Custom, Excise & Service Tax Tribunal
M/S. National Engineering Industries ... vs C.C.E. Jaipur-I on 15 July, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. II
Application No. E/MISC/51152/2015-EX(DB)
Appeal No. E/1371/2011-EX(DB)
[Arising out of Order-in-Original No. 25/2011(CE) dated 07.03.2011 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Jaipur].
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
Hon'ble Shri B. Ravichandran, Member (Technical)
1
Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s. National Engineering Industries Ltd. .Appellants
Vs.
C.C.E. Jaipur-I .Respondent
.
Appearance:
Shri Bipin Garg, Advocate for the Appellant Shri M.S. Negi, DR for the Respondent CORAM:
Hon'ble Shri Ashok Jindal, Member (Judicial) Hon'ble Shri B. Ravichandran, Member (Technical) Date of Hearing: 15.07.2015 FINAL ORDER NO. 52267/2015-EX(DB) Per Ashok Jindal:
The appellants are in appeals against the impugned orders denying availment of Cenvat Credit by them.
2. The facts of the case are that the appellant is a manufacturer of Ball Bearing and having three units at Jaipur, Manesar and Newai. They are having their central Head Office at Jaipur. The appellant availed certain services like Selling Commission, Royalty, Consultancy & Professional, Banking Charges, Audit Fee, AMC Charges, etc. on which service tax was paid and invoices were raised in the name of the Head Office. The Jaipur unit of the appellant has taken Cenvat Credit on all these services. The case of the Revenue is that as their head office is not registered as input service distributor, therefore, Jaipur unit is not entitled to take Cenvat Credit on these services. It is also in the case of Revenue that services in question have not been only utilized by Jaipur unit. Therefore, 100 % credit is not entitled for Jaipur unit. In these set of facts, for the period February 2006 to March 2009 different show cause notices were issued to deny Cenvat Credit to the Jaipur unit. The show cause notices were adjudicated. Cenvat Credit was denied. Consequently, demand on duty was raised along with interest and penalty were also imposed on the appellant. Aggrieved from the said orders appellant is before us.
4. Shri Bipin Garg, the Ld. Counsel for the appellant submits that it is an admitted fact that during the impugned period appellant was not registered as Input Service Distributor. It is not in dispute that services were not utilized by the appellant. In fact, services are in the nature that invoices can be issued only in the name of Head Office and they are fully entitled to take Cenvat Credit on service tax paid on the services in question. It is not in dispute that services in question are not input services as per Rule 2(l) of the Cenvat Credit Rules 2004. Therefore, he submits that appellant has correctly taken the Cenvat Credit merely having no registration as Input Service Distributor does not effect the entitlement of Cenvat Credit to them. To support his contention he relied on the decision in the case of Demosha Chemicals Pvt. Ltd. Vs. CCE Daman-2014 (34) STR 758 (Tri), in the case of Doshion Ltd. Vs. CCE Ahmedabad-2013 (288) ELT 291 (Tri) in the case of Greaves Cotton Ltd. Vs. CCE Chennai-2015 (17) STR 395 (Tri). Therefore, he prayed that appellant has correctly taken the Cenvat Credit and impugned orders are to be set aside.
5. On the other hand Ld. AR strongly oppose the contention of the Ld. Counsel and submits that in this case the appellant is entitled to take Cenvat Credit on services which has been used by them in their factory as per Rule 2 (l) of the Cenvat Credit Rules 2004. Admittedly, in this case the invoices are not in the name of the appellant who is a manufacturer. Therefore, they are not entitled to take Cenvat Credit. He further submits that appellant is not registered as Input Service Distributor. Therefore, the Cenvat Credit on the services availed by the Head Office cannot be availed by the appellant. He submits that as there is a rule frame for availment of Cenvat Credit and appellant has not followed the procedure under Rules, therefore, they are not entitled to take Cenvat Credit. To support his contention he relied on the decision in the case of CCE Thane-Nicholas Piramal (India) Ltd.-2009 (244) ELT 321 (Bom.), in the case of Mangalore Chemicals & Fertilizers Ltd. Vs. Deputy Commissioner-1991 (55) ELT 437 (SC). In these terms, he prayed that appeal be dismissed.
6. Heard the parties. Considered the submission.
7. After hearing the parties we find that issue to be decided by us in the matter is that whether appellant is entitled to avail Cenvat Credit on the services which has been availed by their Head Office and the Head Office is not registered as input service distributor during the impugned period or not. The same issue came up before this Tribunal in the case of Demosha Chemicals Pvt. Ltd. (Supra) wherein the facts are as under:
The facts from records transpires that the appellant had availed the Service Tax credit for the period from September, 2006 to July, 2011 of an amount of Rs. 40,83,617/- on the basis of documents i.e. invoices/challans, raised by various service providers viz. Banks, Insurance Companies, transporters, MTNL and others for telephone, CHAs, Couriers, repairing & maintenance services, etc. issued in the name of their Registered/Head Office situated at Mumbai; their Head Office had not issued any invoice or bill in the name of the appellant and also their head office was not registered as Input Service Distributor category. The department entertained a view that since the invoices/bills are not in the name of the appellant they are not valid documents to avail Cenvat credit under sub-rule (1) of Rule 9 of CCR, 2004 read with Rule 4A(1) of the Service Tax Rules, 1994, therefore, the credit availed by them on the basis of those bills/documents are not admissible. Consequently, a show cause notice was issued to the appellant proposing to disallow/demand the credit availed by them along with interest, imposition of penalty was also proposed. After following due process of law, adjudicating authority confirmed the demand of Cenvat credit amounting to Rs. 40,83,617/- under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A(1) of Central Excise Act, 1944 along with interest. The adjudicating authority also imposed equal penalty under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.
8. In that case this Tribunal observed as under:
On perusal of the records, it transpires that the Cenvat credit which has been availed for the appellant of the Service Tax paid based on invoices/challans was in respect of the services provided by the Banks, Insurance Companies, transporters, Telecom Service, CHAs, Couriers, repairing & maintenance services. The invoices were issued on the name of the registered/head office situated at Mumbai. It transpires from the records that there is no dispute as to the fact that the services were rendered in this case. The dispute as correctly pointed out by the ld. Counsel is only on the ground that the head office of the appellant having not being registered as input service distributor, the entire tax paid by service provider could not be availed as Cenvat credit by the appellant, as there were two units. In the entire records, I did not find any such allegation nor there is any findings to indicate that the appellant herein had availed more than the eligible Cenvat credit of the Service Tax paid in both the units. The Cenvat credit availed by the appellant is exactly the amount which has been charged as Service Tax by the Service provider. I find strong force to the contentions raised by the ld. Counsel that the judgment/order of this bench in the case of Doshion Limited (para 5) and Modern Petrofils (para 4) are directly on the point.
8. Further in the case Doshion Ltd. (Supra) again this Tribunal has examined the issue and observed as under:
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 utilised 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 utilisation 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 (infact 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.
9. We have gone through the case laws relied upon by the Ld. Counsel for the appellant wherein the issue was that whether non registration as input service distributor can be fatal for denial of Cenvat Credit to the appellant or not. The question has been answered by the Tribunal in the case laws relied upon by the Tribunal namely Demosha Chemicals Pvt. Ltd. (Supra) and Doshion Ltd. (Supra) that appellant cannot be denied Cenvat Credit availed by them in the absence of registration as input service distributor by the Head Office. Further, we observed that case laws relied upon by the Ld. AR are not applicable to the facts of the case in hand. In fact, case laws only says that Cenvat Credit is admissible if proper procedure has been followed and the case laws relied upon by the appellant are exactly of the issue before us. Therefore, relying on the case laws cited by the Ld. Counsel in the case of Demosha Chemicals Pvt. Ltd. (Supra) and Doshion Ltd. (Supra) we hold that appellant has correctly taken Cenvat Credit on the services namely Selling Commission, Royalty, Consultancy & Professional, Banking Charges, Audit Fee, AMC Charges, etc.
10. Therefore, impugned order is set aside. Appeal is allowed with consequential relief if any. The Miscellaneous Application is disposed off.
(Dictated and pronounced in the open court)
(B. Ravichandran) (Ashok Jindal) Member (Technical) Member (Judicial)
Bhanu
2
E/1371/2011-EX(DB)