Custom, Excise & Service Tax Tribunal
Murugappa Morgan Thermal Ceramics Ltd vs Commissioner Of Central Excise & St on 4 November, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/41868/2015
[Arising out of Order-in-Appeal No.129/2015 (CXA-I) dt. 1.6.2015 passed by the Commissioner of Central Excise (Appeals-I), Chennai]
Murugappa Morgan Thermal Ceramics Ltd
Appellant
Versus
Commissioner of Central Excise & ST,
Chennai-III Respondent
Appearance:
Shri M. Kannan, Advocate For the Appellant Shri S. Govindarajan, AC (AR) For the Respondent CORAM:
Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of hearing/decision : 04.11.2016 FINAL ORDER No.42192/2016 Issue in question concerns denial of cenvat credit on inputs services availed by the appellant for rent paid in respect of their head office. Department has taken the view that the said credit is irregular on the grounds that the head office has not been registered as Input Service Distributor (ISD) as defined under Rule 2 (m) of the Cenvat Credit Rules, 2004 and requires to be distributed in the manner laid down in Rule 7 ibid. Accordingly, three show cause notices were issued for different periods. On adjudication, amount of credits availed on such renting was confirmed along with interest as follows :-.
(i) Rs.2,33,534/- for January 2009 to December 2009
(ii) Rs.1,08,105/- for January 2010 to June 2010
(iii) Rs.1,08,105/- for July 2010 to December 2010
2. In adjudication, adjudicating authority also imposed a total penalty of Rs.6000/-. On appeal, Commissioner (Appeals) vide order dt. 1.6.2015 has set aside that portion of the OIO holding that impugned services is not input service in terms of Rule 2 (l) of CCR 2004, however, upheld the remaining part of the order, demanding reversal of total credit of Rs.4,49,744/- along with penalty. Hence this appeal.
3. Today, during the hearing Shri M. Kannan, Ld. Advocate, submits that while it is a fact that no ISD registration had been taken, nonetheless it is only a procedural lapse for which substantive benefit should not be denied to them. He further points out that said lapse has been rectified by their taking ISD registration on 18.3.2013. He further points out that in their own case for an earlier period, on the same issue, though for different input services, this Tribunal has held the matter in their favour.
4. Ld. A.R on the other hand points out that the appellants are also engaged in trading activities and are registered with the department for the same and hence it is not known as to what proportion of the service is attributable to trading service.
5. Heard both sides and gone through the facts. I note that this very Tribunal has considered the identical issue as pointed out by learned counsel and has inter alia held that non-registration as ISD should not deprive the assessee of substantial benefit of credit in Final Order No.40881 to 40883/2016 dt. 3.6.2016. The said order has relied upon earlier order of this Tribunal in Pricol Ltd. Vs CCE Coimbatore - 2015 (38) STR 668 (Che.). The relevant portion of this Tribunals order dt. 3.6.2016 is reproduced herein below for ready reference :
"6. It is the fact on record that the tax paid nature has not been disputed by any of the authorities. Revenues only contention is that the appellant is not registered as ISD. I find that non-registration as ISD should not deprive the appellant of substantial benefit of credit. Moreover, I find that the appellant has taken the ISD Registration w.e.f. 18.3.2013, and since this is only a procedural lapse in law, credit cannot be denied. The other aspect with regard to trading of goods should be looked into by the adjudicating authority and for that purpose, I remand the matter back to the adjudicating authority to have a relook into the whole issue. In the event, if it is found that appellant has availed the credit which are used for trading of goods, they shall reverse the same immediately. Since the credit is held to be eligible, the consequential penalty is also set aside.
Appeals are disposed of in the above terms."
6. I respectfully follow the ratio of the aforesaid Tribunals order and remand the matter back to the original authority for de novo consideration on the same lines as has been directed in para-6 of the Tribunals order dt. 3.6.2016 reproduced above.
Appeal is disposed on the above terms.
(Dictated and pronounced in open court) (MADHU MOHAN DAMODHAR) MEMBER (TECHNICAL) gs 5