Custom, Excise & Service Tax Tribunal
M/S Indsil Energy Electrochemicals Ltd vs Cce & St, Raipur on 12 September, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 12/09/2016. DATE OF DECISION : 12/09/2016. Excise Appeal No. 52453 of 2016 (SM) [Arising out of the Order-in-Appeal No. BHO-EXCUS-002-APP-374-15-16 dated 25/02/2016 passed by The Commissioner (Appeals), Customs, Central Excise & Service Tax, Raipur.] For Approval and signature : Honble Shri V. Padmanabhan, Member (Technical) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair :Seen copy of the order? 4. Whether order is to be circulated to the :Yes Department Authorities? M/s Indsil Energy Electrochemicals Ltd. Appellant Versus CCE & ST, Raipur Respondent
Appearance Shri K. Krishana Mohan, Advocate for the appellant.
Shri H.C. Saini, Authorized Representative (DR) for the Respondent.
CORAM: Honble Shri V. Padmanabhan, Member (Technical) Final Order No. 53555/2016 Dated : 12/09/2016 Per. V. Padmanabhan :-
The present appeal has been filed against the order dated 25/2/16 passed by the Commissioner (Appeals), Raipur. The dispute in this case relates to the disallowance of Cenvat credit to the extent of Rs. 3,07,964/-. Revenue was of the view that the Cenvat credit was availed on input services which do not qualify within the definition of input services in Rule 2 (l) of the Cenvat Credit Rules, 2004. The services sought to disallowed are as follows :-
(1) the credit availed on service tax paid on services relating to insurance and handling of final products after their removal from the factory ;
(2) insurance of motor vehicles and transit insurance of goods beyond the place of removal.
2. Out of this amount of Rs. 3,07,964/-, the appellant reversed an amount of Rs. 48,240/- voluntarily. The Original Authority as well as First Appellate Authority confirmed the demand of Rs. 3,07,964/- with imposition of interest and penalties. The appellant has challenged this demand for reversal of Cenvat credit mainly on the following grounds :
(i) the Cenvat credit was availed by the appellant on the basis of the invoices issued by their Head Office as ISD (Input Service Distributor). It is their claim that if the credit availed is improper, the same ought to have been taken up against the ISD who has availed the credit and subsequently transferred the same to the appellant. In this connection, they relied upon the decision of United Phosphorus Ltd. vs. CCE, Surat II reported in 2013 (30) S.T.R. 509 (Tri. Ahmd.). They submitted that in as much as no proceedings have been initiated against the ISD who has actually availed the Cenvat credit on the input services, there is no ground to proceed against the present appellants ;
(ii) on merits also their submission is as follows :-
(a) they are an exporter of products manufactured in their factory. The services such as CHA, terminal handling and insurance, banking etc. have been availed for export of goods after their clearance from the factory. It stands decided by the Honble Gujarat High Court in the case of Central Excise vs. Inductotherm India P. Ltd. reported in 2014 (36) S.T.R. 994 (Guj.) that in the case of export, the port of export will be the place of removal and services availed for export of goods up to the port would be available as input service in the factory. Accordingly, they have pleaded that the Cenvat credit availed by them on such services would be allowable to them ;
(b) they have also placed reliance on the case of CCE, Jaipur II vs. J.K. Cement Works reported in 2009 (14) S.T.R. 538 (Tri. Del.), where it has been held that rent a cab service will be eligible as an input service.
3. The learned DR on the other hand submitted that an amount of Rs. 48,240/- stands admitted by the appellant and reversed and hence is not disputed. He further reiterated the findings in the order-in-appeal where it has been recorded that the appellant has not submitted any documents such as export invoices, purchase order etc. to indicate that the appellant has not exported the goods through merchant exporter and that it has been cleared on FOB/CIF basis. He has accordingly submitted that the place of removal in this case becomes the factory gate. He has further argued that no material has been produced by the appellant to prove that the hiring of vehicles and air tickets of MD were related to business activity of the appellant.
4. Heard Shri K. Krishna Mohan Menon, Advocate for the appellant as well as Shri H.C. Saini, learned DR for the Revenue.
5. From the appeal records, I find that the appellant has submitted copies of the ISD invoices on the basis of which they have availed the Cenvat credit on various services. I also find that copies of these invoices were also submitted before the First Appellate Authority. However, I find that no specific findings has been recorded by the Commissioner (Appeals) on this important issue. From the perusal of some of these sample invoices, I find that the credit on various services such as CHA, handling charges, insurance etc. have been availed for export of goods at the port of export. The credit for these services stand availed at the hands of the input service distributor. In the decision of the Tribunal in the case of United Phosphorus Ltd. vs. CCE, Surat II (supra) it stands decided that Revenue ought to have initiated proceedings against the input service distributor for availing Cenvat credits which are not covered under the definition of input services and not against the assessee availing the credit on the basis of ISD invoices. I reproduce below the relevant portion of the above decision :-
6. In our considered view, the head office of the appellant, being a registered ISD is eligible to distribute service tax credit to any of their units/factory. On a specific query from the Bench, learned departmental representative informed that there was no proposal or proposition to issue show-cause notice to the input service distributor for wrong availment of Cenvat credit.
7.?We find that the view or conclusion arrived at by the lower authority in denying the Cenvat credit is incorrect as there is no dispute of receipt of services. Our views also fortified by the decision of this Bench (supra) [2009 (239) E.L.T. 323 (Tri.-Ahmd.)] wherein this Bench had recorded the following findings :
When we look at the functions of the input service distributor and the documents to be issued by him for passing on the credit, it becomes quite clear that the document issued by him for passing on the credit does not contain the nature of service provided and the details of services. It contains the service providers details, distributors details and the amount. Obviously the eligibility or otherwise of the service tax credit has to be examined at the end of input service distributor only. This is further supported by the fact that both Central Excise assessees and Service Tax assessees are under the regime of self-assessment and therefore it is the assessee himself who has to specify that the credit availed by him is admissible. Therefore the input service distributor cannot say that he is not required to prove the eligibility or otherwise of the service tax credit once at the receivers end which could be a branch or a factory of the distributor, no details would be available regarding the nature of service. Therefore the preliminary objection raised by the ld. Advocate has to be rejected and it has to be held that it is the responsibility of the jurisdictional officer with whom input service distributor has registered to decide the dispute regarding eligibility or otherwise of the service tax credit that the input service distributor has taken and proposes to pass on to others.
8.?In view of the foregoing and also on the factual matrix on the merits of the case, we find that the impugned order is unsustainable and is liable to be set aside and we do so. Accordingly, the impugned order is set aside and the appeal is allowed.
6. From the records, I find that no such proceedings is on record against the ISD. The dispute in the present proceedings has been initiated by the Revenue against the appellant for availing Cenvat credit on the basis of ISD invoices, on the allegations that the services for which such credits have been availed are not covered by the definition of input services. The proper assessee against whom such proceedings, if at all, ought to have been initiated against is the input service distributor. The proceedings for disallowing the credit would have to be set aside.
7. In line with the above discussion, I set aside the impugned order and allow the appeal.
(Dictated and pronounced in open court.) (V. Padmanabhan) Member (Technical) PK ??
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