IFB INDUSTRIES LIMITED Vs. COMMISSIONER CENTRAL EXCISE

JUDGEMENT

(1.) This appeal has been preferred by the revenue under Sec. 35G of the Central Excise Act, 1944 (in short "the Act") against the order dtd. 8/6/2015 (Annexure A-13) passed by the Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi (hereinafter referred to as "the Tribunal") in Stay Order No. SO/ST/52029/2015-CU(DB), claiming the following substantial questions of law:-

(2.) A few facts necessary for adjudication of the present appeal as narrated therein may be noticed. The appellant is a manufacturer of home appliances, namely, washing machines, microwaves, dryers, dishwashers and ovens and has Pan India presence. In the State of Haryana, the appellant had a branch at Karnal where it had two distinct Divisions, namely, Marketing Division and Service Division having registration certificates dtd. 23/12/2008 and 27/1/2010 (Annexures P-1 and P-2, respectively). For the period from October, 2010 to March, 2011, the Marketing Division had transferred service tax of Rs.2,04,447.00 (including cess) to its Goa factory through input service distribution mechanism. Similarly for the period from April, 2011 to March, 2012, the appellant had transferred Rs.1,98,671.00 to its Goa factory. For the period October, 2010 to March, 2011, the Service Division of the appellant at Karnal took Cenvat Credit of Rs.1,00,744.00 on inputs and Rs.1,98,552.00 on the input services. Similarly from April, 2011 to March, 2012, the Service Division of the appellant at Karnal took Cenvat Credit of Rs.2,07,947.00 on inputs and Rs.3,82,114.00 on the input services. Vide notification dtd. 31/3/2011 (Annexure A-3), the amendment of Cenvat Credit Rules was made effective w.e.f. 1/4/2011. According to the appellant, since it is not engaged in providing of any exempted services, Rule 6 of the Cenvat Credit Rules, 2004 (in short "the Rules") does not apply to the appellant. However, the Adjudicating Authority disagreed with the appellant holding that services provided during warranty period were exempted services as no tax was payable on the same and, therefore, levied tax amounting to Rs.1,46,01,332.00 for the period from 1/2/2009 to 30/9/2010. The appellant filed an appeal before the Tribunal, who vide order dtd. 8/4/2013 (Annexure A-4) granted stay of pre-deposit. Since, the appellant had opted for second option in terms of Rule 6(3A)(a) of the Rules, the necessary declaration was made giving necessary details dtd. 20/7/2011 (Annexure A-5). A show cause notice dtd. 11/10/2012 (Annexure A-6) was issued to the appellant for the period from January, 2009 to September, 2010 that providing of free services within warranty period were exempted service. The value of exempted services was wrongly taken to be the sale price of the goods sold from Marketing Division which was completely a separate division and had in no way interconnected with Service Division. The appellant submitted reply dtd. 21/11/2012 (Annexure A-7) to the said show cause notice. The appellant also provided necessary information showing compliance of Rule 6(3A) of the Rules vide letter (Annexure A-8). The Adjudicating Authority obtained a verification report dtd. 11/10/2013 (Annexure A-9). On the basis of the said report, the Adjudicating Authority vide order dtd. 26/12/2013 (Annexure A-10) confirmed the demand of Cenvat Credit of Rs.1,09,23,882.00 (Rs.44,40,888.00 for the period from October, 2010 to March, 2011 and Rs.64,82,994.00 for the period from April, 2011 to March, 2012). The penalty under Sec. 78 of the Act was also imposed. Feeling aggrieved by the order, Annexure A-10, the appellant filed an appeal before the Tribunal on 14/3/2014 (Annexure A-11) along with application (Annexure A-12) for dispensing with the condition of pre- deposit. The Tribunal vide order dtd. 8/6/2015 (Annexure A-13) granted full waiver for the period from April, 2011 onwards but directed the appellant to make a pre-deposit of Rs.64,82,994.00 along with proportionate interest. Hence, the present appeal.

(3.) We have heard the learned counsel for the parties.