Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Nagpur vs M/S Ultratech Cement Ltd on 22 April, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. E/904/09 (Arising out of Order-in-Appeal No. SN/125/NGP/2009 dated 27.4.2009 passed by the Commissioner of Central Excise & Service Tax (Appeals), Nagpur). For approval and signature: Honble Shri Raju, 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 should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== Commissioner of Central Excise, Nagpur Appellant Vs. M/s Ultratech Cement Ltd. Respondent Appearance: Shri Sanjay Hasija, Supdt. (AR) for Appellant Shri Rajesh Ostwal, Advocate for Respondent CORAM: SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 22.04.2016 Date of Decision: 03.06.2016 ORDER NO. Per: Raju
The respondent, M/s Ultratech Cement Ltd., availed credit distributed by their Pune marketing office registered as Input Service Distributor (ISD). Credit availed by the Input Service Distributor was in respect of the services received not only by the ISD but also by its offices located at Aurangabad, Ahmednagar, Jalgaon, Nasik, Beed etc. A show-cause notice was issued to the appellant alleging that credit of the offices located at the various place cannot be distributed by the ISD. It was alleged that ISD could avail credit only in respect of input services received at its own address.
2. The learned Counsel for the appellant argued that the facility of ISD was introduced for the convenience of manufacturer. It was argued that the various services were availed by the marketing office located at various stations. He argued that the input service specifically includes services availed in respect of marketing. The definition of input services reads as follows: -
(l) "input service" means any service,-
(i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; It can be seen that the services of sales promotion, marketing research are specifically covered under the inclusive part of the said definition. Therefore, services availed in various marketing offices located at various stations would be an eligible input services.
3. Learned AR relied on the impugned order. He further relied on the decision of the Tribunal in the case of Mangalore Refinery & Petrochemicals 2013 (30) STR 475 (Tri-Bang) to assert that the credit of only services received by the offices registered as ISD and to be availed. He especially relied on para 3 of the said decision, which reads as follows: -
3.?In the instant case, it is not in dispute that the manufacturing unit of the company at Mangalore chose to take CENVAT credit on BOFS provided by Corporation Bank, on the strength of the invoices issued by the bank to the Mumbai office of the company. Again, it is not in dispute that the Mumbai office of the appellant-company, which was, effectually, the recipient of the service rendered by the bank, allowed the Mangalore unit to take CENVAT credit of the service tax paid on the said service. This was not permissible inasmuch as the transactions involved distribution of CENVAT credit by the Mumbai office of the appellant-company to its Mangalore unit without obtaining ISD registration and issuing invoices in terms of sub-rule (2) of Rule 4A of the Service Tax Rules, 1994. If it is held that the availment of CENVAT credit by the Mangalore unit on the basis of the invoices issued to the Mumbai office by the input service provider is not vitiated by the nature and/or the contents of the invoices used by the manufacturing unit, it would be tantamount to rendering the ISD-related provisions otiose. The aforesaid provisions made by the legislative authority are special provisions governing the registration and conduct of input service distributors. Such provisions must prevail over general provisions. By arguing that the CENVAT credit on BOFS cannot be denied to the manufacturing unit by reason of defects of documents, the learned counsel was virtually invoking the general provisions. At the risk of repetition, I must say that the special provisions prevail over the general provisions and should be given full effect to. He also relied on the decision of Market Creators Ltd. 2014 (36) STR 386 (Tri-Ahmd). He specifically relied on the para 6 of the said decision, which read as follows: -
6.?In the case of present appellant, the service tax is not paid by the rented premises as Head Office for all the branches and no Service Tax registration is so taken by the appellant of such premises issuing credit taking document. In the facts and circumstances, appellant cannot take credit of the document issued by a premises not registered as an Input Service Distributor under the service tax provisions. Argument of the appellant that extended period is not applicable in this appeal will not help their case as nowhere it has been brought to the knowledge of the department that Cenvat credit is being taken by the appellant on a document issued by the service recipient who is not registered as ISD under Rule 3 of the Service Tax (Registration of Special Category of Persons) Rules, 2005 read with Rule 7 of the Cenvat Credit Rules, 2004. He also relied on the decision of Tribunal in case of Clariant Chemicals (I) Ltd. 2015-TIOL-2510-CESTAT-MUM.
4. I have gone through the rival submissions. I find that the Pune marketing office of the appellant is registered as ISD and it was availing credit of various services availed by marketing office located at Aurangabad, Ahmednagar, Jalgaon, Nasik, Beed etc. The only allegation raised in the show-cause notice is that the marketing office located at various places, to avail credit of received services, should have been registered as ISD. Since they were not registered as ISD, the credit of services received by them cannot be availed as credit.
4.1 The input service is defined as follows: -
(l) "input service" means any service,-
(i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; It can be seen that sales promotion, marketing research are specifically covered in the inclusive part of the said definition. In these circumstances, the credit availed by the appellant in the various offices would qualify as input service. The only issue that remains is whether the credit can be availed if the documents are not addressed to the ISD but to its offices not registered as ISD. I find that the input services received by the respondent are entitled to be taken credit. It is not restricted to the input services received by the respondent at their factory. Input services received by the appellant at its Head Office or other offices are also eligible for credit and the facility of ISD has been granted to facility taking of such credit. The show-cause notice nowhere alleged that the services on which credit has been taken are not eligible input services. In the case of Doshion Ltd. 2013 (288) ELT 291 (Tri-Ahmd), the Tribunal has observed as follows: -
5.?We have considered the submissions made by both sides. We find considerable force in the arguments advanced by the learned counsel. The registered office and Vatva office both are located in the same place and appellant has simply utilized the credit at Vatva instead of distributing it to various units. As submitted by the learned counsel, during the relevant period, there was no restriction for utilization of such credit without allocating proportionately to various units. The omission to take registration as an Input Service Distributor can at best be considered as procedural irregularity and in view of the decisions cited, has to be considered sympathetically. Further, it is also noticed that appellant has not got any extra benefit by doing this. In fact from the statement of Shri Chandresh C. Shah, as explained that above Cenvat credit available to them, 20% of service tax payable only was paid and balance was paid in cash. In fact, proper distribution would have enabled them to utilise full credit. It would show that the exercise is totally Revenue neutral and no loss has been caused to the Revenue (in fact Revenue has gained). In the absence of any legal requirement to avail credit based on the services received during the relevant time and in the light of the decision cited by the learned counsel, the procedural irregularity has to be ignored and the demand confirmed has to be set-aside on this ground. In the result, demand for Cenvat credit of Rs. 1,07,07,142/- with interest and penalty equal to the same imposed under Section 11AC of Central Excise Act, 1944 are set-aside.
5. I find that the said decision summarizes the issue here. Following the decision of Tribunal in case of Doshion Ltd. (supra), the appeal is allowed.
(Pronounced in Court on 03.06.2016) (Raju) Member (Technical) Sinha 5 Appeal No. E/ 904/09