By TIOL News Service

BANGALORE, SEPT 18, 2013: AN amount of Rs. 31,75,645/- has been demanded as differential duty from the appellant on the ground that value of “Design and Engineering Work” was not included in the assessable value of “Mounted Storage Vessels” manufactured and cleared by the appellant.

The Advocate of the appellant submits that unit of the appellant had undertaken “design and engineering work” and they had discharged service tax more than Rs. 43 lakhs. In the normal course, if the value of ‘design and engineering work' has to be included in the assessable value, the appellant is eligible for CENVAT credit of service tax paid by their Pune unit also. The appellant has not taken CENVAT credit on service tax paid by their Pune unit. He submits that service tax demanded in this case is only Rs. 31,75,645/- which would show that the appellant has paid more than Rs. 10 lakhs extra which could have been used to discharge excise duty. In these circumstances, the situation is totally revenue neutral. In this case, the show-cause notice was issued on 29.2.2012 whereas the period involved is from 2007-08 to 2009-10 and therefore, the entire demand is beyond the normal period of limitation of one year.

The tribunal found considerable force in the arguments made by the counsel and observed,

"There was no need for the appellant to suppress or mis-declare of any facts as the appellant could have taken CENVAT credit which was more than the duty payable as worked out by the department. In these circumstances, it cannot be said that the appellant has committed suppression or mis-declaration, fraud, collusion, etc. to evade payment of duty. As we already observed, by not availing the CENVAT credit, the revenue realisation is nearly more than Rs. 10 lakhs extra. In these circumstances, we consider that the entire demand is time-barred. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief if any."

(See 2013-TIOL-1374-CESTAT-BANG)