9911796707
TMI Blog2024 (6) TMI 1448X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable services under the category of Steamer Agents service, Goods Transport by Road service, Business Auxiliary Services, Business Support Services and for this purpose they had registered with the jurisdictional authorities of the Department. During the course of audit of the records of the appellant assessee by the Department officers, it was observed that the appellant assessee had shown income under various heads such as forwarders cargo fees, administration and documentation fees, freight and other services. Further, on examination of the terms and conditions mentioned in the Forwarders Cargo Receipt (FCR), the Department had interpreted that the services provided by the appellant assessee would fall under 'Clearing &Forwarding (C&F) agent services' in terms of definition under 65(25) of Finance Act, 1994 and sought the reasons for non-payment of service tax under the above taxable category from the appellant. In response to this, the appellant assessee by their letter dated 26.06.2006 had informed the Department that these incomes shown under various heads are on account of cargo handling services for export and hence such services are exempted from payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le data is unsubstantiated. Accordingly, the department appellant also filed a separate appeal bearing No. ST/86828/2016 before the Tribunal. 3.1 Learned Advocate representing the appellant assessee has submitted that the disputed period in the present appeal is during April, 2003 to March, 2008. The total demand of service tax confirmed in the impugned order is Rs.11,50,68,830/- along with interest and penalties, against which they had filed this appeal; whereas the department appellant have also filed an appeal against the demand of service tax dropped by the original authority for an amount of Rs.25,99,10,158/- relating to appellants registration held at various other locations other than Mumbai, for which they had claimed that the original authority does not have jurisdiction and the same has been accepted by him. As regards the confirmation of the service tax demand forRs.11,50,68,830/- in the impugned order, this relates to various services as given below: Sr. No. Description Amount of S. Tax demand (in Rs.) 1. Forwarders Cargo Fees (CFS charges) 82940187 2. Documentation & Administration charges (FCR charges) 8161936 3. Ocean freight 18335026 4. Exchange Gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnai-III - 2014 (36) S.T.R. 1310 (Tri. - Chennai); APL Logistics (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai - 2015 (37) S.T.R. 301 (Tri. - Mumbai) and Final Order No. A/1756/ 14/CSTB/C-I dated 17.11.2014 in Appeal No. ST/87451/2014Mum. Thus, he pleaded that the decision taken on these cases as above is also applicable to the present case to the extent that the disputed issue is the same i.e., levy of service tax levy on 'ocean freight'. 3.5 The amount of income shown as exchange gain is arising by accounting of foreign exchange gain or loss based on the income booked by the appellant, and it is not towards any service to be identified with any individual customer. Thus, he claimed that there is no service tax liability. As regards the brokerage charges, learned Advocate had stated that the appellant has already paid service tax on the said charges and hence there is no case of any further demand on this account. The other services pertaining to recovery of certain expenses incurred by the appellant are towards reimbursement of actuals such as customs duty paid at actuals and are not towards any service. Therefore, he pleaded that the same is not liable to serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) (iii) Swagat Freight Carriers Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai - 2014 (33) S.T.R. 81 (Tri. - Mumbai) (iv) INOX Leisure Limited Vs. Commissioner of Service Tax, Mumbai - 2016 (42) S.T.R. 497 (Tri. - Mumbai) affirmed by Hon'ble Supreme Court in dismissing Civil Appeal No. 3928 of 2016 filed by department (v) V.N.S.S. Textiles Vs. Commissioner of Central Excise, Madurai - 2010 (19) S.T.R. 785 (Tri. - Chennai) affirmed by Hon'ble High Court of Madras in dismissing Civil Misc. Appeal No. 769 of 2010 filed by department. 4.1 Learned Authorised Representative (AR) appearing for the department, reiterated the findings made by the learned Commissioner. He further stated that in confirmation of the adjudged demands, the original authority was not at hasty and gave full chance to the appellant to produce relevant documents; however, as the appellant assessee had not shown any document in support of their claim of the income from interest, ocean freight, margin money, other services etc. being not subject to service tax, learned Commissioner has confirmed the demands of service tax as recorded in the impugned order at paragraph 18. He reiterated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sides. 6. The issues involved in these appeals is to determine the following issues viz., (i) whether the services provided by the appellant is leviable to service tax under the taxable category of 'Clearing & Forwarding Agent service' or not, in terms of the Finance Act, 1994 and Rules framed thereunder; (ii) whether the services provided by the appellant is leviable to service tax under the taxable category of Business Auxiliary Service (BAS) from February, 2006 and under the category of Business Support Services (BSS) from June, 2006 or not, as claimed by the appellant, in terms of the Finance Act, 1994 and Rules framed thereunder; and (iii) whether the Commissioner of Service Tax, Mumbai-VII has jurisdiction over all the Branches of the assessee appellant for adjudication of the SCN dated 21.10.2008 or not, under the Finance Act, 1994. 7.1 We find from the Show Cause Notice dated 21.10.2008, the department, on the basis of the documents submitted by the appellant assessee, had contended that "(para7)7. From the records submitted by the assessee, it was observed that an exporter having an order and on instructions from their buyer approaches the assessee with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee included the following viz. (i) receiving cargo from various Indian suppliers/exporters of an overseas buyer; (ii) sorting the cargo pertaining to various overseas buyers; (iii) stuffing the cargo in the respective containers to ensure safe transportation of cargo; (iv) transport of cargo to ports or airports; and (v) loading of container on ship/aircraft for transportation of cargo to overseas buyer. For performance of these services the appellant assessee have received the consideration as per above agreement. 7.3 We have perused the relevant clauses of the aforesaid agreement submitted as a part of the appeal paper book. The relevant clauses of the said agreement are extracted and given below: "AGENCY AGREEMENT BETWEEN APL LOGISTICS HONG KONG AND APL LOGISTICS (INDIA) PVT. LTD. This Agreement is made effective the 1st January, 2002, between APL Logistics Hong Kong (hereinafter called "APLL HK") a company incorporated in Hong Kong and having offices at 16/F New T&T Center, 7 Canton Road, TST Kow loon, Hong Kong, and APL Logistics (India) Pvt. Ltd. (hereinafter called the "Agent") a company with its principal place of business at Technopolis Knowledge Park, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 7. To arrange for container Freight Station ("CFS") and Container Yard ("CY") facilities and other cargo handling operations, to attend to the handling of and transshipment of cargo and to maintain contract with forwarding agents, shippers and consignees for the purpose of attending to transportation, storage facilities, palletisation, clearing of cargo and /or special cargo, heavy lifts, port and other authorities and trade organization; 8. To secure and effect delivery of cargo to the Vessel; 9. To coordinate and liaise with other agents of APLL HK concerning to Vessels' arrivals/departures, cargo space, booking, stowage survey and tracing of cargo; 10. To perform a container inspection program and to effect cleaning when necessary. 11. To take charge of and report the receipt of cargo. 12. To issue arrival notices, and upon of cargo at destination, collect original bills of lading and related charges on behalf of APLL HK. 13. To negotiate rates for and procure as required any destination services supplementary to the receipt of cargo including without limitation storage, warehousing, dispatching, information, transportation and depot services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecuted the day and year first above written. APL LOGISTICS HONG KONG APL LOGISTICS (INDIA) PVT. LTD. Signed by: Signed by: Print Name: Rick Moradian Print Name: Glynis Bryan Title: Director / Regional President Title: Director / CFO, APLL ...... SCHEDULE I Agent's Compensation The following rates and conditions of compensation will apply commencing upon the date of execution of the Agreement and will continue unless terminated or amended by written agreement between the Agent and APLL HK: A. Compensation 1. The Agent shall invoice APLI. HK monthly, in accordance with Articles 4 and 6 of the Agreement, for document charges arising from the creation and processing of APLL HK Bills of Lading as follows: a. FCL bills of lading: USD 25.00 each b. LCL bills of lading: USD 15.00 each. 1. In addition to the document charges described above, the Agent shall be entitled to collect for its own account any standard origin and destination charges. 2. Local Value-Added Tax (VAT) to be added to all invoices if applicable B. Proof of Shipment and Audit. If, upon audit of the Agent's records or otherwise, it is found that the Agent has received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Clause A to Article-1 provide that the appellant assessee will arrange procurement and securing of cargo for its transportation through various vessels owned or operated by APLL HK; provide information on freight rates, terms and conditions of carriage of goods, negotiate rates; book the cargo for APLL HK; prepare and issue Bill of Lading for APLL HK and other documents required for Port authorities; arrange for Container Freight Station or Container Yard facilities for handling cargo; secure and effect delivery of cargo the Vessel for ultimate voyage of the vessel to export out of the country and co-ordinate and liaise with other agents of APLL HK concerning the Vessel's arrival/departure, cargo space, bookings, stowage survey and tracing of cargo. Similarly, with specific reference to import of goods the appellant assessee as per agreement is required to take charge and report of receipt of cargo; perform container inspection program and to effect cleaning when necessary; issue arrival notices; upon receipt of cargo at destination collect original bill of lading and related charges on behalf of APPL HK; upon receipt of cargo to convey or prepare, process and issue all document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, 7[operational or administrative assistance in any manner], formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation.-For the purposes of this clause, the expression "infrastructural support services" includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security; [Prior to substitution by the Finance (No. 2) Act, 2004, w.e.f. 10-9-2004] (19) "business auxiliary service" means any service in relation to,- (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) any incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation of prospective customer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce;" Service Tax Rules, 1994. "Export of services. Rule 6A. (1) The provision of any service provided or agreed to be provided shall be treated as export of service when,- (a) the provider of service is located in the taxable territory, (b)the recipient of service is located outside India, (c)the service is not a service specified in section 66D of the Act, (d)the place of provision of the service is outside India, (e)the payment for such service has been received by the provider of service in convertible foreign exchange, and (f) the provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 3 of clause (44) of section 65B of the Act. (2) Where any service is exported, the Central Government may, by notification, grant rebate of service tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification." EXPORT OF SERVICES RULES, 2005 "Export without payment of service tax. 4. Any service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by a clearing and forwarding agent shall be the person engaging/appointing a clearing and forwarding agent (Notification No. 26/97-service tax refers). It may be noted that unlike in the case of other service tax levies where the service provider is the person responsible for collecting the service tax, in the case of services rendered by the clearing and forwarding agents the service tax liability shall be discharged by the person availing the service so rendered. In order words, the principal who engages a clearing and forwarding agent is the person responsible for collecting and paying the service tax to the exchequer, Commissioners of Central Excise may therefore take necessary action accordingly and also make this position clear by issue of suitable trade notice. 2.4 Further under the Finance Act, 1997 the value of taxable service rendered by a clearing and forwarding agent has been defined as the gross amount charged by such agents from the client for the services of clearing and forwarding operations in any manner. However, under service Tax rules it has been provided that the value of taxable service in relation to services rendered by clearing and forwarding ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all under the category of 'clearing and forwarding agent' service. 8.4 In order to further examine whether the services provided by the appellant assessee to its overseas entity APLL HK is covered under the scope of any other services or not, we have also examined the relevant provisions of the Finance Act, 1994 and Rules framed thereunder. We find that the taxable services under the category of 'cargo handling service' covers under its scope various activities related to handling of cargo in import/export operations through containerised or non-containerised freight listed out in the 'means' portion of the definition; however, it the non-inclusion portion, the services relating to 'handling of export cargo' have been specifically excluded. Further, this service is limited in its scope, inasmuch as it covers only cargo handling activities and does not extend to financial, accounting, marketing services etc. as is the case of the appellants here. Thus, we find that 'cargo handling service' is not relevant to the services provided by the appellant assessee in the present set of facts in this case. 8.5 We further find that the various services provided by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o getting a customer, verification of prospective customer, processing of purchase order etc would also be covered under service tax, as the law specifically provides for inclusion of such services as business auxiliary support services. As regards the question whether insurance agents, C&F agents working on commission basis fall under the definition of business auxiliary service, it is clarified that they do not, as they are specifically covered within the definition of other specified taxable services, namely the Insurance service and C&F Service respectively. Under Section 65A of Finance Act 1994, 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, i.e. the service that was subjected to service tax earlier. Since Insurance services and C&F Services are more specific description and were also subjected to service tax prior to imposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was specifically provided under Rule 4 of Export of Services Rules, 2005 that any taxable services could be exported without payment of service tax. In other words, the provision of services that were under the tax net of service tax were those services provided within the territory of India except the State of Jammu and Kashmir. Services provided to any person situated outside taxable territory as a corollary are not liable to be paid with service tax. In the present case, it is not disputed that the services were rendered to APLL HK or by extending further to the clients/customers, both of whom are situated abroad outside India and the consideration were received in convertible foreign exchange as evidenced by compensation clause in Schedule-I to the agreement dated 01.01.2002. Thus, there is no scope for levy of service on the aforesaid components of services provided by the appellant assessee. 8.8 We further find that demand of service tax under Clearing and Forwarding agent service was confirmed on the basis of the terms and conditions of Forwarders Cargo Receipt (FCR) with specific reference to condition Sl. No.3 &4. On perusal of the sample copy of FCR produced by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t most of these charges form part of the transaction value in respect of customs matters and therefore, the question of levy of Service Tax on a customs transaction would not arise at all. If the appellants have collected these charges and remitted the same to the shipping lines, the whole amount received and transmitted cannot be said to be a consideration for the services rendered. What can be levied to Service Tax is the service rendered by the appellant either as a steamer agent or BAS in respect of collection of freight and other charges and only on the consideration received for the services rendered, Service Tax can be levied. In this view of the matter, the impugned order is clearly not sustainable in law and the matter has to go back to the adjudicating authority for de novo consideration. The appellant is also directed to co-operate with the department and submit all the requisite particulars, such as, the amount of ocean freight and other charges collected by them and the amount transmitted by them to the foreign shipping lines and the amount of consideration received/retained by them in respect of the services rendered and whether Service Tax liability has been discharg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relationship between the service provider and receiver and the same should be in the nature of principal (owner) and agent. In the entire case before us, we find that this relationship has not been established by the Revenue which is obvious as the appellant herein is not functioning as clearing & forwarding agent. The clinking point in this case is that the appellant herein is not receiving the goods from principal or storing the goods or dispatching the goods, as per the orders received from the principal or prepares the invoices on behalf of the principal. It is also on record that in these cases, the appellant does not receive any commission as remuneration for receipt/store/despatch and preparing invoices of the goods on behalf of the principal. In the absence of any such service being rendered by the appellant, circular issued by C.B.E.&C. would be binding on the lower authorities. 20. We find that as correctly pointed out by ld. Counsel that judgment of Hon'ble High Court of Punjab & Haryana in the case of Kulcip Medicines will specifically cover the issue. With respect, we may reproduce the relevant paragraph from the judgment of Hon'ble High Court. "11. The question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nown in the trade as stainless steel and further, it should contain 11% chromium as a component of the allow steel. This is clear from the use of the word "and". If the intention of the trade notice was to treat the two types of alloy steels as stainless steel, then it would have been made clear by using the word "of instead of the word "and"." 12. We are further of the view that the circulars issued by the Board are binding and meant for adoption for the purposes of bringing uniformity. In that regard reliance may be placed on the judgments of Hon'ble the Supreme Court in the cases of Ranadey Micronutrients v. Collector of Central Excise - 1996 (87) E.L.T. 19 (S.C.) and Paper Products Ltd. v. Commissioner of Central Excise - 1999 (112) E.L.T. 765 (S.C.) = (1999) 7 SCC 84. If the aforesaid principle is applied to the facts of the present case there does not remain any doubt that the circular issued by the Board is to be considered as binding and cannot be deviated even by the department. On that account also the expression 'clearing and forwarding agent' have to be interpreted in the light of the circular. " 21. Yet, in another case of Karamchand Thapar & Bros v. U.O.I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly or indirectly", "in any manner", we find that the larger bench of this Tribunal, in case of Larsen & Toubro v. C.C.E. Chennai, 2006 (3) S.T.R. 321 (Tri-LB) (wherein, I was also one of the Member), had specifically held in Para 10, which is reproduced below : "10. It appears to us that the expressions "directly or indirectly" and "in any manner" occurring in the definition of "clearing and forwarding agent" cannot be isolated from the activity of clearing and forwarding operations. A person may undertake to provide service of procurement of orders as agent of the principal without agreeing to provide services of clearing and forwarding of the goods. Clearing and forwarding has a very specific connotation in the context of movement of goods from the supplier to their destination and agents undertaking clearing and forwarding operations may never have been concerned with procurement of orders for the goods which are cleared and forwarded. A person entrusted with the work of commission agent for procuring orders for the principal cannot insist on also providing services as clearing and forwarding agent in respect of those goods and it would be open for the principal to engage so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decisions (supra) relied upon by the appellant, the services rendered by the appellant do not come under the category of "Clearing & Forwarding Agency Service". Accordingly, we set aside the impugned order and allow the appeal with consequential relief, if any, in accordance with law." 9.5 The above orders of the Tribunal clearly provide that the services provided by the appellant assessee such as ocean freight charges, Forward Cargo Receipt charges/advance manifest charges/CFS charges, bunkering charges, foreign exchange gain or income/currency adjustment charges including clearing and forwarding charges are not liable to service tax. Further, we also find that the agreement dated 01.01.2002 entered by the appellants also provide for reimbursable expenses incurred by them as agent of APLL HK under Article 6 and for appointment of sub-agents with the approval of APLL HK under Article 7. Thus, we do not find that appointment of sub-agents like APL Logistics and Warehouse Management Service (Hong Kong) Ltd. (APLL WMS), a company organized under Hong Kong laws, as unauthorized or deliberate action with an intention to evade tax. Further, we also take note of the payment of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is for all the locations. As the Commissioner of Service Tax, Mumbai has jurisdiction only in Mumbai, the Service Tax demand on revenue earned by locations other than Mumbai is beyond jurisdiction and beyond the powers granted under Rule 3 of the Service Tax Rules, 1994. It is seen from para 15 of the Show Cause Notice that the quantification of Service Tax payable has been done on the basis of the yearly income shown in Audited Annual Accounts. Thus, evidently the quantification of Service Tax demand is for all the locations, as the Annual Account consists of income pertaining to all the operations from all the branches. This being the case, the question that needs to be answered is whether the Commissioner of Service 1 Tax, Mumbai is within is powers to issue the Service Tax demand under Section 73(1) of the Finance Act, 1994, pertaining to branches located outside the jurisdiction of Mumbai. xx xx xx xx xx The Noticee's branches were located at Mumbai, Delhi, Cochin, Kolkatta, Tuticorn and Chennai. These branches were holding separate Service Tax registrations. In view of the Orders issued by CBEC u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 has to be computed. As stated above, the Show Cause Notice had considered the value/income shown in the Balance Sheets for the respective years. However, the Noticee have now produced the CA Certificate dated 18.12.2015 issued by Hemant V. Shah & Co., Chartered Accountant, which is based on the financial records, viz., Trial Balance, Audited Financials, backup working basis from which trial balance is prepared and revenue recorded for Mumbai branch and other branches. The CA Certificate being legally acceptable document, I consider the values shown in the same for computing the Service Tax payable by the Noticee, which is as under - (Amount in Rs.) Period Taxable value Service Tax payable on value pertaining to Mumbai branch Total Service Tax payable Mumbai Br. Branches other than Mumbai Service Tax Education Cess 2003-04 16,88,76,766/- 29,32,59,647/- 1,68,87,677/- 3,37,754/- 1,72,25,431/- 2004-05 30,79,98,559/- 51,86,26,024/- 3,07,99,856/- 6,15,997/- 3,14,15,853/- 2005-06 18,29,30,311/- 62,31,36,122/- 1,82,93,031/- 3,65,861/- 1,86,58,892/- 2006-07 18,88,14,219/- 72,32,54,491/- 2,26,57,706/- 4,53, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36) S.T.R. 1310 (Tri.-Chennai) by setting aside the original order and remanding back the case to the original authority. Further, we also find similar demand of service tax on the issue of valuation of service tax under the category of steamer agent services was issued in Mumbai and the original authority had confirmed the demand for the period October, 2007 to March, 2012 which was decided by the Tribunal in the case of APL (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai reported in 2015 (37) S.T.R. 301 (Tri. Mumbai) by holding that most of the charges such as ocean freight, currency adjustment charges, bunkering charges, advance manifest charges form part of the transaction value in respect of customs matters and remanded the case back to the adjudicating authority for passing a speaking order. In another case decided by the Co-ordinate Bench of the Tribunal in Final Order No. A/1756/14/CSTB/C-I & S/1271/14/CSTB/C-I in Appeal No. ST/87451/2014-Mum. dated 17.11.2014, the impugned order confirming service tax was set aside and remanded back for fresh decision on the basis of issues already decided by the Tribunal in the appellant's own case and in the case of Gudwin Logi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers conferred on the officers by the Board under Rule 3 of the Service Tax Rules, 1994. 10.6 Further, the records available in the present case do not indicate that on account of centralised registration being taken by the appellant assessee in November, 2010, the SCNs pending adjudication at different locations were transferred to the Commissioner of Service Tax-VII, Mumbai. As the SCN in respect of the impugned order was issued on 21.10.2008, much prior to the centralised registration taken during November, 2010, there is no possibility for the jurisdictional Commissioner to assume jurisdiction over all the units of the appellant registered separately at different locations. In view of the above factual position, we do not find any merits in the appeal filed by the department stating that the dropping of the service tax demand raised in the SCN dated 21.10.2008 for locations other than Mumbai is legally sustainable. 11.1 As regards the penalties proposed in the show cause notice, the learned Commissioner had imposed penalty equal to the amount of service tax demanded under Section 78 ibid. The relevant paragraphs of the impugned order imposing penalty is ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as the appellant have provided complete details in respect of the audited accounts and the balance sheets for the years 2003-2004 to 2006-2007 to the departmental officers during the course of audit of the appellant's records. We further find that in the grounds of appeal filed by the Department, it is stated that the bifurcation of the data location wise/ unit vice was given by the appellant and much later date, after issue of centralised registration, and hence the department had issued SCN for the entire operation including the Mumbai finding no alternative. Thus, the Department claimed that the appellant by avoiding to provide the figures, had intentionally by design stopped the process of issuing to show cause notices by other jurisdiction, and thus they had intention to evade duty. We find from the factual details about various notices issued in other jurisdictions and that the entire data having been provided to the audit officers of the Department, there is no justification to claim suppression of facts in such a situation. Further, we find that there is no evidence or any document to indicate that the appellant assessee in any manner had attempted to evade servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year; (b) in any other case, within six months, from the relevant date, serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been so short-levied or part paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any duty has not been levied or has been short-levied or the interest has not been charged or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words "one year" and "six Months", the words "five years" were substituted. Explanation. - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of one year or six months or five years, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following words : 53. ... Our attention was drawn to the cases of CCE v. Chemphar Drugs and Liniments [(1989) 2 SCC 12], Cosmic Dye Chemical v. CCE [(1995) 6 SCC 117], Padmini Products v. CCE [(1989) 4 SCC 275], T.N. Housing Board v. CCE [1995 Supp (1) SCC 50] and CCE v. H.M.M. Ltd. (supra). In all these cases the Court was concerned with the applicability of the proviso to Section 11A of the Central Excise Act which, like in the case of the Customs Act, contemplated the increase in the period of limitation for issuing a show cause notice in the case of non-levy or short-levy to five years from a normal period of six months.... 54. While interpreting the said provision in each of the aforesaid cases, it was observed by this Court that for proviso to Section 11A to be invoked, the intention to evade payment of duty must be shown. This has been clearly brought out in Cosmic Dye Chemical case where the Tribunal had held that so far as fraud, suppression or misstatement of facts was concerned the question of intent was immaterial. While disagreeing with the aforesaid interpretation this Court at p. 119 observed as follows: (SCC para 6) 6. Now so far as fraud and collusion a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note the proviso to Section 11A of the Excise Act at this stage. It states that : "Where any duty of excise has not been levied or paid or has been shortlevied or short-paid or erroneously refunded, by the reason of - (a) fraud; or (b) collusion; or (c) any wilful misstatement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under Section 11AA and a penalty equivalent to the duty specified in the notice." 24. As noticed in the excerpted portions of the Supreme Court's judgment, the material distinction between the provisos of Section 11A of the Excise Act and Section 28 of the Customs Act was contemplated in Associated Cement Co. Ltd. v. Commissioner of Customs (supra) [2001 (128) E.L.T. 21 (S.C.)]. The only material difference in the language of the two provisions is that the phrase 'with inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat : "... 12. ... The conclusion that mere non-payment of duties is equivalent to collusion or wilful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of nonpayment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or wilful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso. ....... 14. In Sarabhai M. Chemicals v. Commissioner of Central Excise, Vadodara [(2005) 2 SCC 168], a three-judge bench of this Court, while referring to the observations extracted above, echoed the following views : "23. Now coming to the question of limitation, at the outset, we wish to clarify that there are two concepts which are required to be kept in mind for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y very strong words as 'fraud' or 'collusion' and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. " 27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word 'suppression' in the proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. "fraud, collusion, wilful misstatement". As explained in Uniworth (supra), "misstatement or suppression of facts" does not mean any omission. It must be deliberate. In other words, there must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how cause notice dated 6-10-2008, we find that the various locations of the appellant were duly registered under service tax. In such case, responsibility is cast on the appellant to furnish details to the authorities at prescribed frequency under Rule 7 of the Service Tax Rules and declare the services rendered, assess the tax due and make the payment of service tax by the due date. It is only in pursuance of investigation carried out by DGCEI that the nonpayment of service tax came to light. In these circumstances the demand under the extended time period under Section 73 is sustainable. 12. Equivalent penalty in terms of Section 78 is also payable on account of the fact that there was suppression of facts which warrants penalty under Section 78. 13. In view of the above, we pass following order : (a) Demand of service tax on 'pouring fees' and 'signing fees' is upheld to the extent of demand on services rendered within the jurisdiction of Service Tax, Commissioner Mumbai. The demand quantum may be worked out and intimated by the Commissioner to the appellant within 15 days of the receipt of this Order. (b) The demand in respect of such services rendered outside the j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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