Jindal Steel & Power Ltd. Vs. CCE, Raipur - (Customs, Excise and Service Tax Appellate Tribunal) (20 Jun 2018)

In the case of any taxing statute, the same is required to be interpreted literally

MANU/CE/0277/2018

Excise

In facts of present case, the Appellant is engaged in the manufacture of sponge iron, billets, rolled items and other goods falling under Chapters 72, 73 etc. The dispute covers the period 2011-2012 to 2014-2015 (upto August, 2015). The Appellant availed cenvat credit on inputs, capital goods and input services. In addition, to manufacture and clearance of excisable goods, the Appellant avail loans from various Banks as well as other 'Banking and other Financial Services' from overseas service provider. For such services, they paid service tax under reverse charge mechanism and part of such service tax was allocated to the appellant unit by their corporate office under the registration as input service provider.

The departmental officers during the course of audit observed that, the Appellant did not maintain separate record of input and input services used to provide taxable service under the category of 'Banking and other Financial Services' and hence Revenue was of the view that, the Appellant was required to reverse 50% of the cenvat credit on input and input service taken, on monthly basis as stipulated under Rule 6(3B) of the Cenvat Credit Rules, 2004. On the above lines, show cause notice was issued which resulted in the impugned order in which cenvat credit amounting to Rs. 3,52,37,222 was ordered to be reversed alongwith interest and penalty equal to the duty. Aggrieved by the decision, the present appeal has been filed.

Company, which accepts deposits from public for the purpose of lending or investment, will be considered as banking company. In view of the Explanation to Section 5(c) of the Banking Regulation Act, 1949, the Appellant will not fall within the category of 'Banking Company' since they are primarily engaged in the manufacture of iron steel items.

Since, the Appellant's principal business is not receiving deposits and lending money in any manner, it cannot be said that, they fall within the category of NBFC. Appellants activity being industrial, which falls under the exclusion category of financial institution, they will not be covered within the definition of 'Financial Institution'. The provisions of Rule 6(3B) will be applicable only to a banking company and financial institution including a non banking financial company. Since, the Appellant does not fall within any of the categories, the provisions of Rule 6(3B) will not be applicable to the Appellant.

The adjudicating authority has observed that, even though the Appellant is not registered as a banking company, non banking financial company or a financial institution, but they have undertaken the activities falling therein and hence will be covered by Rule 6(3B). The findings of the adjudicating authority cannot be accepted. It is fairly well settled that, in the case of any taxing statute, the same is required to be interpreted literally. Since, the Appellant does not fall within any of the categories for which the restriction of 50% has been specified in Rule 6(3B), the same will not be applicable to the Appellant. Consequently, the impugned order is set aside. Appeal is allowed.

Tags : DEMAND RULE APPLICABILITY