Ajay Sharma ORDER
V. Padmanabhan, Member (T)
1. The present appeal is filed against the Order-in-Original No. 27/2014 dated 28.08.2014. The appellant also filed miscellaneous application seeking to introduce a few additional arguments to strengthen the ground already advanced in the appeal. Same is allowed and with the concurrence of both parties, the appeal itself is taken up for final disposal.
2. The dispute pertains to the period October, 2007 to December, 2012 and pertains to Keshav Dev Malviya Institute of Petroleum Exploration (KDMIPE), Dehradun which is a Division of Oil and Natural Gas Corporation Limited (ONGC). The appellant is registered with the Service Tax Department and the output services include:
(i) Maintenance and Repair Service;
(ii) On line Information
(iii) Commercial Training or Coaching Service
(iv) Scientific and Technical Consultancy Service
(v) Erection, Commissioning and Installation Service and
(vi) Consultancy Services.
The appellant was availing cenvat credit under Cenvat Credit Rules, 2004 and, during the period under dispute, availed a total credit of about Rs. 4.48 crores. The Department, during the course of audit of the appellant's accounts, observed that during the period under dispute the appellant had incurred a total expenditure on the Institute to the tune of Rs. 1671 crore. But the total taxable value provided was about Rs. 19.74 crore but paid Service tax of about Rs. 2.09 crore. The Audit team observed that the bulk of the Service tax paid is out of cenvat credit. Show cause notice dated 09.04.2013 was issued to the appellant alleging that Service Tax was irregularly availed by the appellant. The Department was of the view that major portion of the input service was being used for there own organisation and only a very small portion in providing of output taxable service to other service recipients. In the show cause notice, the Revenue adopted a ratio of their output taxable service divided by total expenditure incurred during the year and proceeded to restrict the cenvat credit availed alleged on the basis of the said formula. Accordingly, show cause notice proceeded to disallow a total cenvat credit amounting to Rs. 4.42 crore. The Revenue also alleged suppression of facts on the part of the appellant and invoked the extended time limit for raising demand. Proceedings were initiated against the appellant and the impugned order came to be passed in which the adjudicating authority disallowed. Further, penalty was imposed on various grounds of the Finance Act. Aggrieved by the order, present appeal is filed by the appellant.
3. With this background, we heard Sh. Verender Kalra, ld. C.A. for the appellant and Sh. Sanjay Jain, ld. AR appearing for the Revenue.
4. The arguments advanced on behalf of the appellant are summarised below:
(i) Ld. Consultant submitted that the KDMIPE is a unit of ONGC which caters to the requirement of all other units of ONGC and also renders service to outside parties. The cenvat credit availed is in respect of various input services, a significant part of which by way of reverse charge mechanism in respect of services such as Works Contract Service, Sponsorship Service and Manpower Supply Service.
(ii) He submitted that in respect of activities carried out by the Institute for other ONGC Divisions, no consideration is charged or received but each Division of ONGC was a separate cost centre only for purposes of internal accounting. He submitted that in such cases no consideration is separately charged and there is no question of paying service tax. Such activities were included as 'exempted service' only with effect from 01.04.2016 but the amendment carried out in Rule 6(i) of the Cenvat Credit Rule is not relevant since the dispute is for prior period be applicable.
(iii) Ld. C.A. argued that during the course of audit, the Revenue identified only cenvat credit amo........