Per: M.M. PARTHIBAN

This appeal has been filed by the Revenue in pursuance of Order of the Committee of Commissioners dated 22.03.2018, in assailing the Order-in- Appeal No. PUN-EXCUS-001-APP-0722/2017-18 dated 28.11.2017 (herein after referred to as ‘the impugned order’) passed by the Commissioner of Central Tax (Appeals-I), Pune. The respondent assessee M/s Eaton Industrial Systems Private Limited, Pune has filed cross objection to the said appeal for upholding the impugned order passed in their favour.

2.1 The facts of the case, leading to this appeal, are summarized herein below:

2.2 The respondent herein inter alia, is engaged in manufacture of excisable goods viz., gear transmission system and other automotive components etc., falling under chapter heading 8708 of Central Excise Tariff Act, 1985. For the purpose of discharge of appropriate excise duty on the final products manufactured by them and for compliance with Central Excise statute, the respondent is registered with jurisdiction central excise authorities vide Registration No.AABCA4586BXM001.

2.3 During scrutiny of records maintained by the respondent, the department has observed that during the period 2007-2008 to 2010-2011, that the respondent had received engineers/employees on deputation from its foreign group company M/s Eaton Corporation, USA in terms of Seconding Agreement entered in respect of such individuals. Eaton Corporation, USA paid salaries and statutory employment benefits to such personnel outside India, for administrative convenience and recovered the same amount from the respondent assessee without any markup by raising debit notes. All employment related costs and risk associated with secondment of employees including all costs relating to hiring, relocation, severance, employment related lawsuits and any other costs resulting from employment relationship were also borne by the respondent, by effecting such payment through Eaton Corporation, USA. These expenses were recorded as salaries to employees in the books of accounts maintained by the respondent. Based on such scrutiny of records and debit notes, the department interpreted that the arrangement constituted import of ‘manpower recruitment or supply agency’ services as defined under Section 65(105) (k) of the Finance Act, 1994. Since the respondent assessee had not paid the service tax on such expenses incurred in foreign currency for such services under the reverse charge mechanism in terms of Section 66A(1) ibid, the department initiated show cause proceedings against the respondent.

2.4 Show Cause Notice (SCN) dated 19.04.2013 was adjudicated by the Additional Commissioner vide Order-in-Original No. PUN/ STC/ADC/08/17-18 dated 31.05.2017 in confirmation of service tax demand of Rs.90,43,587/- along with interest, under Section 73 ibid read with rule 2 (1) (d) (iv) of the Service Tax Rules, 1994 by invoking extended period of limitation; besides, he also imposed penalties on the respondent under Section 77 and 78 ibid on the appellants. Feeling aggrieved with the said order of the original authority, the respondent had filed an appeal before the Commissioner (Appeals), who in disposal of the appeal, has set aside the order of original authority and dropped the confirmed demands and penalties imposed on the respondent.

Feeling aggrieved with the impugned order passed by the Commissioner (Appeals), Revenue has filed this appeal. The respondent has also filed cross objection to such appeal filed by Revenue.

3. We have heard both sides and perused the records of the case. We have also considered the additional written submissions given in the form of paper books by Authorised Representative for the Revenue and the Counsel for the respondent.

4. The issue involved in the above appeal is whether the respondent being part of the group company situated in USA, who have seconded their employees to the respondent as recipient entity, would result in provision of "manpower recruitment or supply age