ADLABS Vs. COMMISSIONER OF CENTRAL EXCISE, BANGALORE

JUDGEMENT

(1.) THIS appeal arises from Order -in -Appeal No. 81/2005 (ST) dated 9 -8 -2005 passed by the Commissioner of Central Excise (Appeals -II), Bangalore by which the duty demand was confirmed by denying the claim of deduction of cost of certain material used while providing service in the category of photography service under Section 65 of Finance Act. It was pleaded by the assessee that the Service Tax was not to be levied on the value of material used and consumed while providing photographic service, as it does not form part of the valuable taxes and not attracted to the levy of Service Tax. They had produced all the documents before the authorities to seek deduction in respect of claim made by them. They also relied on the Notification No. 12/2003 -S.T., dated 20 -6 -2003 and Boards Clarification in letter No. 233/2/2003 CX 4, dated 7 -4 -2004 addressed to the Punjab Color Lab Association. However, the Commissioner is unwilling to accept the Boards circular. He has denied on the ground that the material used has not been indicated in the bills/invoices. The learned Counsel points out to the Boards circular which only refers to maintenance of records. He submits that the record was maintained and it is not required to be shown in the invoices, which are issued to the customers. In general practice, nobody indicates the various inputs and materials used in photography in the bills and invoices issued to the customers. He submits that the ground for denying the benefit is not sustainable. Learned Counsel also submits that the Revenue has already recovered Rs. 5,00,000/ - while the stay application was pending.

(2.) THE learned SDR justified the grounds for denying the benefit.

(3.) ON a careful consideration, we notice that the Commissioner was not justified in taking the view, in contra to the Boards letter and the Notification. The appellants have maintained the records of the inputs used in the photography, nowhere it is stated in the circular and Notification that the inputs used in the photography should be mentioned in the invoices/bills issued to the customers. The reasoning given by the Commissioner is not sustainable. In view of the clarification given in the Boards letter and the Notification itself the denial of benefit by the lower authorities is not justified and not correct in law. The appellants are eligible for the benefit of deduction in terms of the Boards circular and the Notification. The order passed by the impugned authorities is not correct in law as the same is contra to the Boards letter and the Notification. The impugned order is set aside by allowing the appeal.