2025 (7) TMI 217 - AT - Service Tax

Benefit of Exemption - Trasport Services in relation to Export Goods - Failure to fulfil the conditions specified in the Notification No. 18/2009-S.T. dated 07.07.2009 - denial of benefit on the ground that the Let Export Order dates are prior to the date of transportation - HELD THAT - The appellant has submitted charts showing the dates of the Let Export Order and dates of transportation of the goods. The benefit of N/N. 18/2009-S.T. dated 07.07.2009 is not available to the appellant in respect of the Shipping Bill No. 5559983 dated 03.07.2009 and consequently the appellant is liable to forego the amount of Rs.66, 437/- pertaining to this Shipping Bill. The allegation in respect of the other 4 Shipping Bills does not sustain since the dates of Let Export Order in these cases falls after the dates of transportation. Hence the appellant is eligible for the benefit of N/N. 18/2009-S.T. dated 07.07.2009 in respect of these 4 Shipping Bills. Another ground on which the benefit of the aforesaid Notification has been denied to the appellant is that the dates of Let Export Order were prior to the dates of the Shipping Bills. However on perusal of the records it is seen that this allegation is not true as in all the cases as per the chart reproduced supra the dates of Let Export Order is after the dates of the Shipping Bills. Thus the allegation made on this count is unsustainable. The ld. appellate authority in the impugned order has not taken the revised EXP-2 filed by the appellant into account. The revised EXP-2 furnished by the appellant is perused and the revised EXP-2 is found to be in order. Therefore the benefit of the N/N. 18/2009-S.T. dated 07.07.2009 cannot be denied on the ground that the appellant has not filed the EXP-2 within the prescribed time. Imposition of penalties - HELD THAT - The appellant has not suppressed any information and are agreeing to forego the amount paid in respect of the Shipping Bill No. 5559983 dated 03.07.2009. In the facts and circumstances of the case therefore no penalty is imposable on the appellant. Appeal disposed off.

Summary

The core legal questions considered in this appeal are:

(i) Whether the appellant is entitled to the benefit of exemption from Service Tax under Notification No. 18/2009-S.T. dated 07.07.2009 on input services, specifically transportation of goods by road, used in export of iron ore;

(ii) Whether the conditions prescribed under the said Notification, including timelines and documentary requirements such as filing of EXP-2 forms and the sequence of Let Export Order dates relative to transportation and Shipping Bill dates, have been complied with by the appellant;

(iii) Whether the demand of Service Tax, interest, and penalties confirmed by the adjudicating authority and upheld by the Commissioner (Appeals) are sustainable;

(iv) Whether the appellant is entitled to refund of amounts paid under protest, and if so, to what extent;

(v) Whether penalties imposed under Sections 76 and 77 of the Finance Act, 1994 are warranted given the facts and conduct of the appellant.

Issue-wise Detailed Analysis:

1. Entitlement to Exemption under Notification No. 18/2009-S.T. dated 07.07.2009

The relevant legal framework is the Notification No. 18/2009-S.T. which exempts Service Tax on transportation of goods by road used in export, subject to fulfillment of prescribed conditions. The appellant claimed this exemption for transportation services connected to export of iron ore under five Shipping Bills.

The Department issued a Show Cause Notice alleging non-fulfillment of conditions, including discrepancies in dates and documentation, leading to demand of Service Tax with interest and penalties.

The Court examined the dates of Let Export Orders vis-`a-vis transportation dates. The appellant submitted charts showing that except for one Shipping Bill (No. 5559983 dated 03.07.2009), the Let Export Order dates were after transportation dates, satisfying the condition for exemption.

The Court found that for the single Shipping Bill where the Let Export Order date preceded transportation, the exemption was rightly denied, making the appellant liable for Service Tax on that shipment. For the other four Shipping Bills, the exemption was rightly claimed and should be allowed.

The Court further rejected the allegation that Let Export Order dates were prior to the Shipping Bill dates, as the appellant's records demonstrated the contrary.

2. Compliance with Documentary Requirements - Filing of EXP-2

Filing of EXP-2 forms within prescribed timelines is a statutory condition to claim the exemption. The Department alleged delayed or non-filing of EXP-2, justifying denial of exemption.

The appellant admitted initial clerical errors in the EXP-2 filed on 19.04.2010 but submitted a revised EXP-2 during the appeal process. The Commissioner (Appeals) did not consider this revised filing.

The Court reviewed the revised EXP-2 and found it to be in order and filed within the prescribed time. Consequently, the Court held that denial of exemption on the ground of non-filing or delayed filing of EXP-2 was unsustainable.

3. Matching of Exported Quantities with Consignment Notes

The Department alleged mismatch between quantities exported and those mentioned in consignment notes. The appellant produced a Chartered Accountant certified reconciliation showing quantities matched consignment-wise.

The Court accepted this evidence, finding no discrepancy in quantities exported versus consignment notes, thereby negating the Department's allegation.

4. Demand of Service Tax, Interest, and Penalties

Based on the above findings, the Court held that the demand for Service Tax was sustainable only in respect of the single Shipping Bill where conditions were not met. For the other four, the demand was not sustainable.

Regarding penalties imposed under Sections 76 and 77 of the Finance Act, 1994, the Court noted that the appellant had not suppressed any facts and had voluntarily agreed to forego the amount related to the one ineligible Shipping Bill. Given these circumstances, the Court held that no penalty was imposable.

5. Refund and Adjustment of Amounts Paid

The appellant had paid Rs.10,26,482/- in total, including amounts demanded and penalties, some under protest. The Department also made a recovery deduction from the appellant's bank account.

The Court ordered refund of the amount paid in respect of the four eligible Shipping Bills, along with applicable interest, after adjusting the amount corresponding to the ineligible Shipping Bill (Rs.66,437/-). The refund was subject to verification of the appellant's payment claims.

Treatment of Competing Arguments:

The Department relied on documentary discrepancies and non-compliance with procedural requirements to deny exemption and uphold demands. The appellant countered with documentary evidence, corrections, and admissions limited to one Shipping Bill only.

The Court carefully examined documentary evidence and timelines, giving weight to corrected filings and certified reconciliations. It rejected generalized allegations unsupported by records and accepted the appellant's partial admission and corrective action.

Significant Holdings:

"I find that the benefit of Notification No. 18/2009-S.T. dated 07.07.2009 is not available to the appellant in respect of the Shipping Bill No. 5559983 dated 03.07.2009 and consequently, the appellant is liable to forego the amount of Rs.66,437/- pertaining to this Shipping Bill."

"The allegation in respect of the other 4 Shipping Bills does not sustain since the dates of Let Export Order in these cases falls after the dates of transportation. Hence, I find that the appellant is eligible for the benefit of Notification No. 18/2009-S.T. dated 07.07.2009 in respect of these 4 Shipping Bills."

"I am of the view that the benefit of the Notification No. 18/2009-S.T. dated 07.07.2009 cannot be denied on the ground that the appellant has not filed the EXP-2 within the prescribed time."

"In the facts and circumstances of the case, no penalty is imposable on the appellant."

"The appellant is eligible to refund of the amount already paid by them in this regard, along with applicable interest, after adjustment of the ineligible amount in respect of Shipping Bill No. 5559983 dated 03.07.2009, subject to verification of the claim made by the appellant regarding the said payment."

The Court's final determinations are:

(1) The appellant is entitled to exemption under Notification No. 18/2009-S.T. dated 07.07.2009 for four out of five Shipping Bills, with denial only for Shipping Bill No. 5559983 dated 03.07.2009;

(2) No penalties under the Finance Act are leviable given the appellant's conduct and partial admission;

(3) Refund of amounts paid by the appellant is to be granted after adjusting the ineligible amount, subject to verification.