Custom, Excise & Service Tax Tribunal
Novozymes South Asia Private Ltd vs Commissioner Of Central Excise ... on 3 December, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 27076 / 2013 Application(s) Involved: E/Stay/28494/2013 in E/27918/2013-SM Appeal(s) Involved: E/27918/2013-SM [Arising out of Order-in-Appeal 380/2013-CE dated 31/07/2013 passed by Commissioner of Central Excise , BANGALORE-CUS Novozymes South Asia Private Ltd 20th Km. Hosur Main Road, Electronic City, BANGALORE, KARNATAKA-560100 Appellant(s) Versus Commissioner of Central Excise Bangalore, POST BOX NO 5400...CR BUILDINGS, BANGALORE, KARNATAKA 560001 Respondent(s)
Appearance:
B.G.CHIDANANDA URS Adv #520, AMRUTH NIVAS, 7TH MAIN, 13TH CROSS, RMV 11 STAGE, DOLLARS COLONY, BANGALORE -560094 For the Appellant Mr. Ganesh Haavanur, A.R. For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER Date of Hearing: 03/12/2013 Date of Decision: 03/12/2013 Order Per : B.S.V.MURTHY The appellant availed CENVAT credit of Rs. 2,44,625/- on the basis of a bill dated 6.7.2009. The bill was raised by a commission agent on the appellant. Taking a view that the input service had no nexus with the manufacture of goods and the document was incomplete, proceedings were initiated treating the CENVAT credit availed as wrong which has culminated in confirmation of the demand for CENVAT credit availed along with interest. Penalty also has been imposed.
2. Even though only stay application has been listed, considerable time was spent in arguments by both sides and detailed submissions were made especially on the preceding decisions of Honble High Courts of Gujarat and Punjab and Haryana. Further, I was also taken through the contract between the parties and details as regards facts. After spending so much time in hearing both sides, I consider it appropriate that the matter itself should be finally decided rather than posting it to a future date. Accordingly requirement of predeposit is waived and appeal is taken up for final decision.
3. The learned counsel submitted that, the first issue is whether the stand taken by the Revenue that there is no nexus is correct or not. The first submissions by the learned counsel was that the Commissioner has not at all gone into this aspect and has indicated that he need not go into the merits in view of the fact that the document on the basis of which credit was taken was defective and therefore credit itself was totally inadmissible. Unfortunately, he submitted that in this case, even though the bill was raised as commission bill, in reality the Commission Agent was engaged in sales promotion activity. The learned A.R submitted that the service provided by the Commission Agent cannot be considered as sales promotion activity and for this purpose he relied upon the decision in the case of Commissioner of Central Excise Ahmedabad Vs Cadila Healthcare Ltd. [2013(30)STR 3 (Guj)] and the decision of the Ahmedabad Bench of the Tribunal in the case of Commissioner of Central Excise Surat Vs Astik Diestuff (P) Ltd. [2013(31)S.T.R. 459(Tri-Ahmd)] wherein services rendered by a domestic commission agent was considered by the Tribunal and the Tribunal came to the conclusion that the services of commission agent cannot be considered as eligible service in the absence of sales promotion. Learned counsel in his rejoinder relied upon the decision of the Honble High Court of Punjab and Haryana in the case of Commissioner of Central Excise Vs Ambika Overseas [2012(25)STR 348 (P&H). He also submitted that in the case of Cadila Health Care Ltd. (supra), Honble Gujarat High Court came to the conclusion that the benefit of CENVAT credit was not admissible in view of the fact that in that case there was no evidence whatsoever relied by the appellants. In fact in sub-para 8 of para 5.2, Honble High Court However there is nothing to indicate that such commission agents were actually involved in any sales promotion activities as envisaged under the said expression.... Therefore, it is his submission that the conclusion of Honble High Court which indicated that the commission agents in that case were only acting as simply commission agents there was no evidence to indicate that they were actually undertaking sales promotion activity. In the case of Ambika overseas (supra) Honble High Court observed that canvassing and procuring orders were in relation to sales promotion would fall under sales promotion activities. This observation of the Tribunal was upheld by the Honble High Court. It is his submission that a combined consideration of the two decisions of the two High Courts would lead to the conclusion that if a commission agent is undertaking sale promotion also and he is not merely commission agent, credit would be admissible, Canvassing and procuring orders, according to the Honble High Court of Punjab and Haryana was in the nature of sales promotion. The learned counsel for the appellants drew my attention to the contract. The relevant potions of the contract are reproduced below:
2.1. The agent shall at all times during the term of this Agreement uses his best efforts to solicit customers situated in the Territory 2.4 The Agent shall be responsible for all general marketing necessary to diligently promote products in the Territory 3.1 The Agent shall independently and continually promote sales and collect orders for products from customers in the Territory on behalf of Novozymes.
4. I find that the facts as emerging from the contract are distinguishable from the facts before the Honble High Court in the case of Cadila Healthcare Ltd (supra). I also find that the decision of Punjab and Haryana High Court would be applicable to the facts and circumstances of this case. Therefore, on merits, I consider that the appellants have been able to make out a case. Even though it was submitted by the learned A.R. that the Commissioner (Appeals) has not discussed the merits and therefore matter may be remanded, I find that in the facts and circumstances of this case, it may not be appropriate and it is not advisable also since that would increase the workload of everybody and increase litigation.
5. Coming to the deficiency in the documents, I observe that while applying the provisions of the Statute, officers seem to ignore important aspects. In para 15 of the order-in-original, the original authority observed that sub-rule-2 of Rule 9 of CENVAT Credit Rules 2004, the bill/invoices shall contain the registration No. of the person issuing , name and address of the person receiving taxable service, description and classification of the taxable service. As these details are not shown in the bill/invoice, hence CENVAT credit is liable to be disallowed. In the show-cause notice issued, I find that same are not forthcoming on the invoice on which the credit was availed by the assessee. I have also verified a copy of the above said invoice and found that the above mentioned particulars are not forthcoming on the same.
6. According to Rule 9(2) of CENVAT Credit Rules, the requirement of name and address of the person receiving taxable service is not a mandatory requirement. I reproduce the relevant portion of the Rule 9(2) to make this clear.
Provided that the said document does not contain all the particulars but contains details of duty or service tax payable, description of the goods or taxable service, assessable value, central excise or service tax registration No. of the person issuing the invoices as the case may be, the name and address of the factory or warehouse or premises of first or second stage dealers or provider of taxable service..... From the above, it becomes clear that the name and address of the person receiving the taxable service is not mandatory requirement. Secondly I also find that even verification of documents has not been done by the original authority properly and on going through a bunch of the invoice produced by the appellants before me, I find that full name and address of the service receiver, the nature of service provided, registration No. of the service provider, amount of service tax paid for the service rendered and address of the issuer are available in the invoice. At least I could not make out any deficiency in the invoice. The Assistant Commissioner made a categorical observation that above mentioned particulars, meaning thereby, name and address of the person receiving taxable service, description and classification of taxable service or not forthcoming on the invoice. The only basis this objection can be upheld is that photocopy submitted by the appellant cannot be relied upon. Unfortunately, the Assistant Commissioner does not even say that he has verified the original or photocopy. The Commissioners (Appeals) observes:
I find that adjudicating authority has convincingly established vide para 15 of the impugned order that the appellants have taken the credit of service tax on the basis bill which is not a prescribed document and does not contain details as required under sub-rule (2) of Rule 9 of CENVAT Credit Rules 2004....
Apparently the Commissioner (Appeals) is too busy to verify the invoice in question and is in dispute before him. Otherwise there is no communication forthcoming as to whether the Commissioner (Appeals) had a look at the invoice or not. This is the sole ground on the basis of which he has disallowed the CENVAT credit. After considering the invoice, I am not able to find any deficiency in the bill, I have to take a view that CENVAT credit has been taken correctly.
7. The third ground taken by the appellant is limitation. Even though, I have already taken a view on merits as well as on the basis of documents that the appellant is eligible for the credit, it would be appropriate to deal with limitation also. It is strange that the original authority in para 16 of his order observes:
It is also noticed that the assessee have not indicated or produced any specific documents or records before me during the adjudication proceedings as evidence that the documents on which the issue in question was brought to the knowledge of department earlier. The assessee has therefore suppressed the fact of availing and utilizing credit on service tax paid on services from the knowledge of the department. But for observation of the department audit team, the fact of irregular availment of Cenvat credit would have gone unnoticed and resulted in revenue loss to the exchequer.... I am not able to understand what exactly was suppressed by the assessee in this case. The requirement of submission of the documents on the basis of which credit has been taken is no longer in the Statute book. Therefore, the appellant was not required to produce the documents on the basis of which credit has been taken. Honble Supreme Court has already taken a view to the effect that to invoke suppression facts, suppression of facts should be such that they should be ones which are required to be declared in accordance with Statute before the Statutory Authorities. When documents on the basis of which credit was taken is not required to be produced, how suppression of facts can be invoked and on what basis defies imagination. In any case, I find considerable force in the arguments advanced by the learned counsel that before a decision in the case of Cadila Healthcare (supa) by Honble Gujarat High Court was rendered, there was a view prevailing that credit is admissible in respect of service rendered by commission agent. In fact, there is a Circular issued by the Board where such a view has been taken. Under these circumstances, extended period could not have been invoked in this case. The discussion above would show that on merits as well as on limitation, the impugned order cannot be sustained. Accordingly, the impugned order is set aside and appeal allowed with consequential relief if any to the appellants.
(Order dictated and pronounced in open court) B.S.V.MURTHY TECHNICAL MEMBER pnr...2