Custom, Excise & Service Tax Tribunal
Roca Bathroom Products Pvt. Ltd vs C.C.C., Jaipur I on 25 November, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-I Date of hearing: 17.11.2016 Date of pronouncement:25.11.2016 Central Excise Appeal No.1302 of 2012, 55201 and 55202 of 2013 Arising out of the order-in-original No.05/2012 (CE) dated 10.1.2012 and No.56 & 57/2012(CE dated 9.10.2012 passed by Commissioner of Central Excise, Jaipur. Roca Bathroom Products Pvt. Ltd. .. Appellant Vs. C.C.C., Jaipur I Respondent
Appearance:
Present Shri R.K. Verma, Advocate for the appellant Present Shri Yogesh Agrawal, A.R. for the Revenue Coram: Honble Mr. Justice (Dr.) Satish Chandra, President Honble Mr. Ashok K. Arya, Technical Member Final Order No. 55250 55252/2016 Per Ashok K. Arya:
1. The appellant M/s Roca Bathroom Products Pvt. Ltd. are manufacturer of bathroom fittings. During the period of dispute from March 2008 to August 2009 they took cenvat credit of Rs.78,93,729/- on the basis of the invoices issued by their head office at Chennai as input service distributors, in respect of the services of advertisement and publicity, godown rent, annual maintenance charges, customer care , rent a-cab service, courier service, communication service, C & F service, logistics service, business support service and insurance service etc. The Department was of the view that in addition to manufacturing, the appellant were also engaged in trading activity and these services had also been used in connection with their trading activity.
1.1 When the appellant could not give break-up of the value of input services used for manufacturing activity and for trading activity separately, show cause notices were issued for denying the entire cenvat credit. The Commissioner, Central Excise, Jaipur vide Orders-in-Original dated 10.1.2012 and 9.10.2012, confirmed the entire cenvat credit demand along with interest.
1.2 The appellant M/s Roca Bathroom Products Pvt. Ltd. is in appeal against the above Orders-in-Original passed by the Commissioner before this Tribunal. They have been represented by Shri R.K. Verma, ld. Counsel and Shri Yogesh Agrawal, for Revenue.
2. Based on the appeal memorandum and written submissions, the ld. Advocate mainly submits as follows:
i) The Central Excise Authoriteis in charge of the factory are not competent to initiate proceedings to disallow cenvat credit in a case where the credit has been taken on the basis of invoices issued by the ISD (Input Service Distributor).
ii) The credit is distributed by the ISD and unless the credit is held to be irregularly distributed by the ISD, the credit cannot be denied to the appellant.
iii) There is no provision under Rule 3 or 4 of Cenvat Credit Rules to deny cenvat credit distributed by the ISD to the manufacturing unit even if distribution is found to be wrong.
3. Ld. A.R. for Revenue reiterates the findings given in the impugned orders.
4. After careful examination of the case and submissions of both sides, it appears that cenvat credit for the input defined in Rule 2(k) and for the input service defined in Rule 2(l) of Cenvat Credit Rules can be taken only when such input or input service has been used by the manufacturer for final product or by the provider of output service for providing output service; or in other words, such inputs/input services are used directly or indirectly by the manufacturer in relation to manufacture and clearance of final product. The provisions of law relating to Cenvat Credit Rules as per definition given for input under Rule 2(k) and for the input service under Rule 2(l) of Cenvat Credit Rules are very clear and unless such inputs/ services fulfill the definitional criteria of input or input service, the invoices issued by the ISD (Input Service Distributor) cannot legally distribute the credit of service tax paid on the said services.
4.1 The impugned order points out that the appellant has taken cenvat credit of input services pertaining to the traded/stored goods which is not admissible. In other words, if the cenvat credit claimed is attributable to trading activity, the same cannot be covered under the definition of input service as given under Rule 2(l) of the CCR, 2004. Central Excise Authorities are the only competent authority who can initiate the proceedings for disallowance of cenvat credit, when credit is taken on the invoice issued by ISD is against the basic principle that cenvat credit can be claimed only when there is nexus of input service with the output goods/final products of the manufacturer/appellant. The premise of the cenvat credit scheme under Central Excise law and the relevant Rules prescribed thereunder is that wherever there are irregularities, which are brought to the notice of the Revenue,; Central Excise authority incharge of the unit, who received the invoices/documents for claiming cenvat credit for the ISD are competent to verify the admissibility /eligibility of such invoices/documents for claiming cenvat credit; the assessee cannot plead that they have taken cenvat credit based on the invoices issued by the ISD and Central Excise authorities other than the jurisdictional incharge of the ISD cannot deny the said cenvat credit. In the present case, it is a matter of record that there are some input services which have been used for trading activity, therefore, cenvat credit relating to such input service(s) cannot be allowed to the appellant.
4.2 From the records , it appears that during the personal hearing held before the lower authority i.e. Commissioner, the appellant took the plea that they had taken cenvat credit only in respect of input service(s) which were used in the manufacturing of goods. However, this submission has not been supported by any evidence either before the lower authority i.e. Commissioner or before the Tribunal. Hence when there is no evidence produced to establish nexus between the input service and the manufacturing conducted by the appellant, the cenvat credit based on such invoices/bills/challans issued by the ISD is not admissible.
5. based on the above discussion and analyses, the appeal is rejected as without merit. The impugned order is sustained.
(Pronounced in the open Court on 25.11.2016).
(Justice Dr. Satish Chandra) President (Ashok K. Arya) Technical Member scd/ Appeal No.E/1302/12, 55201, 55202/13 1