ENPRO OIL (P) LTD. Vs. C.C.E. NOIDA
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Enpro Oil (P) Ltd.
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(1.)THE appellants filed this appeal against Order -In -Original No. 30/Comm./NOIDA/2007 dt.05.09.2007 in terms of which the demand of Rs. 63,80,119/ - pertaining to the period from Feb 2004 to Aug 2005 has been confirmed along with interest and penalties of Rs. 1,00,00,000/ - under Section 78 Rs. 150/ - per day under Section 76 and Rs. 4000 under Section 77 of Finance Act 1994 were also imposed.
(2.)THE facts, briefly stated, are as under: - -
"(i) The appellants were allegedly engaged in the business of rendering Management Consultancy Service to M/s. Transocean and M/s. Tide Water during the period Feb 2004 to Aug 2005. (ii) The scope of services rendered by the appellants to M/s. Transocean and M/s. Tide Water, were listed in the agreement entered into by the appellant with these entities and are described in the table below: - -
The Adjudicating Authority confirmed the demand alongwith interest and penalties invoking extended period holding that: "(i) service rendered to Transocean and Tidewater groups fell in the category of Management Consultancy Service, (ii) the appellants were guilty of willful misstatement/suppression of facts with intent to evade service tax."
(3.)THE appellants have contended as under: - -
"(i) The term Management Consultant was defined in Section 65(65) of the Chapter V of the Finance Act, 1994 as under: - - Management Consultant means any person who is engaged in providing any service either directly or indirectly, in connection with the management of any organization in any manner and includes any person who renders any advice, consultancy or technical assistance, relating to conceptualizing, devising, development, modification, rectification or upgradation of any working system of any organization.
The Taxable Service is defined in section 65(105)(r) of the Act as under: - - any service provided to a client, by management consultant in connection with the management of any organization in any manner. (ii) Management Consultancy is an advisory service while the service rendered by them was in the nature of executionery service. They stressed the difference between the Managerial function and operations as well as the concept of management and referred to certain judgments with regard thereto. They also contended that Management Consultancy Service is different from Business Consultancy Service which was incorporated as a taxable services w.e.f. 01.06.2007.
(iii) The Order -in -Original passed by the Ld. Commissioner seems to suggest that any advice or consultancy or technical assistance rendered by a service provider in connection with the business of the service receiver is covered by Management Consultancy Service. In this connection, they contended that Management Consultant has been substituted vide Finance Act, 2007 by the expression Management or Business Consultant with effect from 01.06.2007. This clearly shows that before this amendment, Business Consultancy service was not a taxable service. In other words, Management Consultancy Service covered only those services which related to the management of an organization. Therefore, even going by the finding given by the Ld. Commissioner that the Appellants had rendered consultancy to the Foreign Service Providers in connection with their business in India, such services would be liable to service tax only with effect from 01.06.2007 and not before that.
(iv) Their service is more appropriately covered under Business Support Service which came into effect from 01.05.06, or under Business Consultancy Services which was incorporated with effect from 01.06.2007.
(v) They also referred to the following judgments among others: - -
"(a) Glaxo Smithkline Pharmaceuticals Ltd. v. CCE : 2004(188) ELT -171 (Tri. -Mum.) (b) Commissioner of Central Excise Vadodara v. Arvind Narayan Prasad Nopary : 2008 (11) STR 353 (Tri. -Ahm). (c) Board of Control for Cricket in India v. CST : 2007 -TIOL -684 -CESTAT -MUM. (d) Telephone Cables Ltd. v. CCE : 2007 (7) STR 657 (Tri. -Del) (e) Bharti Televentures Ltd. v. Commissioner of Central Excise Delhi -I : 2013 (30) STR 148 (Tri. -Del.) (vi) So long as the consideration was received in convertible foreign currency, the service tax was exempt during the entire period by virtue of it being export of service.
(vii) As regards a part of payment received by the appellants from ONGC in respect of service rendered to the foreign service providers (M/s. Tidewater and M/s. Transocean) the same is to be considered as payment received in convertible foreign currency because ONGC was required to pay a quantum of sum in foreign currency to the same foreign service providers who were to pay the appellants and the ONGC deducted an equivalent amount from the amount due to be paid by them to the foreign service providers and sent that amount to the appellants here in India. It is contended that it has been held by Hon'ble Supreme Court in the case of J.B. Boda and Co. Pvt. Ltd. v. CBDT :  223 ITR 271 (SC) and Indian Hume Pipe Co. Ltd. v. CBDT :  165 ITR 537 (Bom.) that such payment is to be regarded as payment received in foreign exchange.
(viii) There is no willful mis -statement/suppression of facts on their part and the contraventions, if any, were on account of bona fide belief that they were not liable to pay service tax and that mere non -registration or non -filing of returns does not amount to suppression/willful mis -statement. They referred to several familiar judgments in this regard.
(ix) No penalty is imposable in view of the fact that there was no mens rea and issue involved interpretation of Law. They quoted certain judgments in this regard including the one of DCW Ltd. v. Asstt. CCE, : 1996 (88) ELT -31 (Mad.)
(x) Penalty under sections 76 and 78 cannot be simultaneously imposed as held in case of Financers v. CCE Jaipur reported in, 2007(8) ELT (Tri. Del.).
The Learned AR contended that the service rendered by the appellants to M/s. Transocean and M/s. Tide Water clearly fell under the category of Management Consultancy Service because the service rendered was not executionery but advisory. He stated that as is evident from the description of service rendered by the appellants they were clearly providing consultancy with regard to the various aspects of management and therefore it was covered under Management Consultancy Service. He said that the management consultant plans the work and not work the plan and the service rendered by the appellants was essentially in the nature of providing consultancy in relation to planning the work and not working the plan. He also referred to CBEC Circular No. (section 37B) dt. 27.06.2001 wherein the expression Management in Management Consultancy have been elucidated to stress the point that the impugned service fell in the category of Management Consultancy Service.
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