TMI Blog2013 (10) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... contracts entered into by the appellants with M/s. Chambal Fertilizers and Chemicals Ltd., Kota ( CFL for short). 2. During the period Aug., 2002 to July, 2004, the appellants were providing certain services to CFCL. The services were rendered through the employees of the appellants working in the factory premises of M/s. Chambal Fertilizers and Chemicals Ltd. The different items of work done are listed below :- S. No. Job Description Job Code Unit Unit Rate 1. UREA PRODUCT HANDLING BAGGING Bagging and stitching-including checking 570101101100 METRIC TONNE 3.01 2. UREA PRODUCT HANDLING BAGGING Wagon Loading -Receiving bags in wagon loading platform through the loader, and loading it into the wagons including the Tally checking. 570102101101 METRIC TONNE 6.30 3. UREA PRODUCT HANDLING BAGGING Wagon Loading - Manual direct loading of the wagons wherever the wagon loaders are not reachi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. UREA PRODUCT HANDLING BAGGING Empty Bags Handling - Empty Bags lifting from the Main store to the sub store in Bagging floor - and distribute to the running slats with the help of EOT Cranes/Hoist/Manually)-(100 Bags per bale) 570105102101 PER BALE 2.00 13. UREA PRODUCT HANDLING BAGGING Tarpaulin/Dunnages - Unloading of tarpaulins and dunnages - New 570106101101 PER BUNDLE 1.35 14. UREA PRODUCT HANDLING BAGGING Tarpaulin/Dunnage - Unloading of tarpaulins and dunnages - used tarpaulins received from the unloading stations, segregating the damaged tarpaulins properly folding of tarpaulins and stacking neatly in the space specified and disposing the damaged tarpaulins to specified areas. 570106101102 Each 1.35 15. UREA PRODUCT HANDLING BAGGING Miscellaneous Jobs - Wagon cleaning and removing debris from the track area and dunnage and wall sheet spreading 570107101101 Per Wagon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 and the appellants had to pay Service Tax. Since the appellants were not paying such Service Tax on such services rendered during the period 16-8-2002 to 19-7-2004, a show cause notice was issued on 27-7-2005 demanding Service Tax and proposing imposition of penalty under various Sections of the Act. The show cause notice was adjudicated by the Additional Commissioner confirming Service Tax amount of ₹ 16,53,889/- along with interest. Further, penalties under Sections 75A, 76, 77 and 78 of the Finance Act, 1994 were imposed. Aggrieved by the order, the appellants filed appeal with the Commissioner (Appeals) who rejected their appeals. 3. The argument of the appellants is that they were supplying only manpower for doing certain type of work inside the factory for CFCL. They contest that activity of packing, unpacking, loading and handling goods within the factory premises will not be covered by the entry for Cargo Handling Services because at that stage where such activity was being done they were just handling goods and not cargo . For this argument they rely on the decision of the Rajasthan High Court in the case of S.B. Construction Company v. Union of India - 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sides. Now, it is well settled by various decisions of the Tribunal and the different High Courts that handling of goods within a factory does not amount to Cargo Handling as defined in the Finance Act, 1994. However, it is seen that the items of work specified in the contract between the appellants and CFCL at S. No. 1 to 11 involves handling of cargo into rail wagons and into trucks. Thus the argument of the appellants that the entire service rendered by them is of manpower supply and the manpower so supplied was only assisting in proper functioning of an automatic system is not correct. Here the Counsel is just trying fit the facts of the case into the decision of the Rajasthan High Court in the case of S. B. Construction Co. (supra) and the decision of the Tribunal in J J Enterprises quoted supra whereas the facts as disclosed by the contract hardly fits into the reasoning of the said decision. 6. Now, the issue is to be examined is whether the demand is time-barred. The decisions quoted are that in the case of Pahwa Chemicals (supra) and CCE v. Chemphar Drugs and Chemicals (supra). 7. For appreciating the decisions relied upon by the appellants it is necessary to no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iately take up the contention that the benefit of the Notification was lost. 7.2 Paras 2 to 4 of the decision relating to Chemphar Drugs read as under : 2. The respondent manufactured patent and proprietary (P P) medicines falling under T.I. 14E and also pharmacopoeia preparations falling under T.I. 68 of the Central Excise Tariff of an aggregate value of ₹ 20,59,338.60 and cleared during the period of 1-4-1979 or 31-3-1980, the same without payment of duty, availing the benefit of exemption Notification No. 80/80. 3. Under the provisions of sub-clause (ii) of clause 2 of Notification No. 80/80, dated 19th June, 1980 and sub-clause (iii) of clause (a) of Notification No. 71/78, dated 1-3-1978 the manufacturer would not be eligible for exemption under the two notifications in respect of clearances of patent or proprietary medicines from 1st April, 1980 since the notification would not apply to a manufacturer who manufactures excisable goods falling under more than one item of the First Schedule of the Act, and the aggregate value of the clearances of all such excisable goods by the manufacturer or on his behalf are cleared for home consumption from one or more facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erwise, is required before it is saddled with any liability, before the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. The Tribunal came to the conclusion that the facts referred to hereinbefore do not warrant any inference of fraud. The assessee declared the goods on the basis of their belief of the interpretation of the provisions of the law that the exempted goods were not required to be included and these did not include the value of the exempted goods which they manufactured at the relevant time. The Tribunal found that the explanation was plausible, and also noted that the Department had full knowledge of the facts about manufacture of all the goods manufactured by the respondent when the declaration was filed by the respondent. The respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities. These fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifier Corpn. (I) Ltd. v. CCE - 2011 (263) E.L.T. 655 (S.C.). (Information taken by Department from Balance Sheet - Supreme Court held that extended period was invokable) 2. The appellant herein is a manufacturer of electronic transformers, semi-conductor devices and other electrical and electronics equipments. During the course of such manufacture the appellant also manufactured machinery in the nature of testing equipments to test the final products of the assessee company costing ₹ 31,27,405/- as per Note 6 of the Schedule Q page 15 of the balance sheet for the year ending December, 1987. The aforesaid position was further reiterated in the Director s report appearing at page No. 2 of the Annual Report for the year ending December, 1988. 12. Submission was also made regarding use of the extended period limitation contending inter alia that such extended period of limitation could not have been used by the respondent. The aforesaid contention is also found to be without any merit as the appellant has not obtained L-4 licence nor they had disclosed the fact of manufacturing of the aforesaid goods to the department. The aforesaid knowledge of manufacture came to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly be invoked when there is a conscious act of either fraud, collusion, wilful mis-statement, suppression of fact, or contravention of the provisions of the Act or any of the rules made thereunder on the part of the person chargeable with duty or his agent, with the intent to evade payment of duty. In the present case, the Tribunal while considering this issue has not stated whether or not there were any such circumstances which would not allow the revenue to invoke extended period of limitation. It only observes in its order since both the assessees are situated under the jurisdiction of the same division and as such it cannot be reasonable to conclude that the revenue was not aware of the transactions. Since this is not what is envisaged under the proviso to Section 11A(1) of the Act, we cannot agree with the reasoning and the conclusion reached by the Tribunal. (Emphasis supplied) 7.9 British India Corporation Ltd., Dhariwal v. Collector - 1986 (25) E.L.T. 727 (Tribunal) - Affirmed by Supreme Court vide [British India Corporation Ltd. v. Commissioner - 2010 (255) E.L.T. A78 (S.C.). In this case the Tribunal held that for invoking the special time-limit of five years, men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries to strike a balance between the requirement to collect tax through a self-assessment scheme and the requirement not to slap an unforeseen levy on a bona fide assessee. (The mention about self-assessment is made in the context that when self-assessment was introduced, Section 11A was amended to change the normal period. The time limit for issuing a demand for short levy in cases not involving suppression, was increased from 6 months to 12 months.). The fact to be noted is that the legislature has consciously tilted the balance between these two requirements in favour of Revenue as may be seen from the fact that even an assessee making all disclosures (even having an approved classification list in the earlier regime of excise levy) is liable to pay demand of short levied duty for a past period of one year if a new interpretation is found to be correct. The provision is not that demand due to such interpretation will apply only from the date the changed interpretation is notified to the assessee. This tilt is justified because the interest of a sovereign which trusts its subjects to comply with its laws and pay tax has to be safeguarded and it cannot be totally left to the chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will show a higher level of culpability. In such a situation also it can be argued in defence of the assessee that there was no positive act since he did not state anywhere that he was not doing cargo handling . A reading of the decisions with due regard to the facts of each case would show that the Apex Court was not talking of this type of positive act. 11. In this case the noticee did not take out registration and disclose his contract to the department and we are of the view that it amounts to suppression, in view of our views explained above. We do agree that if there was a public notice issued by Government or a decision of any Court or Tribunal holding that the activity was not taxable and if the assessee was acting according to such clarification or ruling then the situation should have been adjudged differently. 12. So in our view the extended period of five years applicable for cases involving suppression with intent to evade payment of tax, is applicable in this case. 13. It is seen that in this case penalty equal to duty evaded is imposed under Section 78 of the Finance Act. But no option was given to the assessee to pay 25% of the tax amount as penalty withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dated 1-8-2002 clarifying that individual undertaking who hires labourers for loading of goods in their individual capacity will not come under the purview of Service Tax as Cargo Handling Agency. 16. Learned Advocate appearing for the appellants during the course of hearing had also referred to the Tribunal s decision in the case of JJ Enterprises v. CCE, Raipur - 2006 (3) S.T.R. 655 (Tri.-Del.) laying down that packing, unpacking, loading of cement by automatic/mechanised process with role of manpower to oversee and guide the activity would not amount to rendering cargo handling services liable to Service Tax. Accordingly the Tribunal had observed that the noticee who was neither owner nor lessee of machines, their role being limited to supply of manpower, cannot be held to be rendering of services of cargo handling. Learned Advocate also referred to the judgment of Hon ble Rajasthan High Court in the case of S.B. Construction Company v. Union of India - 2006 (4) S.T.R. 545 (Raj.), wherein it stands held that handling of coal from the Railway wagons to the site of thermal power station with the aid of wagon tippling system to be fed in boiler bunkers through conveyor system, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t s decision in the case of Pahwa Chemicals Private Limited v. CCE, Delhi - 2005 (189) E.L.T. 257 (S.C.) as also in the case of CCE v. Chemphar Drugs Liniments - 1989 (40) E.L.T. 276 (S.C.) as also to the decision of Supreme Court in the case of Padmini Products v. CCE - 1989 (43) E.L.T. 195 (S.C.) holding that mere non-intimation and non-disclosure to the Revenue will not be sufficient to invoke the extended period unless such non-information is conscious or deliberate or withholding information was with intention to evade payment of duty. I find that apart from the fact that the service tax was new subject at the relevant time and there was lot of confusion in the field, the Tribunal s judgment in the case of J J Enterprises and the Rajasthan High Court s decision in the case of S.B. Construction Company referred supra laying down that mere supply of labourer does not amount to providing cargo handling services were sufficient for the appellant to entertain a bona fide belief. Further services of manpower supply and cargo handling are overlapping and the person who is not an expert in the legal field can be under the impression that he has only provided manpower to their cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... originally both members disagreed in decision making. Learned Technical Member examining the work order, scope of the taxing entry as well as activity carried out by both the appellants, by an elaborate order came to the conclusion that they provided Cargo Handling Service . He specifically tested the scope of activity that was required to be carried out by the understanding of the parties and decided merit of the case in Para 5 of his order at page 6. He held that employment of machine does not decide taxability of the activity enumerated in work order but its scope and provision of service bring that into the ambit of Cargo Handling Service . 22. Apart from examining merit of the case thoroughly, learned Technical Member also examined the issue of time bar as well as applicability of penal provisions of law and concession, if any, permissible in imposing penalty in both the cases. He leniently held that grant of option for depositing 25% of tax towards penalty within 30 days of receipt of the appeal order shall serve useful purpose of law. He accordingly decided the matter on all aspects against the appellants except grant of concession in penalty. While reaching to such co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellants for which that attracted the taxing entry Cargo Handling service under law. Written contract of both parties demonstrated what was intended to be carried out. When there is visibility of clear application of mind by learned Commissioner (Appeals), it cannot be said that he had not considered the material facts on record as well as grounds raised in appeal. His order cannot be said to be an outcome of empty formality. That was conclusive on the points raised before him. All these aspects have been well understood by learned Technical Member. He did not fail in his duty to consider entire material facts touching the contract as well as manner of performance of the same including object thereof as well as the law applicable. 28. In view of the aforesaid outcome, it is difficult to disagree with the learned Technical Member s conclusion. Accordingly, the questions referred are answered as under : (1) Appeals are liable to be rejected on merit. (2) Invocation of longer period of limitation is justified without warranting remand of the matters. (3) Penalty imposed under Section 78 is upheld and concession in penalty as has been held by learned T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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