COMMISSIONER OF CENTRAL EXCISE, LUDHIANA Vs. AMBIKA OVERSEAS

JUDGEMENT

(1.) This appeal filed under Section 35G of the Central Excise Act, 1944 by the revenue-appellant is directed against the order dated 20-7-2010 [ , 2010 (20) S.T.R. 514 (Tri. - Del.)] passed in Excise Appeal No. 1287 of 2008-SM(BR) by the Customs, Excise and Services Tax Appellate Tribunal, New Delhi (for short "the Tribunal"). The appellant has claimed that the following substantial question of law arises for consideration by this Court :

(2.) The facts, in brief, necessary for adjudication as narrated in the appeal, are that the respondent is engaged in the manufacture and clearance for export and home consumption of hand tools. The respondent had been paying overseas commission to its overseas commission agents who were causing sale of the exported goods, on payment of commission at an agreed percentage of business generated by them. As the commission agents were non-residents from outside India and had no office in India, the respondent being the receiver of their services was liable to pay service tax on the value of overseas commission paid by it to them for procuring business auxiliary services under Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 (for short "the Rules"). The respondent was, thus, required to obtain service tax registration, pay service tax and file ST-3 returns under Rule 7 of the Rules. A notice was issued to the respondent to show cause why recovery of service tax of Rs. 8,205/- for the period from 4/04 to 12/04 be not made from it. It was, however thereafter, that the respondent wrote a letter dated 29-8-2006 to the Assistant Commissioner, Central Excise Division-I, Jalandhar intimating that it had deposited service tax of Rs. 4,20,592/- including the education cess of Rs. 8,246/-, along with interest of Rs. 45,127/- as its service tax liability for the period from 9-7-2004 to 30-6-2006. It was further stated in the letter that the same be treated as an intimation as required under sub-section (3) of Section 73 of the Finance Act, 1994 and that it had taken Cenvat Credit of the said service tax in its Cenvat account which would be utilized for payment of excise duty.

(3.) On scrutiny, it was observed that the respondent had wrongly availed the Cenvat Credit of service tax and thus, contravened the statutory provisions of Rule 2(1) read with Rules 3 and 4 of the Cenvat Credit Rules, 2004 (in short "the 2004 Rules"). It is how a show cause notice dated 26-10-2006 was issued to the respondent requiring it to submit its stand and further why the recovery of the wrongly availed service tax be not made from it. The adjudicating authority thereafter by order dated 31-10-2007 confirmed the recovery of Rs. 4,20,592/- besides imposing penalty of the equal amount, under Rule 15 of the 2004 Rules.