SYNDICATE BANK Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) HEARD the ld. Chartered Accountant for the Appellants and ld. DR for the Respondent. The present application for stay has been filed in appeal arising from order dated 26 -6 -2009 passed by the Commissioner of Central Excise, Mangalore. By the impugned order, Commissioner has disallowed CENVAT credit to the tune of Rs. 5,09,85,560/ - for the period April, 2007 to March, 2008 and the demand is confirmed in that regard along with interest thereon. The Commissioner has also confirmed the demand of service tax to the tune of Rs. 50,26,40,360/ - along with Education Cess of Rs. 1,00,52,807/ - and Secondary & Higher Education Cess of Rs. 50,26,404/ - for the period from April, 2007 to March, 2008. The tax amount of Rs. 39,51,99,505/ - already paid by the Assessee for the said period has been appropriated. The demand has been confirmed along with interest payable thereon. Besides penalty of Rs. 200/ - per day during which the failure continues or at the rate of 2% of such tax per month, whichever is higher, starting from the first date after due date till the date of actual payment of the outstanding tax has been imposed for failure to pay the service tax in time. Besides, penalty of Rs. 2000/ - under Rule 15(3) of Cenvat Credit Rules, 2004 has also been imposed.

(2.) THE challenge to disallowance of the CENVAT credit is essentially on the ground that though the show cause notice was issued on the allegation that the credit was availed without maintaining the necessary documentary proof regarding the availment and utilization of the credit, the impugned order by travelling beyond the scope of the said show cause notice has denied the credit on the ground that the Appellants were not eligible to claim the credit. As regards the valuation aspect, the contention of the Appellants is that the inclusion of commission received in advance is contrary to the provisions of law relating to the service tax liability as such tax can be recovered only in relation to the services provided and not in relation to services yet to be provided.

(3.) ON the other hand, the DR submitted that the Commissioner, considering the fact that the credit is sought to be availed on the items non -eligible for availment of credit, and that too without necessary documentary proof, has rightly rejected the claim of the Appellants in that regard. She further submits that as regards the valuation, the Commissioner has clearly relied upon the explanation clause to Rule 6(1) of the Service Tax Rules, 1994 and therefore, no fault can be found with the impugned order in that regard. She also submitted that the order passed by the Commissioner in relation to the earlier period relied upon by the Appellants clearly shows that therein the Commissioner has denied the credit in relation to certain items and in relation to the similar items the credit has been denied under the present impugned order also.