TaxTMI 
TaxTMI 
2006 (7) TMI 39
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....ly on 30% of such value. It was alleged that remaining 70% of AMC value was deducted by them on their own without any legal basis. It was alleged that though the statutory rate of Service Tax was 10% the assessee did not pay the correct amount of Service Tax in accordance with statutory provisions. Further, it was stated that in terms of Notification No. 21/2002-Cus., dated 1-3-2002, parts/spares parts of specific medical equipment imported by the assessee were not to be sold. Therefore, it was alleged that the provisions of Sections 67, 68 and 70 of Finance Act has been violated. The appellants reply dated 29-12-2005 to the show cause notice has been incorporated in the impugned order, which is extracted herein below. In their reply dated 29-12-2005 to the SCN, the assessee inter alia put forth the following submissions: (1) They are engaged in importing various medical equipments and selling the same to their Indian customers. They also undertake installation of those equipments and enter into Annual Maintenance Contract (AMC) with their customers for maintenance of such equipments. In the maintenance contract, there are 2 types of agreement, one is the agreement for providing....
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....nt month on 30:70 basis. (4) If the customer is in Procare AMC, the cost of parts is realized from him. If the customer is in Max care AMC or Comprehensive AMC, then the parts are replaced without collecting any additional amount. The engineer diagnoses the problem and ascertains whether any part is to be replaced. The parts that are used during the AMC are imported by them by availing the benefit of Notfn. No. 21/2002-Cus., dated 1-3-2002. (5) They referred to the definition of maintenance or repair services as provided under Sec. 65(64) of the Finance Act, 1994 and stated that the service rendered by them gets covered in either part of the definition, inasmuch as there is a maintenance contract and they are also authorized person of the manufacturer to undertake such maintenance and repair. (6) They referred to Sec. 67 of the Finance Act, 1994 regarding the valuation of taxable service and stated that, the cost of parts or other material sold to the customer during the course of providing maintenance or repair service would get excluded from the computation of value of taxable service. Further, they referred to Notfn. No. 12/2003-ST., dated 20-6-2003, which also exempted value....
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....'ble Apex Court - 2005 (ST3) - GJXO 143 SC. (10) Section 65(121) of the Finance Act, 1994, states that "words" and "expression" used but not defined in this chapter, but defined in Central Excise Act, 1944 or the Rule thereunder shall apply, so far as may be in relation to Service Tax as they apply in relation to duty of Excise. They referred to definition of "sale" as mentioned under Sec. 2 (h) of the Central excise Act, 1944. Relying on the definition, it was stated that transfer of possession for consideration by one person to another would constitute "sale". In their case, the possession of materials have been transferred to the customers and amount have been received in advance as consideration. Therefore, the definition of "sale" is satisfied with reference to service tax. They also cited the following case laws to corroborate their contention that transfer of possession without transfer of property is to be considered as "sale". (a) Radro Tyres Ltd. v. CCE -2004 (174) E.L.T. 218 (b) CCE v. Video Master- 1996 (88) E.L.T. 117 (c) CCE v. Moldtek Plastics Ltd. -2002 (50) RLT 944 (d) Pratap Steel Rolling Mills (P) Ltd. v. CCE - 2001 (137) E.L.T. 741 (e) Imex Engineeri....
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....interpretation as to whether, the value of material used can be considered as sold. The extended period is not invoçable in the absence of any deliberate intention to evade payment of duty/tax. They have been regularly filing the returns and did not suppress anything from the department. In view of the following decisions of the Hon'ble Apex extended period cannot be invoked in their case. (i) CCE v. Chemphar Drugs and Liniments - [1989 (40) E.L.T. 276 (S.C.)] (ii) Padmini Products v. CCE [1989(43)195 (S. C.)] (iii) Pushpam Pharmaceutical Company v. CCE Bombay - [1995 (78) E.L.T. 401 (S.C.)] (iv) Ugam Chand Bhandari v. CCE - [2004 (167) E.L.T. 491 (S. C.)] (v) Anand Nirishikawa Co. Ltd. v. CCE - [2005 (188) E.L.T. 149 (S.C.)] The demand made in the Show Cause Notice is required to be set aside on the ground of limitation, except for the period May, '04 - Dec.'2004. (16) Penalty under the provisions of Section 76 and Section 77 of the Finance Act, 1994 is not sustainable, since the Service Tax itself is not payable and hence, none of the provisions of the Act has been contravened. Further, since the extended period of limitation is not invocable, the penalty under the above....