Custom, Excise & Service Tax Tribunal
Ballarpur Industries Ltd vs Commissioner Of Customs & Central ... on 26 October, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/1312 & 1313/07 (Arising out of Order-in-Appeal No. SVS/222 & 223/NGP-C-ST/2007 dt. 26.6.2007 passed by the Commissioner of Customs & Central Excise (Appeals) Nagpur ) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ======================================================
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 : No
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?
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Ballarpur Industries Ltd.
:
Appellant
VS
Commissioner of Customs & Central Excise, Nagpur
:
Respondent
Appearance
Shri Prasad Paranjape, Advocate for Appellant
Shri Ajay Kumar, Jt. Commr. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Date of hearing : 26/10/2016
Date of decision: 26/10/2016
ORDER NO.
The adjudicating authority denied the Cenvat Credit and the same was upheld by the Commissioner (Appeals) for the following reasons:
In respect of the distribution of credit by the Head office the credit was distributed to their obtaining registration. The invoice in respect of such distribution of credit is not in proper format, credit is not admissible on Rent-a-Cab and Security service, as the same was provided at job workers place where the job worker is carrying out cutting process of paper on behalf of the appellant. The credit on mobile phone was denied as it does not have nexus with in or in relation to the manufacturer.
Aggrieved by the impugned order, the appellant is before me.
2. Shri Prasad Paranjape, Ld. Counsel for the appellant submits that as regard the issue of credit on ISD which was distributed before obtaining registration by the Head Office, he submits that even if the credit of service tax paid by Head Office is distributed before obtaining registration, the same cannot be denied as has been held in the various judgments which are cited below:
(i) Commissioner of Central Excise vs. Dashion Ltd.
2016 (41) S.T.R. 884 (Guj.)
(ii) Commissioner of Central Excise Vs. Smita Conductors Ltd.
2012 (278) E.L.T. 492 (Tri.-Ahmd.)
(iii) Bhansali Engg. Ploymers Ltd. Vs. Commissioner of C.Ex., Bhopal 2016 (42) STR 86 (Tri.-Del.) On the issue of valid documents i.e. invoice for ISD. He submits that the allocation chart on which the credit was taken by the head office containing all the information which are required to be contained in the ISD invoice, therefore the said document is valid for availing the Cenvat credit. In this regard he placed reliance on the following judgments:
(i) Shriram Pistons & Rings Ltd. Vs. Commissioner of C.Ex.
2012 (281) E.L.T. 90 (Tri.-Del.)
(ii) Commissioner of C.Ex., Bangalore Vs. Tikmani Steel Company Ltd.
2005 (192) E.L.T. 413 (Tri.-Bang.).
(iii) Vodafone Cellular Ltd. Vs. Commissioner of Central Excise, Pune-III 2016 (42) STR 1048 (Tri.-Mumbai) He further submits that credit was rightly taken on Rent-a-Cab service as the vehicle was used for transportation of employees to and fro factory. The issue of credit on Rent-a-Cab is covered by the following circular/judgments:
(i) Circular 943/4/2011-CX.dated 29-Apr-2011 dt. 29.4.2011
(ii) Principal Commissioner Vs. Essar Oil Ltd.
2016 (41) STR 389 (Guj.)
(iii) Indian Oil Corporation Ltd. Vs. Commissioner of C.Ex.,Mumbai-II 2016 (41) STR 515 (Tri. Mumbai) As regard the security service, the same has been provided to the appellant only at the premises of their job worker for security and safety of material of the appellant lying in the job workers place. The job worker is carrying out the cutting process of paper supplied by the appellant on job work basis. Therefore, the security service is directly related and is part and parcel of their entire manufacturing process of the final product. As regard the cenvat credit on mobile phone he does not press and not contesting the same as the amount is very meager i.e. Rs.1,847/- and the same has been reversed by the appellant.
3. Shri Ajay Kumar, Ld. Joint Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that for the purpose of distribution of credit from the Head Office to the factory special provision was enacted under which input service shall be distributed i.e. Head Office is required to be registered under Rule 7 of Cenvat Credit Rules 2004, therefore the registration is mandatory and without which distribution of credit is not legal and correct. He further submits that as regard invalid documents of ISD the proper invoice is required to be issued whereas the appellant has availed the credit on allocation chart which is not a valid document. The credit on Rent-a-Cab and security service is also not admissible for the reason that these services are not related directly or indirectly to the manufacture of final product.
4. I have carefully considered the submissions made by both the sides, I find that as regard the registration issue whether the ISD can distribute the credit before obtaining registration has been settled in the judgments cited by the Ld. Counsel. The relevant parts of the judgments are reproduced below:
(i) In the case of Commissioner of C. Ex. Vs. Dashion Ltd. held that-
7.?The second objection of the Revenue as noted was with respect of non-registration of the unit as input service distributor. It is true that the Government had framed Rules of 2005 for registration of input service distributors, who would have to make application to the jurisdictional Superintendent of Central Excise in terms of Rule 3 thereof. Sub-rule (2) of Rule 3 further required any provider of taxable service whose aggregate value of taxable service exceeds certain limit to make an application for registration within the time prescribed. However, there is nothing in the said Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons disentitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. It was in this background that the Tribunal viewed the requirement as curable. Particularly when it was found that full records were maintained and the irregularity, if at all, was procedural and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, in our opinion, rightly did not disentitle the assessee from the entire Cenvat credit availed for payment of duty. Question No. 1 therefore shall have to be answered in favour of the respondent and against the assessee.
(ii) In the case of Commissioner of C. Ex. Vapi Vs. Smita Conductors held that-
3.?I have considered the submissions. I find that the decision in the case of Jindal Photo Limited was rendered in exactly similar circumstances. In that case also the registration was not taken by the head office as input service distributor. Further, I am unable to appreciate the stand taken by the Revenue that this decision is not applicable in view of the judgment in the case of Jindal Photo Limited deals with modvat/cenvat credit of goods and in this case the question involved is services. This itself is a wrong submission since in Jindal Photo Limited case also the ratio involved was cenvat credit on input services only. Further, it has also been submitted that receipt of goods is verifiable but not the services. In this connection it would be worthwhile to see the provisions to provisos of sub Rule 2 of Rule 9 of Cenvat Credit Rules, 2004. According to the said proviso, if the invoices do not contain all the particulars but contains certain details specified therein, the Assistant Commissioner can allow the credit on the basis of such defective documents, if the goods or services covered by such documents, have been received and accounted for in the books of accounts of the receiver. The submissions made by the appellant in this case is contrary to the provisions of law which require the Assistant Commissioner/Dy. Commissioner to verify whether input services have been received or not. This amounts to a submission that while formulating the Rules, the Government did not consider the practicability or otherwise of verification of receipt of input services. It is the duty of the executives to implement the provisions of rules and if there is any problem in implementing the rules, the rules have to be got amended but certainly the submissions like this not called for. In view of the fact that the ratio is covered by the decision of this Tribunal and I do not find anything wrong with the decision of the Commissioner in following the same and I also find the submission that why this decision is not applicable are not at all correct, I find no merit in the appeal filed by the Revenue and accordingly reject the same.
(iii) In the case of Bhansali Engg Polymers Ltd. Vs. Commissioner of C. Ex., Bhopal held that-
After hearing both the sides duly represented by Shri Naveen Bindal, Advocate for the appellant and Shri Govind Krishna Dixit, Departmental Representative for the respondent/Department, we find that credit of Rs. 59,53,367/-, availed by the appellant, on the basis of the invoices issued by their Head Office registered as Input Service Distributor stands denied on three grounds. First, the invoices were issued when the Head Office was not registered as Input Service Distributor, secondly on the ground that the credit has been availed on the basis of TR-6 challan and thirdly, on the ground that there are no invoices produced by the appellant, in some of the cases. As regards the first objection of the Revenue, we find that it stands held by the Tribunal in a number of decisions, that the distribution of credit by the Head Office without taking the registration, cannot be adopted as a ground for denial of the credit. Reliance in this case is made to the Tribunals decision in the case of Doshion Ltd. v. CCE, Ahmedabad reported in 2013 (288) E.L.T. 291 (Tribunal-Ahmd.).
From the above judgments it was observed that even if the credit is distributed before obtaining registration, it is permissible.
As regard the issue, where the appellant has taken the credit not on valid invoice but on the allocation chart, I find that whatever document on which credit was passed on, if it contains all the information as required under Rule 4A of Service Tax Rules, 1994, the said document should be accepted and the credit cannot be denied. The relevant portion of Rule 4A is reproduced below:
RULE [4A. Taxable service to be provided or credit to be distributed on invoice, bill or challan. (1) Every person providing taxable service shall [, not later than [thirty days] from the date of [completion of] such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier,] issue an invoice, a bill or, as the case may be, a challan signed by such person or a person authorized by him [in respect of such taxable service] [provided or agreed to be provided] and such invoice, bill or, as the case may be, challan shall be serially numbered and shall contain the following, namely :-
(i) the name, address and the registration number of such person;
(ii) the name and address of the person receiving taxable service;
[(iii) description and value of taxable service provided or agreed to be provided; and]
(iv) the service tax payable thereon : The allocation chart on record contains the above details as required under Rule 4A of the Rules.
I further find that this issue has been considered in the various judgments, the same are reproduced below:
(i) In the case of Shriram Pistons & Rings Ltd. Vs. Commissioner of C. Ex., held that-
5.?We have carefully considered the submissions from both the sides and perused the records. In this case the bulk of the service tax credit, in questions, has been denied on the ground that the same was availed on the basis of the letters issued by the head office distributing the credit, which are not valid documents for availing cenvat credit. However, the appellants plea is that during the period of dispute, the head office had issued challans for passing of the credit and in every case alongwith those challans, the invoices of the input service providers, which are in the name of the head office, had been enclosed and the challans alongwith the invoices contain all the details of the service providers as well as the details of the services provided and service tax paid, which could be verified by the department. In our view when certain input services have been received by a manufacturer under the invoices of the service providers issued in the name of the head office, the head office had taken cenvat credit and thereafter passed on the same to its manufacturing units, the cenvat credit to a manufacturing unit cannot be denied even if the same has been passed on by letters and not the document bearing the name invoices or challans provided and letters or documents issued by the head office contain all the details which are required to be mentioned in the invoices/challans issued by the input service distributor. When the Appellant as service recipient had discharged the service tax liability in respect of the services received, under Rule 2(1)(d) of the Service Tax Rules, 1994, they would be eligible for the credit on the basis of the challans under which the service tax had been paid on the service received if the services received are covered by the definition of input service.
(ii) In the case of Commissioner of C. Ex. Bangalore Vs. Tikmani Steel Co. Ltd., held that-
5. On a careful consideration, we notice that the Commissioner has examined the issue on each of the point in great detail. In so far as the demands on manipulated documents are concerned, the duty is Rs. 29,980/-, which has already been paid. On the issue pertaining to taking Modvat credit on the documents issued by the Dealers who were not Registered one, we find that the provision for availing credit on the basis of documents issued by Registered Dealers was introduced only on 4-7-1994 while the period in question is April, 1994 to June, 1994. Therefore, the findings recorded by the Commissioner that the documents are all in the prescribed format and merely because the documents referred to Stock Transfer Memos instead of invoices is no ground to deny the Modvat credit as all the prescribed statutory details were available in the document. The Commissioners findings on time bar is a correct finding as all the details were furnished and there is no suppression of facts. We do not find any infirmity in the order and hence confirm the same by rejecting the Revenue appeal.
(iii) In the case of Vodafone Cellular Ltd. Vs. Commissioner of C. Ex., Pune-III held that-
7.1?This leads as to the next point of contention between the two sides. The contention of the AR is that the demand letters issued by the appellant should be treated as invoice. The AR relies on the judgments in the case of Banmore Cables & Conductor v. CCE, Indore - 2012 (278) E.L.T. 503 = 2012 (28) S.T.R. 109 (Tribunal), CCE v. Jalaram Plastic Pack - 2014 (34) S.T.R. 66 to support her case and states that when assessees want to avail Cenvat credit they are successful in doing so on the basis of certificates/debit notes which gives all the details required in an invoice. We find that in terms of Rule 4A the following details are required in an invoice :
(i) the name, address and the registration number of such person;
(ii) the name and address of the person receiving taxable service;
(iii) description and value of taxable service provided or agreed to be provided; and
(iv) the service tax payable thereon.
From the demand letters issued by the appellant to various telecom operators, we find that they contained all the details required in an invoice. The demand letters give the name and address of the service provider as well as the service receivers. The description and value of service provided is also mentioned by the appellant in the demand letter. As regards the service tax payable, we are of the view that once the value is known as well as the rate of tax, the actual amount of service tax payable becomes quite obvious. The demand letters complied with the substantive provisions of Rule 4A and therefore, may be considered as invoices. Formal invoices were not issued by the appellant because service receivers were not ready to enter into a contract with the appellant even though they were receiving service continuously from the appellant. Therefore, we hold that service tax is payable by the appellant on the basis of the demand letters.
As regard the Cenvat Credit on Rent-a-Cab service, the vehicle is used for transportation of employee for the purpose of factories activity. Therefore Rent-a-Cab service falls within the ambit of definition of input service. This issue is also covered by the following judgment.
(iii) In the case of Indian Oil Corporation Ltd. Vs. Commissioner of C. Ex. held that-
5.?Having considered the rival contentions, we hold that the appellant have rightly availed Cenvat credit of Rs. 30,16,215/- being an amount paid towards Goods Transport Agency service. We further hold that the appellant is entitled to Cenvat credit of Rs. 7,11,257/- taken on the basis of TR-6 challan, which is a notified documents for availing credit and being a procedural issue, will apply retrospectively. We further hold that the input service like Courier service, Xerox service and Rent-a-Cab operator service are input services in relation to business of the appellant as a manufacturer and service provider and as such the appellant has rightly availed the Cenvat credit on the input. Thus, the impugned order is set aside. The appeal is allowed with consequential benefit. As regard the security service provided at job workers place, I am of the view that since the security service was received by the appellant even though at job workers place but it is in relation to job work activity carried out on behalf of the appellant, the job work activity is part and parcel of the over all manufacturing of the final product. Therefore the security service is used in or in relation to the manufacture of final product. In my considered view the credit is admissible on the security service. As regard the denial of credit on mobile phone, as per the submission of the Ld. Counsel they are not contesting the same, as they already reversed the credit of Rs.1847/-. On that count, I therefore uphold the demand of Rs.1847/- related to mobile phone service. As per the above discussion, the appellant is entitled for the credit of Rs.48,56,153/- demand of Cenvat Credit of Rs.1,847/- of mobile phone is upheld, since the major portion of the demand is dropped. I set aside the entire penalties. The appeals are partly allowed in above terms.
(Pronounced & Dictated in court) (Ramesh Nair) Member (Judicial) SM.
2Appeal No. E/1312 & 1313/07