Custom, Excise & Service Tax Tribunal
M/S. Pricol Ltd vs Cce, Coimbatore on 5 January, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
ST/335/2011
(Arising out of Order-in-Original No. 6/2011 dated 28.2.2011 passed by the Commissioner of Central Excise, Coimbatore)
M/s. PRICOL Ltd. Appellant
Vs.
CCE, Coimbatore Respondent
Appearance Shri S. Jaikumar, Advocate for the Appellant Shri M. Rammohan Rao, DC (AR) for the Respondent CORAM Honble Shri D.N. Panda, Judicial Member Honble Shri R. Periasami, Technical Member Date of Hearing: 05.01.2015 Date of Decision: 05.01.2015 Final Order No. 40006 / 2015 Per D.N. Panda CENVAT credit of Rs.1,03,90,046/-taken by the appellant under Rule 2(m) r/w Rule 7 of CENVAT Credit Rules, 2004 relates to credit allocated to it by its head office as input service distributor by that head office. Apart from this, the other credit of Rs.4,74,233/- taken by the appellant is on the basis of xerox copies of invoices. The third credit of Rs.6,83,349/- was in respect of CHA service availed.
2. Appellants submission is that Rule 2(m) of the CENVAT Credit Rules, 2004, allowed the ISD to allocate its credit to its sister units in order to avail the same by them. Regulatory provision for registration of ISD came into force from 7.6.2005 by a set of rules called Service Tax (Registration of Special Category of Persons) Rules, 2005. Prior to that there was no registration provision available for ISDs. Appellant availed the credit allocated to it during the period September 2004 to June 2005.
3. According to appellant, in absence of registration provision as state above the genuine credit allocated cannot be questioned when availed by the appellant for the taxable service provided by it. So far as the credit taken on xerox copies of invoices is concerned, the appellant does not press the demand but prays for relief from penalty on that account. The third argument is that the services availed from CHA being relatable to the taxable activity of the appellant itself, without being disintegrated, it shall be allowable.
4. Revenue supports the adjudication on the ground that when there was a registration procedure prescribed, the appellant having failed to avail registration should be denied the allocated CENVAT credit of Rs.1,03,90,046/-. So far as the credit taken on the xerox copy is concerned, Revenues contention is that no penalty should be waived. On the third count of denial of credit on CHA service submission of learned DR is that the same being rightly disallowed by the learned adjudicating authority giving proper finding, no interference may be made.
5. Heard both sides and perused the records.
6. Contentions of both sides in respect of CENVAT credit of Rs.1,03,90,046/- is considerable in the light of provision contained in Rule 2(m) of CENVAT Credit Rules, 2004 granting credit to allocation of such credit made by the ISD which was permitted from 10.9.2004. The regulatory measure of registration of ISD came into force from 16.6.2005.
7. Perusal of the substantial law in Rule 2(m) leads to the conclusion that appellant was entitled to the credit for no finding on the genuinity of the credit availed ad such credit allocated by the ISD. Similarly, there was no disintegration between the appellant and its head office. There is also no finding that the credit which the appellant availed is not attributable to its manufacturing activity. Therefore, the fact itself makes clear that there was an inextricable link between the service availed and the activity for which such service was availed. There is also nexus between the head office and the appellant. So also the credit is remaining unquestioned as to the genuinity thereof.
8. When substantial law has granted relief, it is only procedural law that has dragged the appellant to the litigation. As a result of which the substantial relief granted by rule making authority, deprived the appellant from its genuine claim of credit due to delay in registration process prescribed. We may state that procedure is not tyrant of the law but is servant thereof and justice cannot be denied for reasons attributable to the procedural law. Honble Supreme Court in the case of Sambhaji Vs. Gangabai 2009 (24) ELT 161 (SC) held that procedural law should not dominate over the substantial law to deprive the litigant from the process of justice. Therefore, the procedural law deserves to be construed as directory instead of mandatory for its application. Paras 9, 10, 11 and 12 of the judgment are reproduced to appreciate the jurisprudence on the procedural law.
9. All the rules of procedure are the handmaids of justice. The language employed by the draftsman of processual (sic) law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of justice. In an adversarial system, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. Unless compelled by express and specific language of the statute, the provisions of CPC or any other procedural enactment ought not to be construed in a manner which would leave the court helpless to meet extraordinary situations in the ends of justice.
10. The mortality of justice at the hands of law troubles a Judges conscience and points an angry interrogation at the law reformer.
11. The processual law so dominates in certain systems as to overpower substantive rights and substantial justice. The humanist rule that procedure should be the handmaid, not the mistress, of legal justice compels consideration of vesting a residuary power in Judges to act ex debito justitiae where the tragic sequel otherwise would be wholly inequitable. Justice is the goal of jurisprudence, processual, as much as substantive. No person has a vested right in any course of procedure. He has only the right of prosecution or defence in the manner for the time being by or for the court in which the case is pending, and if, by an Act of Parliament the mode of procedure is altered, he has no other right than to proceed according to the altered mode. A procedural law should not ordinarily be construed as mandatory, the procedural law is always subservient to and is in aid to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be followed.
12. Processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. A procedural prescription is the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice. [Emphasis supplied]
9. Taking into consideration the rule of procedural law and substantial law as stated above by Apex Court, CENVAT credit of Rs.1,03,90,046/- is allowed to the appellant. The appeal on the CENVAT claimed on the basis of xerox copies of invoice is dismissed. However, so far as penalty in respect of denial of credit of Rs.4,74,233/- on such count is concerned, learned adjudicating authority has not dealt with the same as to whether such a penalty to its extreme dose is leviable. But he has stated that under Rule 15(4) of CENVAT Credit Rules, penalty is imposable and what should be the quantum of penalty that was not adjudged stating reasons therefor. Therefore, there shall be no penalty on this count also.
10. So far as the credit availed on CHA service is concerned, there is no material fact and evidence on record to rule out the availment of such a service by the manufacturer-appellant. Therefore, in absence of disintegration between the service availed for use in the activity carried out by appellant, credit of Rs.6,83,349/-is admissible.
11. In the result, appeal succeeds partly to the extent indicated above.
(Dictated and pronounced in open court)
(R. PERIASAMI) (D.N. Panda)
Technical Member Judicial Member
Rex
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