Custom, Excise & Service Tax Tribunal
Everest Industries Ltd vs Commissioner Of Customs, C.Ex. & ... on 6 July, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/41337/2015
[Arising out of Order-in-Appeal No.CMB-CEX-000-APP-065-15 dt. 25.3.2015 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Coimbatore]
Everest Industries Ltd.
Appellant
Versus
Commissioner of Customs, C.Ex. & Service Tax,
Coimbatore Respondent
Appearance:
Shri M. Saravanan, Consultant For the Appellant Shri R. Subramaniyan, AC (AR) For the Respondent CORAM:
Honble Shri P.K.Choudhary, Judicial Member Date of hearing : 10.06.2016 Date of Pronouncement :06.07.2016 FINAL ORDER No.41076/2016 This is second round of litigation before this Tribunal. The brief facts of the case are that M/s.Everest Industries Ltd., Podanur, Coimbatore, the appellant herein, are the manufacturers of Asbestos Cement Sheet and had been availing input service credit.
2. M/s.Peirce & Leslie Agencies Ltd., the CHA had raised invoices for the input services rendered directly to the appellant and for some other services rendered by third party. Service charges and taxes were collected from the appellant by the said CHA through debit notes. During April 2008 to December 2008, the appellant had availed total credit of Rs.5,64,314/-.
3. The only point of dispute in this case is as to whether the appellant is eligible to avail cenvat credit of service tax paid in respect of input services received on the basis of certain documents called "debit notes" issued by the service provider. The department's objection is that debit note is not a valid document under Rule 9 of the CCR 2004 for availing cenvat credit.
4. After considering the rival submissions and on perusal of records, I find that the Tribunal vide Final Order No.40435/2013 dt.13.09.2013 has observed that, "there is no reason to deny the credit on the basis of the debit notes subject to verification of the documents placed by the learned counsel". In the Denovo order being 'OIO' Sl.No.09/2014- C.Ex (JC-ADC0 dt. 20.11.2014 passed by the Additional Commissioner of Central Excise, Coimbatore, it has been confirmed that the verification of the documents was done and recorded in para 6.2.3 which is reproduced below :-
"6.2.3 In this regard, the Deputy Commissioner, Coimbatore-III Division, Coimbatore who is the jurisdictional Deputy Commissioner of the Service Provider was addressed vide this office letter even number dated 17/10/2014, to verify the claim of the Everest that their service provider had paid the service tax amounts, as mentioned in their debit notes into the credit of government account. The Coimbatore-III Divisional Deputy Commissioner, vide his verification report letter issued from File C.No.IV/2/9/2011 dated 05/11/2014, reported the following facts with sample documents :
* For the services provided to Everest for the impugned import of goods, the steamer agents raised bill on Everest for collection of 'Terminal Handling Charges, Delivery Order fee, Container Cleaning Charges" etc. These charges along with service tax were paid by Peirce Leslie on behalf of Everest. Subsequently, the service provider Peirce Leslie, have raised debit notes on Everest for reimbursement of the amounts paid.
* In the Debit notes, the Custom House Agent adds some additional amounts over and above the amounts charged by the steamer agent. The service tax was worked out on the revised increased amount i.e. the amounts added over and above the steamer agent charges, and shown in such debit notes.
* Out of the total service tax amount shown in the debit notes, they deduct the service tax paid by the steamer agent as per the invoice issued by such steamer agent and pay the remaining service tax amount into the government account under category of Custom House Agent Service.
* In other words, on verification of debit notes with relevant steamer agent's invoice, it is seen that the CHA collects more amounts from the Everest than the amount they have paid to the steamer agent.
* The jurisdictional Deputy Commissioner, has also reported that Peirce Leslie have not paid the entire service tax into the government account. The service tax on the excess amount collected from the exporter was only paid by the CHA into the credit of government account.
* In this regard, the copies of the Peirce Leslie's letter dated 27/10/2014, certificate issued by their Company auditors in connection with service tax collected / remitted on behalf of Everest and sample copies of debit notes with the relevant steamer agent invoices are also furnished."
In this case, it is not correct to say that credit has been availed only on the basis of debit notes. On going through the records, I find that it has been observed time and again that debit notes were raised for reimbursement of value of services and recovery of service tax availed on behalf of the appellant from the third parties. The CHA had provided Custom House Agent service to the appellant and have raised invoices for collection of their service charges which includes service tax. It has also been verified and confirmed that all the impugned debit notes contain the service tax registration number of the respective service providers. All the details of the service provided is recorded in the debit notes. Since the documents on the basis of which credit has been availed, specify and contain essential details which are required as per the proviso to Rule 9 (2) of Cenvat Credit Rules and there is no observation that service has not been received, there is no occasion to doubt about the eligibility of the documents.
5. I find that the Board vide circular No.766/82/203-CX dt. 15-12-2003 has observed that no action should be taken against the buyer to reverse/recover the CENVAT credit for the non-payment of tax by the manufacturer. I also find that the Tribunal in the following cases has held that credit cannot be denied to the buyer for non-payment of duty/service tax by the manufacturer/service provider :-
(i) Ultratech Cement Ltd. Vs CCE Jaipur-11 2015 (320) ELT 492 (Tri.-Del.)
(ii) Memories Photography Studio Vs CCE & ST 2015 (39) STR 331 (Tri.-Ahmd.) The relevant paragraph of the Tribunal's Ahmedabad Bench decision in the case of Memories Photography Studio Vs CCE & ST (supra) is reproduced as under :-
"3.?Heard the learned AR and perused the case records. The only issue which requires deliberation in these proceedings is whether Cenvat credit can be denied to a service recipient when the service provider has not discharged the tax liability. In my opinion, it has to be established by the Revenue for denial of such credit that appellant was aware of non-payment of tax before taking the credit. In the present case, there is no evidence on record that appellant was aware of non-payment of Service Tax before taking Cenvat credit. A service recipient will only see the cenvatable document under which service tax paid/ payable has been indicated. It is not the case of the Revenue that the service provider does not exist. Under the present facts and circumstances Cenvat credit is not deniable to the appellant and has been correctly availed."
Since this is second round of litigation before the Tribunal, it would be a futile exercise to send back the matter again for re-consideration. Therefore, appeal is allowed to reduce the litigation, finding relevancy and integration of the cenvatable input services with the activities of the appellant. In the facts of the present case, I find that the amount of service tax has been discharged by the service provider by cash and by utilizing CENVAT credit. Since the dues have been duly discharged, I find that the appellant-company is eligible for CENVAT credit. Since the issue is interpretative in nature, the imposition of penalty on the appellants is not warranted and the same is set aside. Accordingly, respectfully the ratio of the Tribunal's decisions (supra), the impugned order is set aside and the appeal is allowed.
(Order pronounced in open court on 06.07.2016) (P.K.CHOUDHARY) JUDICIAL MEMBER gs 5