By TIOL News Service

CHANDIGARH, MAY 14, 2018: THE issues in this appeal filed by the assessee against the O-in-O dated 15.09.2009 were –

1. Whether the demand can be confirmed under Business Auxiliary Service for the period prior to 16.06.2005 under the category of Business Auxiliary Service for the activity of bullet proofing of vehicle or not?

2. Whether the appellant is entitled to benefit of exemption notification no. 50/2003-CE or not?

The Member (Judicial) inter alia observed -

+ Clause V of Section 65 (19) of the Finance Act, 1994 was amended on 16.06.2005 wherein the production or processing on behalf of the client has been amended. Earlier, the clause 5 read as under:-

"Production of goods on behalf of the client."

Admittedly, the appellants are not producing the goods on behalf of the client, moreover, the appellants are engaged in the activity on the goods produced by their clients and further processing for the bullet proofing of those vehicles. Admittedly, for the period, prior to 16.06.2005, the word processing of goods was missing, in that circumstances, the demand of Service Tax for the period prior to 16.06.2005 is not sustainable. Admittedly, in this case the period involved is prior to 16.06.2005, therefore, the demand of Service Tax on account of Business Auxiliary Service is set aside.

+ To avail exemption under said notification (50/2003-CE), the assessee is required to give his option in writing before the effecting the first clearance.As per the report submitted by the Inspector, the declaration under Notification No. 50/2003 was received in their office on 06.10.2003.

+ Ongoing through these documents, we find that the condition stipulated by the Notification has been complied with by the appellants. If there is any discrepancy in the details, in that case, the Department could have asked to the appellants. The contention of the Revenue is that no such declaration is on record and no declaration has been filed, the said fact is incorrect as per the letter issued by the Range Inspector on 15.07.2009.

The impugned order was set aside and the appeals were allowed with consequential relief.

The Member(Technical) recorded a separate order. While agreeing with the Member (J) on the conclusion arrived at in the matter of demand of service tax under BAS, the Member (T) disagreed on the grant of the benefit of notification 50/2003-CE.

The Member (T) inter alia observed –

"…there is no record either of the letter dt.6.10.2003 having been received in the office of Assistant Commissioner, Shimla. There is thus no sanctity of letter dated 6.10.2003 as Sector Officer himself has cancelled the letter dated 15.7.2009, which formed the lone basis of existence of the letter dt. 6.10.2003. Hence, no reliance can be placed on the same. I find that the Commissioner has carried out a very thorough and detailed examination of the enquiry of the said letter dt.6.10.2003 and his observations in para 70-74 in this regard are very pertinent…"

Agreeing with the reliance placed on the certification of Director of Industries to adjudge the question of eligibility of area based exemption under Notification No.50/2003-CE., the Member (T) concluded that the appellants are not eligible for the benefit of Notf.No.50/03-CE. [ Jai Ambey Containers - 2017-TIOL-2211-CESTAT-CHD , Sunnoxx International - 2015-TIOL-2640-CESTAT-DEL relied upon.]

The matter, therefore, came to be referred to the third Member(Technical) and who, after considering the submissions made by both sides, held thus -

"31. …, I find that the appellant has got an acknowledgment of having a letter addressed to Assistant Commissioner intimating availment of the said Notification No. 50/2003 and a copy of which having acknowledged by Sector Officer and that the Sector Officer is part and parcel of establishment of Assistant Commissioner, therefore, as held in pronouncements that a communication submitted to any authority under establishment was to be treated as submitted to the head of the office, therefore, I hold that the letter acknowledged by Sector Officer is an intimation submitted to the Assistant Commissioner. If that is not held so than in further each and every acknowledgment is to be given by Assistant Commissioner himself and the same will not be practical and possible.

Therefore, I am of the opinion that the appellant had filed an intimation that they would be availing benefit of notification no. 50/2003 with the to Assistant Commissioner. The revenue did not act for five years on the same to get any short-coming about information given by them to be made good and it was for revenue to write to the appellant and seek such information. It is unfair on the part of Revenue to say that a letter dated 15.07.2009, signed by a sector officer and copy of which is available on record is cancelled. Therefore, I do not agree with the views expressed by the brother Member (Technical). I agree with the views expressed by the brother Member (Judicial)."

In view of the majority decision the appeals were allowed.

(See 2018-TIOL-1512-CESTAT-CHD)