from
the
department. Therefore, I find that the extended period for raising the
demand is correctly invokable in this case.
29/-
As
Government
regard
of
India
the
v/s
Noticee’s
Indian
reliance
Tobacco
placed
in
Association
the
case
of
reported
as
2005(187)ELT162(S.C.), it is observed that the said case was related to
Customs matter and issue involved in the said case was pertaining to the
benefit granted under former statute was taken away in the subsequent
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 26 of 33
statute by way of Notification which had not stated expressly to be
prospective, which is not the issue in the present case as the Notification
No.25/2010-CE(NT), dated 22.06.2010 has clearly stated that it has
prospective effect from 22.06.2010 onwards, hence this case law is not
applicable in the present case. Therefore, I do not find any force in the
argument advanced by the Noticee.
30/-
The Noticee has also contested that since they had also provided
goods transport agency service by using Dumpers/Tippers/Trucks and by
issuing consignment note, and the said service was one of the services
specified in said rule even prior to issuance of Notification No.25/2010CE(NT), dated 22.06.2010, they were entitled to take Cenvat credit under
dispute, for which they placed reliance in the case of Jindal Stainless Steel
Ltd., 2009(245)E.L.T.244(Tri.-Bang.), by stating that Hon’ble Tribunal had
also allowed Cenvat Credit on tippers by treating them as capital goods. In
this regard, I have already held that the Noticee had provided mining service
only and no other services were provided by them during the relevant period
and Service Tax was paid accordingly. Further, in the said case the issue
involved pertained to entitlement of tipper for cenvat credit as capital goods
which was allowed being the tipper as accessories to conveyor system,
falling under chapter 85 of the First Schedule to the Central Excise Tariff Act,
1985 covered under Rule 2(b) of Cenvat Credit Rules, 2002 corresponding to
Rule 2(a)(A) of the CCR, whereas issue involved in the present case is
pertaining to eligibility of cenvat credit on motor vehicles as capital goods
used by the Noticee being service provider, hence, there is no similarity in
both the cases. Since the Noticee is held to be ineligible for such cenvat
credit on the grounds discussed supra, therefore, the said citation is not
applicable here.
31/-
As regard the Noticee’s argument on time bar, I find that in
terms of the provisions of Rule 9(5) of the CCR, the provider of output
service availing cenvat credit, is required to maintained proper records as
specified and also to file half yearly return in the prescribed form by the end
of the month following the particular quarter or half year. The Service Tax
law provides self assessment and it was responsibility of the Notice to
disclose all material facts to the department at the relevant time. As
discussed in foregoing paras, though the Noticee being provider of output
service viz. ‘Mining of Mineral, Oil or Gas Service’, was availing the benefit
of CENVAT scheme and had taken cenvat credit on goods treating as Capital
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 27 of 33
Goods during the Financial Year 2008-09 and 2009-10 and also claimed to
have filed returns alonwith details of such credit, but I find that they had
filed ST-3 returns without providing any such details and all such returns
were filed only for providing services under the Category of ‘Mining of
Mineral, Oil or Gas Service’ and for receiving services under ‘Goods
Transportation Agency Service’, which shows that the department was
unaware of the facts of availing cenvat credit on Dumper, Tipper and
Motor Grader as capital goods prior to 16.08.2010 i.e. the date on which
statement of the Manager-cum-Authorised Signatory of the Noticee was
recorded, whereas they were availing such cenvat credit since Financial
Year 2008-09. Though they being provider of output services under the
category of ‘Mining of Mineral, Oil or Gas Service’ were very well aware
that the said category was not specified for availing cenvat credit on any
motor vehicles or Dumper/Tipper/Motor Grader during the period under
consideration, even then they had taken and utilised such credit, which
shows that they had availed wrong cenvat credit knowingly by way of
suppression of the facts as the full facts of availing of such credit were
revealed during the investigation of the matter. As regard contention of the
Noticee that they had filed ST-3 returns with details of said Cenvat credit for
the period covered under the show cause notice but no discrepancy with
regard to entitlement of the credit was pointed out and therefore demand
beyond one year from the date of issuance of the notice was time barred, for
which they relied upon the decisions in the cases of (i) Cheviot Company
Ltd.-{2010 (255) ELT 139 (T)} and (ii) PCL Oil & Solvents Ltd.-{2009 (246)
ELT 528 (T)}, it is already discussed in foregoing paragraphs that the
Noticee had filed ST-3 returns without providing any such details and the full
facts of such Cenvat credit on Dumper, Tipper and Motor Grader have
been revealed during the investigation in the present case, which shows
that they had suppressed the said facts from the department and
therefore, extended period for raising the demand is held to be correctly
invokable in this case. I find that in the cases of (i) Cheviot Company Ltd.{2010 (255) ELT 139 (T)} and (ii) PCL Oil & Solvents Ltd.-{2009 (246) ELT
528 (T)}, the appellants were engaged in manufacturing of excisable goods
and demand was pertained to Cenvat credit, however extended period of
limitation was held to be not invokable for the reasons that the appellants
were filing periodical returns disclosing every fact to the department,
whereas facts involved in the present case were never disclosed by the
Noticee before the investigation in the matter. Hence, these citations are not
applicable in this case. Further, as regard their contention that there was no
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 28 of 33
mention of any of the ingredients of the provisions of proviso to Section
73(1) of the Act for invoking extended period, for which they placed reliance
in
the
case
of
Collector
of
Central
Excise
Vs.
H.M.M.
Limited-
{1995(76)ELT497(S.C.)} and Board Circular No.268/102/96-CX, dated
14.11.1996, it is observed that the show couse notice has clearly mentioned
that the Noticee by suppressing the facts had knowingly, wilfully &
wrongly availed cenvat credit on various motor vehicles, viz., Tipper,
Dumper and Motor Grader, during the relevant period, which was not
admissible to them being provider of services under Mining Service as the
said taxable category had not been specified for availing cenvat credit on
such motor vehicles as capital goods under rule 2(a)(B) of CCR readwith
rule 3(1) ibid at the relevant time as the said facts were revealed during
the investigation in the matter, hence demand has been raised by
invoking extended period of limitation under the said Section. Therefore,
their said contention is not incorrect. Further, in the case of H.M.M. Limited
Hon’ble Supreme Court has held that limitation for extended period was not
invokable unless show cause notice puts the assessee to notice specially as
to which of the various commission or omission stated in the proviso to
Section 11A(1) of the Central Excise Act, 1944 had been committed. Since
the present show cause notice has clearly contained the ingredient of
Section 73(1) of the Act for invoking extended period, therefore this case
law does not provide any relief to the Notice. Further, in respect of their
reliance placed in the case of Godrej Foods Ltd. v/s Union of India{1993(68)ELT28(M.P.)}, wherein Hon’ble High Court held that a mere
mechanically repetition of the language of the provision in the show cause
notice would not confer jurisdiction on the Collector of Central Excise to
invoke extended period of limitation, I find that the grounds for invoking
extended period have been clearly & specifically mentioned in the notice,
hence the said case is also not applicable in the present matter.
32/-
I further find that there was ample opportunity for them to
bring these facts to the notice of the department at the time of furnishing
information/details under Rule 4 readwith Rule 5 of the Rules, filing returns
under Rule 9(9), audit of their records, but it is seen that these facts were
not reported/reflected in ST-3 returns filed for the period of 2008-09 and
2009-10 and the Noticee on his own was giving an interpretation of law and
not bringing the relevant material facts to the notice of the department at
any point of time during the relevant period. The Noticee has not produced
any evidence showing that the facts in the present case had been pointed
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 29 of 33
out by them to the department before 16.08.2010. Therefore, I find that
they had to themselves assess the admissibility of said cenvat credit in
terms of the provisions of the Act and the CCR, but, they had acted in the
manner discussed in foregoing paras, the full facts of which were revealed
during the investigation under reference only. I find that they have
knowingly suppressed the facts involved in the present case and also willfully
mis-stated the facts and tried to mislead the department by way of
misinterpreting the relevant provisions of the Act and the CCR, not
reporting/reflecting these facts in ST-3 returns just to escape the payment of
Service Tax with intent by way of wrong availment of the said cenvat credit.
Thus they have wrongly taken and utilised cenvat credit of Rs.3,97,93,728/as mentioned supra. Therefore, in view of above finings, I hold that the
Noticee has violated/contravened provisions of Rule 2, 3 and 4 of the CCR
and thus, they deliberately mis-stated and withheld the full facts of their said
activities with intent to avail wrong cenvat credit. I further find that the
Noticee has never disclosed the facts of the present case at any point of time
and also failed to produce any evidence to show that the facts were within
the knowledge of department. Further, the Noticee placing reliance in the
cases of (i) Rohit Industries Ltd.-2009(242)ELT240(T), (ii) Hindustan Coca
Cola Beverages Pvt. Ltd.-2009(242)ELT45(T), (iii) Sipani Fibres Limited2007(212)ELT374(T)
and
(iv)
Shabana
Steels
Pvt.
Ltd.-
2004(177)ELT332(T), has raised contention that they had been audited
regularly by the Department/CERA and there was no dispute from the
auditors regarding such Cenvat credit, hence extended period was not
justifiable. In this regard, it is observed that different branches of Hon’ble
Tribunal in the said cases held that the assessees were audited regularly by
the Department and there was no case of wilful suppression or misstatement. The first case was pertained to central excise matter and issue
involved was regarding assessable value of the goods manufactured by the
respondent assessee who was audited regularly and no evidence was held to
establish suppression of facts hence extended period not invocable. In the
second case, issue involved was related to Cenvat credit which was held to
be not disallowable on account of procedural or technical breaches and
accordingly, extended period was not invocable u/s 11A of the Central Excise
Act, 1944. In the third case, the appellant was engaged in manufacturing of
excisable goods and the demand was pertained to Cenvat credit which was
held to be based on theoretical calculation and they also being audited
regularly, extended period was held to be not invokable. In the last case, the
issue was related to Cenvat credit for which all the required documents were
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 30 of 33
made available to the Department, hence the appellant was held to have not
suppressed the facts and thus extended period was not invokable. I observe
that no mandatory records have been prescribed/specified to be maintained
by the assessee under the Rules and the assessee himself have to maintain
records in accordance with the various laws in force from time to time,
however, as per Rule 5 of the Rules he is required to inform to the
Department regarding all the records as specified & maintained by him. It is
further observed that during the course of audit of such records provided by
the assessee, the departmental officers carry out test checks of the records
with selective & limited purposes and therefore, it can not be said that all the
records are audited. Further, there is nothing on record to show that the
Noticee had pointed out their said facts to the officers at the time of audit
and hence, I find that mere production of records before the departmental
officer for audit can not tantamount to disclosure of facts. In this regard, I
find that in case of Agrico Engg. Works (India) Pvt. Ltd. Vs CCE2000(122)ELT891(Tribunal), Hon’ble Tribunal has held that no suppression
could not be pleaded on the ground that Excise Officers visited the
appellant’s factory number of times unless there was something on record to
show that they pointed out some fact to department and even after the
discovery of that fact the department had not taken any action. Therefore, in
view of above discussion, the argument advanced by the Noticee is
untenable and the citations given by them are not applicable here.
33/-
As regard contention of the Noticee that cenvat credit was taken
by them on account of their bona fide belief that they were entitled for the
same as the issue involves interpretation of law and therefore, extended
period was not invokable and thus, they were also not liable for penalty
under Rule 15 of CCR read with Section 78 of the Act, for which they placed
reliance in the cases of (i) SRV Automations-{2007(211)ELT346(T)}, and (ii)
Piaggio Vehicles Pvt. Ltd.-{2009(14)STR568(Commr.Appl)}, it is
observed
that in the first case issue involved pertained to Cenvat credit and all facts
were disclosed to the Department and therefore the appellant assessee was
held to be under bonafide belief that they were eligible to avail the credit,
hence demand barred by time. Further, in the second case the issue
involved was pertained to Cenvat credit on input service and the demand
was held time bar on the ground that the appellant assessee was filing
returns and they were also audited regularly but no objection was raised. I
find that, though there was no ambiguity in the relevant provisions of the
Act/Rules, the Noticee had on their own misinterpreted the said relevant
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 31 of 33
provisions and had acted in conscious disregard of its obligation and also
acted deliberately in defiance of the Act/Rules with sole intent to evade the
payment of Service Tax due, by way of wrong availment/utilisation of cenvat
credit and therefore, their argument on the basis of bonafide belief and
aforesaid case laws is untenable. Further, in respect of their reliance in the
case
of
Union
of
India
v/s
Rajasthan
Spinning
&
Weaving
Mills-
{2009(238)ELT3(SC)}, it is observed that in the said case Hon’ble Supreme
Court has held in the absence of any element of deception or malpractice the
recovery of duty could only be for a period not exceeding one year. As
discussed hereinabove, since the Noticee is found to have suppressed the
facts involved in the present case and extended period is invocable,
therefore the said case law is not applicable in this case.
34/-
Therefore, in view of above findings I find that this is a fit case
for invoking extended period of time for recovery of the said cenvat credit
under proviso to Section 73(1) of the Act. In view of the above, the Noticee
is rightly required to pay the amount of Rs.3,97,93,728/- equivalent to
credit wrongly availed & utilised, under Rule 14 of the CCR readwith proviso
to Section 73(1) of the Act.
35/-
As regard their contentions for not levying interest Section 75 of
the Act and non imposing penalty Section 78 of the Act, I have already held
that the demand for recovery of Cenvat credit wrongly taken & utilised as
proposed under the notice is recoverable by invoking extended period of
time under Section 73 of the Act and Section 75 of the Act mandates levy of
interest on delayed payment of Service Tax, therefore, the demand is
recoverable along with interest under the said Section. I find that provisions
for imposition of penalty for Cenvat Credit wrongly taken or utilised has
been provided under Rule 15 of the CCR which should be read with
Section 78 of the Act. I further find that where any service tax has not been
levied or paid or has been short-levied or short-paid by the reason of
suppression of facts or fraud or collusion or wilful mis-statement or
contravention of any of the Act or the Rules made there under with intent to
evade payment of Service Tax, Section 78 of the Act provides mandatory
penalty and the person, liable to pay such service tax, shall also be liable to
pay a penalty, in addition to such Service Tax and interest thereon. It is
settled law that penalty is imposable on the basis of law operating on the
date on which the wrongful act is committed, and it is levied on the totality
of facts and circumstances of each case under the relevant provisions. In
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 32 of 33
view of the findings given in foregoing paras, as extended period of time for
demand under Rule 14 of the CCR readwith proviso to Section 73(1) of the
Act is invokable in the present case, I find that the Noticee has rendered
themselves liable for penalty under Rule 15 of the CCR readwith Section 78
of the Act for the various acts committed by them as discussed hereinabove.
36/- In view of above discussion and findings, I pass the following order:
Order
(i)
I confirm the demand of Rs.3,97,93,728/- (Three Crore
Ninety-seven Lakh Ninety-three Thousand Seven Hundred
Twenty-eight only) against M/s. H.D. Enterprise, H.D. House,
1st Floor, Pooja Complex, Station Road, Bhuj-Kutch, under
Rule 14 of the CENVAT Credit Rules, 2004 read with proviso
to Section 73(1) of the Finance Act, 1994 and order for
recovery thereof from them.
(ii)
I order for levy of interest under Rule 14 of the CENVAT
Credit Rules, 2004 read with Section 75 of the Finance Act,
1994 on the amount of service tax, as confirmed at Sr.No.(i)
above against M/s. H.D. Enterprise.
(iii)
I impose penalty of Rs.3,97,93,728/- (Three Crore Ninetyseven Lakh Ninety-three Thousand Seven Hundred Twentyeight only) on M/s. H.D. Enterprise, under Rule 15 of the
CENVAT Credit Rules, 2004 read with Section 78 of the
Finance Act, 1994. However, as provided in proviso to
section 78 ibid, if M/s. H.D. Enterprise pays the amount of
service tax confirmed along with interest thereon, within
thirty days from the communication of this order, the
amount of penalty shall be twenty-five per cent of the
penalty imposed above. The benefit of reduced penalty shall
be available only if the amount of penalty so determined has
also been paid within thirty days from the receipt of this
order.
Show
Cause
Notice
No.V.ST/AR-Gnd/Commr/233/2010
dated
14.10.2010 issued by Commissioner, Central Excise, Rajkot, is decided in
V.ST/15-362/Adj/2010
M/s. H. D. Enterprise, Bhuj-Kutch
Page 33 of 33
above terms.
(B. K. Bansal)
COMMISSIONER
Central Excise & Customs,
Rajkot
F. No. : V.ST/15-362/Adj/2010
Date:
.02.2012
By RPAD / Hand Delivery
To
M/s. H.D. Enterprise,
H.D. House, 1st Floor, Pooja Complex,
Station Road,
Bhuj-Kutch
Copy to :(i)
(ii)
(iii)
(iv)
The Chief Commissioner, Central Excise, Ahmedabad.
The Deputy Commissioner, Service Tax Division, Rajkot.
The Superintendent, Service Tax, A.R.-V, Gandhidham.
Guard File.