ISPAT INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE above appeals arise out of the order of the Commissioner of Central Excise who has confirmed service tax demands of Rs. 27,71,955/ -raised in show cause notice dated 28.10.2004 and Rs. 2,38,09,000/ - raised in show cause notice dated 20.5.2005 on account of services availed by them after 16.8.2001 under the proviso to Section 73(1) of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994, together with interest under the provisions of Section 75 of Chapter V of the Finance Act, 1994, and imposed penalties of Rs. 2,000/ - under the provisions of Section 77, Rs. 5,00,000/ - under the provisions of Section 75A/76 and Rs. 2,65,80,955/ -under the provisions of Section 78. The period in dispute in both appeals is 2002 to 2004. The first demand has been confirmed on the ground that the appellants received consulting engineer services from M/s. Helmet Weiland, Germany, M/s. GFA, Germany, and M/s. DML Steel Tech, USA and since the German firms and the US firm were non -residents who did not have any office in India, the appellants herein being the recipients of the services, were liable to pay service tax. The second demand has been confirmed on technical know -how fees and expenses paid by the appellants, holding technical know -how as a service falling under the category of consulting engineer services.

(2.) WE have heard both sides.

(3.) AS regards the first demand, we find that the appellants had disputed that the German firms and the US firm were engineering firms, in their reply dated 3.11.2004 to the show cause notice dated 28.10.2004 and had in tact denied the stand of the department in this regard. In spite of this, no material has been placed on record to rebut the appellants' contention and therefore the department has not discharged its burden of proving that the firms in Germany and USA were engineering firms, so as to hold the appellants liable to pay service tax on services provided by foreign engineering firms, which is a pre -requisite for levying service tax on such services, as held by the Tribunal in Roots India Power v. CCE 2005 -TIOL -1170, CCE, Meerut v. Jain Steel and CCE, Mangalore v. Daylight Electronics Pvt. Ltd. 2006 -TIOL -298. Further, in respect of texable services provided by a person who is a non resident or is from outside India, who does not have any office in India, such service was notified in the official gazette, in exercise of the powers conferred by Sub -section (2) of Section 68 of the Finance Act, 1994 only on 31.12.2004 with the issue of Notification 36/2004 -ST which came into force on 1.1.2005, while the period in the present case is prior to such date, and service tax is therefore not leviable for the period prior to 1.1.2005, in the light of Tribunal's order in Aditya Cement v. CCE, Jaipur 2007 -TIOL -236. For the above reasons, we hold that the demand of Rs. 27,71,955/ - is not sustainable, and accordingly set it aside.