THERMAX LIMITED Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants are the manufacturers of industrial boilers, heaters, pollution control equipment, heat pumps, chillers, etc., for industrial use falling under Chapter 84 of the Central Excise Tariff Act, 1985. The appellants are also registered under service tax for providing services under the five categories, viz., consulting engineering, installation and commissioning, repairs and maintenance, technical testing and analysis, franchise service.

(2.) DURING the scrutiny of their records, the CERA auditors observed that the appellants are also engaged in the business of leasing and hire purchase of some equipment from July 16, 2001 onwards and have received lease receipts/financial charges for providing these services. This service appeared to be covered as taxable service under the category of "banking and other financial services" as per Section 65(12) of Chapter V of the Finance Act, 1994 (as amended) with effect from July 16, 2001. Further, Ministry of Finance vide its circular No. BII/1/2001 TRU dated July 9, 2001 has clarified that in the case of hire -purchase agreement, interest or finance charges together with processing charges/documentation charges is the consideration for the services rendered which will constitute the value of the taxable services and service tax is payable on this. The original adjudicating authority, i.e., the Assistant Commissioner, Central Excise (STC), Pune -I observed that as per Section 65(105)(zm) of the Act "any service provided to a customer by any other body corporate in relation to 'banking and other financial services' namely, 'financial leasing services including equipment leasing and hire -purchase by a body corporate' is a taxable service with effect from August 16, 2002". Accordingly, he confirmed the demand of service tax of Rs. 1,35,189 under Section 73(1) of the Finance Act, 1994 for the period from August 16, 2002 till March 31, 2004 as against the demand of Rs. 3,45,553 raised in the show cause notice dated October 12, 2004 for the period from July 16, 2001 to March 31, 2004. The Assistant Commissioner also levied interest under Section 75 of the said Act and also imposed penalties under Sections 76, 77 and 78 of the said Act. On appeal, the Commissioner (Appeals) confirmed the order passed by the Assistant Commissioner. Hence this appeal.

(3.) HEARD both sides and perused the documents.