Custom, Excise & Service Tax Tribunal
Murugappa Morgan Thermal Ceramics Ltd vs Commissioner Of Central Excise on 3 June, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/40122/2015
[Arising out of Order-in-Appeal No.11/2014 (M-III) dt. 10.11.2014 passed by the Commissioner of Central Excise (Appeals-I), Chennai]
Appeal No.E/40126/2015
[Arising out of Order-in-Appeal No. 12/2014 (M-III) dt. 10.11.2014 passed by the Commissioner of Central Excise (Appeals-I), Chennai]
Appeal No.E/40127/2015
[Arising out of Order-in-Appeal No. 13/2014 (M-III) dt. 10.11.2014 passed by the Commissioner of Central Excise (Appeals-I), Chennai]
Murugappa Morgan Thermal Ceramics Ltd.
Appellant
Versus
Commissioner of Central Excise,
Chennai-III Respondent
Appearance:
Shri M. Kannan, Advocate For the Appellant Shri S. Mohan, AC (AR) For the Respondent CORAM:
Honble Shri P.K.Choudhary, Judicial Member Date of hearing :03.05.2016 Date of pronouncement : 03.06.2016 FINAL ORDER No.40881-40883/2016 As the issue involved in these appeals is common, all the three appeals are taken up together for disposal.
2. M/s.Murugappa Morgan Thermal Ceramics Ltd., the appellant herein are engaged in the manufacture of Ceramic Fibre Products falling under Chapter 69 of CETA'85, having their registered office at Chennai. The appellants are registered with Service Tax department for payment of service tax on output service rendered by them, and are regularly filing ER-1 returns for excisable goods cleared on payment of duty. The appellants availed credit for Excise duty paid on inputs and capital goods as well as Service tax paid on Input services. Show cause notices were issued for different periods which culminated in passing of respective OIOs. On appeal, the learned Commissioner (Appeals) upheld the OIOs. The details of show cause notice, the period of dispute, duty amount etc. are tabulated herein below :-
Appeal No. OIO No. OIA No. Period Involved Amount (Rs.) E/40122/ 2015 14/2013-CE dt. 13/3/2013 11/2014 (M-III) Dt. 10.11.2014 April 2011 to September 2011 Duty: 2,22,158 + Interest + Penalty Rs.1000 u/r15(1) of CCR 2004 E/40127/ 2015 25/2013-CE dt. 27.5.2013 13/2014 (M-III) Dt. 10.11.2014 Oct, 2011 to Dec, 2011 Duty: 4,33,571 + Interest = Penalty Rs.2000/- u/r15(1) of CCR 2004 E/40126/ 2015 24/2013-CE dt. 27.5.2013 12/2014 (M-III) Dt. 10.11.2014 Jan 2012 To March 2012 Duty : 3,66,607/- + Interest + Penalty : Rs.2000/- u/r15(1) of CCR 2004 The disallowance of credit by the lower authorities was on the ground that the invoices addressed to appellant's head office at Chennai based on which the appellant availed credit, was not valid document and also the services relatable to "trading" are not input services within the meaning of "Input Service' in terms of Rule 2 (l) of CCR 2004. Both the adjudicating authority and the appellate authority confirmed the demand along with interest and penalty. Hence these appeals before the Tribunal.
3. Shri M.Kannan, Ld. Counsel appearing on behalf the appellants, submitted that when head office receives input services for office purpose such as rent, courier, rent-a-cab, telephone etc., then only the head office has to register under the category of "Input Service Distributor" (ISD). Non-taking of registration is only a procedural lapse for which substantial benefit of credit cannot be denied. He submits that though ISD registration was taken on 18.3.2013, thereafter no SCN have been issued. He fairly submitted that for the purpose of verification of records on the issue of trading activities rendered by appellant, the matter may be remanded to the original authority. He relied on the following case laws :-
(1) CC & CEX Vs DNH Spinners 2009 (16) STR 418 (Tri.-Ahmd.) (2) Modern Petrofils Vs CCE Vadodara 2010 (20) STR 627 (Tri.-Ahmd.) (3) CCE Vapi Vs Samita Conductors Ltd.
2012 (278) ELT 492 (Tri.-Ahmd.) (4) Parekh Plast (India) Pvt. Ltd. Vs CCE Vapi 2012 (25) STR 46 (Tri.-Ahmd.) (5) Pricol Ltd. Vs CCE Coimbatore 2015 (38) STR 668 (Tri.-Chennai (6) Bhansali Engg. Polymers Ltd.
2016 (42) STR 86 (Tri.-Del.)
4. Revenue was represented by Shri S. Mohan, A.C (A.R).
Ld. A.R submitted that appellant availed credit of service tax paid on input services addressed to their Head office. They are having two units (i) at Ranipet (ii) at Ahmedabad. On any invoice addressed to H.O., there is pretty chances of availing of credit by the other unit. The Head office should have got registered as "Input Service Distributor" (ISD) and distributed the credit accordingly. They can very much distribute the credit. The invoices also relate to Banking charges. The main allegation is that the invoices are addressed to H.O. He submits that when the appellants are also engaged in trading activities, they could have very well refrained from taking credit on trading activities. Though they have quantified their credit taken on trading activities, till it needs to be verified by the original authority.
5. I have carefully considered the submissions of both sides and perused the records. The point to be decided in this case is whether the invoices that are issued in the name of Head office are eligible for availment of credit by the factory. The appellant is a manufacturer of Ceramic Fiber Products and are registered with Service tax department. The credit which was held to be ineligible in the present dispute is for the reason that the appellants had availed the credit of excise duty paid by their Head office at Chennai and that they were not registered as Input Service Distributor during the period April 2011 to March 2012. It is the case of the Revenue that the appellant had also involved themselves in trading activities and the credit to that extent ought not to have been taken. Both sides have made their respective pleas with regard to eligibility or otherwise. I find that this issue is covered in the light of case laws cited by the appellant. From the above case laws, I find that this Bench of the Tribunal, in the case of Pricol Ltd. Vs CCE Coimbatore 2015 (38) STR 668 (Tri.-Chennai) is directly on the issue on hand wherein the Tribunal has held that procedural law deserves to be construed as directory instead of mandatory for its application. The relevant paragraphs 7 & 8 of the Tribunal's decision are reproduced as under :-
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 and 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 v. Gangabai - 2009 (240) E.L.T. 161 (S.C.) 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.?Procedural 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]
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.
(Order pronounced in open court on 03.06.2016) (P.K.CHOUDHARY) JUDICIAL MEMBER gs 7