9911796707
TMI Blog2025 (5) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... le 4(6) of CCR, vide letter dated 18.10.2016, to clear the goods manufactured by the Appellant on job work basis, directly from the Appellant's premises, on payment of appropriate Central Excise Duty by the Angul unit. 2.2 The Appellant states that each unit of JSPL operates as a separate profit centre and accordingly, in respect of the inter unit transactions, such as that of job work, notional entries towards entitlement to receive job charges was made by the Appellant ((SPL-Raigarh), while notional entry towards liability to pay was made by JSPL-Angul. In the financial accounts prepared for reporting purposes and statutory compliances, these entries were squared off. It is undisputed that there is no payment made by JSPL, Angul to the Appellant (SPL - Raigarh) for provision of any service (job work). 2.3 Pursuant to an audit, a Show Cause Notice F. No. I/639110/2022/734 dated 15.06.2022, was issued on the count that manufacturing of goods on job work basis for its Angul unit was an exempted service in terms of Section 66D of Chapter V of the Finance Act 1994 and that since Cenvat credit had been availed on input and input services which were common for manufacturing of fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added to Rule 6(1) of the CCR, which provides that for the purpose of the said Rule, exempted service shall include an activity which is not a service as defined in Section 65B (44) of the Finance Act. Therefore, even if it was assumed that the job work activity undertaken by the Appellant (JSPL- Raigarh) for its Angul unit, did not qualify as a service as defined under Section 65B (44) even then the same would be covered under definition of exempted service in terms of Explanation 3 appended to Rule 6(1) of CCR. 2.7 Insofar as the invocation of the extended period of limitation is concerned, the Adjudicating Authority has held that there was an obligation on the Appellant to take all necessary precautions before taking any credit and that in the instant case, but for the audit, the factum of the irregular credit would not have been surfaced and accordingly, the extended period of limitation was rightly invokable. 3. The learned counsel for the appellant submits as under: 3.1 The appellant submits that Adjudicating Authority has overlooked the fact that the expression 'service' has been defined in Section 66B(44) of the Finance Act, to mean an activity carried out by a person fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r on the count of it being provided from one person to another. The law in this regard has been settled by the decision of this Hon'ble Tribunal in the case of Reliance Jio Infocomm Ltd. in Final Order No. A/85812/2024 dated 27.08.2024, the relevant extract of which reads as under: 8.1 Even if we assume that qua the 0.0007 percent subscribers or 0.15 percent subscribers, the services provided by the appellants were free of charge/without consideration, as held by the learned Commissioner, the next question that would arise is whether, such services (supposedly provided without any consideration), are exempted services for the purpose of Rule 6(3) of the CCR. The Revenue has relied upon Explanation 3 to Rule 6(1) of the CCR, for contending that the said explanation contains a deeming fiction, deeming activities undertaken without consideration to be exempt service for the limited purpose of applying Rule 6. The said Explanation 3 provides that the expression exempted service will include an activity which is not a service as defined in section 65B(44) of the Act of 1994. It has been argued by the appellants that according to Explanation 3 and the definition of service, as extr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2006. If an activity without consideration was also to be considered as an activity, which is not a service and thus deemed to be an exempt service by application of Explanation 3, the value of such exempt service in any case would be NIL. This is so as Explanation 4 requires adoption of invoice/agreement/contract value. In our view, the only reasonable and logical way of reading Explanation 3 and 4 is that, activities without consideration are not activities, contemplated to be covered by Explanation 3 to Rule 6(1) of the CCR. 3.5 The Adjudicating Authority has erred in holding that had it not been for the audit, the same would not have come to the knowledge as the activity undertaken by the Appellant has always been in the knowledge of the Department since the Department has only granted the permission to JSPL-Angul under Rule 4(6) of CCR to get the job-work done from the Appellant and imposed a condition of payment of Excise duty on JSPL-Angul. The Appellant submits that it is a settled position in law that extended period of limitation cannot be invoked merely on the ground that the facts would not have come to the Department's notice had it not been for the enquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having separate Central Excise and Service Tax registrations, and as such are two different legal entities in terms of excise/service tax law. The appellant has booked income in lieu of this service provided to the Angul Unit, the service recipient. 4.3 He further submitted that the Plain reading of Rule 3 of CCR 2004 makes it amply clear that a manufacturer (JSPL-Angul) or provider of output service is allowed to avail Cenvat credit on inputs/input service even when the same are used in the manufacture of intermediate products, by a job worker. It is not coming out that the job worker (appellant) is entitled to avail credit on inputs/input services used for job work done by him. 4.4 He also submitted that The explanation does not use the word 'only' with the word 'include', it in fact seeks to expand the ambit of 'exempted service' to (further) include activity, which is not a 'service' as defined in section 65B(44) of the FA, 1994. 4.5 Finally, he submitted that the details of cenvat credit considered for reversal under Rule 6(3A) of CCR in respect of exempted goods/services is not available in ERI returns. It could only be noticed/detected during Audit. After initiation of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration. Perusal of order challenge shows that the adjudicating authority has confirmed the demand by holding that the service has been provided by the appellant to its associate company i.e. M/s. CMST-BSNL and an amount is charged as shown in books of account which as per the explanation to section 67 (4) is taxable of the Act. 8. We observe from the facts on record the Department of Telecommunication was operating composite telecommunication services and thereafter w.e.f. 01.10.2000, M/s BSNL was incorporated as a Central Government Company for this purpose but its policies are totally formulated by the Department of Telecommunication Government of India, BSNL is providing telecom services in different Circles in India and different offices/units under one circle of BSNL cannot be treated as associated enterprises as these are not intermediaries in the management of or control or capital of the other enterprises as required for being associated enterprises as per Section 92 A of the Income Tax Act. 1961. Here in this case both the CMTS-BSNL are units/office of one and the same company i.e. BSNL. In view thereof we are of the opinion that the adjudicating officer has not appreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice has been issued on 15.06.2022 for the period 2016-2017 and 2017-2018 up to June 2017, the show cause notice issued to the appellant beyond the period of five years. Therefore, the demand pertaining to the period up to May 2017 is not sustainable. As the said period is beyond five years, therefore, we hold that the show cause notice is barred by limitation. We further take note of the fact that learned authorized representative has relied on the case laws, namely: (i) CCE, Mumbai Vs. Kalvert Food India Pvt. Ltd. - 2011( 270) ELT 643 (SC); (ii) CCE Vizag Vs. Mehta & Co. - 2011 (264) ELT 481 (SC). 11. In those cases, the demand is within the period of five years. Therefore, those decisions are not applicable to the facts of this case. 12. Further, we take note of the fact that the appellant was provided permission to JSPL Angul under Rule 4(6) of CCR, 2004 to get job work done by the appellant, therefore, the activity of job work undertaken by the appellant was known to the respondent. Hence extended period of limitation is not invokable. 13. In view of this, we do not find any merit in the impugned order. The same is set aside. 14. In the result, the appeal is allowed wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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