The Delhi Bench of the Customs, Excise and Service tax Appellate Tribunal (CESTAT) observed that Non-taking of inputs, capital goods, credits, or benefit of notification number suffices for service tax exemption.
The issue to be decided was whether the denial of the benefit of the exemption notification to the appellant was considered unjustified.
The appellant exported goods from JNPT, Nava Sheva, submitted details to DGFT by 01.10.2011 for an EODC within an eight-year period. Presented with written submissions on 08.06.2023, the Customs issued a show cause notice on 04.06.2014, post-claimed by the appellant.
During adjudication, the appellant neither attended nor replied. The Adjudicating Authority hastily confirmed the notice, citing non-submission of documents. The department requested dues in letters dated 25.05.2015 and 16.02.2016. The appellant appealed the Order-in-original on 01.05.2017, citing non-receipt of documents, asserting fulfillment of the export obligation, obtaining EODC from DGFT on 26.05.2015.
The Counsel for the appellant Pawan Arora highlighted the absence of a prescribed format for the certificate. They pointed to the Tribunal decisions that deemed certificates provided on the GTA’s letterhead as sufficient. In contrast, the Revenue asserted that the appellant had failed to furnish the declaration in the prescribed format on a consignee note, thereby disqualifying them from the benefits of the exemption notification.
The counsel for the appellant Pawan Arora contested the denial of benefits under exemption notification no. 32/2004-ST dated 3.12.2004. The dispute arose from the appellant’s submission of a photocopy of declarations from three service providers on their letterhead, resulting in the rejection of the 25% service tax levy on the gross amount charged by the Goods Transport Agency (GTA).
The appellant’s counsel cited precedent cases, including Paliwal Home Furnishing and Alok Leasing Pvt. Ltd., emphasizing that the notification lacked a prescribed format for the certificate, asserting that GTA-issued certificates on letterheads sufficed, challenging the department’s insistence on consignment note-specific certificates.
The Counsel for the respondent Rajesh Jain scrutinized documents, focusing on a declaration by Chater Sain, Delivery Manager of M/s Prakash Parcel Services, confirming the non-usage of credit on input and capital goods. Similar declarations from other Goods Transport Agencies supported the appellant’s consistent claim.
No irregularities were found, establishing a strong case for granting the appellant the benefit of the exemption notification. Circular No.B/16/2005 –TRU clarified that a declaration in the consignment note sufficed when tax liability was with the consignor or consignee, ensuring adherence to regulatory requirements and strengthening the appellant’s eligibility for service tax abatement.
The single bench of the Tribunal comprising Binu Tamta Member (Judicial) observed that in favor of the appellant on merits, the issue of levying interest or penalty does not survive.
The bench thus held that, “The invocation of the extended period is also not sustainable. The impugned order deserves to be set aside. The appeal stands allowed with consequential benefit.”
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