Custom, Excise & Service Tax Tribunal
Kemwell Biopharma Pvt. Ltd vs Commissioner Of Central Excise & ... on 31 May, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/776/2012, E/777/2012, E/778/2012, E/779/2012, E/780/2012, E/781/2012, E/782/2012-SM [Arising out of Order-in-Appeal No. JMJ/65 to 71/2011 dated 27.12.2011 passed by the Commissioner, LTU Bangalore] For approval and signature: HON'BLE SHRI S.S. GARG, JUDICIAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Kemwell Biopharma Pvt. Ltd. No. 11, Kemwell House Tumkur Road, Bangalore 562 022 Appellant(s) Kemwell Biopharma Pvt. Ltd. 34 KM, Tumkur Road, T-Begur, Nelamangala Taluk, Bangalore 562 123 Appellant(s) Versus Commissioner of Central Excise & Service Tax, LTU, JSS Towers, 100 Feet Ring Road, Banashankari III Stage, Bangalore 560 085 Karnataka Respondent(s)
Appearance:
Shri N. R. Badrinath, CA 6th Floor, Trade Centre, #29/4, Race Course Road, Bangalore 560 001 For the Appellant Shri Pakshi Rajan, AR For the Respondent Date of Hearing: 26/05/2016 Date of Decision: 31/05/2016 CORAM:
HON'BLE SHRI S.S. GARG, JUDICIAL MEMBER Final Order Nos. 20376 - 20382/ 2016 Per: S.S. GARG The appellants have filed seven appeals numbering E/776/2012, E/777/2012, E/778/2012, E/779/2012, E/780/2012, E/781/2012, E/782/2012 against the common impugned order No. JMJ/65 to 71/2011 dated 27.12.2011 passed by the Commissioner (Appeals) vide which the learned Commissioner (Appeals) dismissed the appeals of the appellant and upheld the Order-in-Original and thereby deny the cenvat credit on various input services as claimed by the appellant in various appeals.
2. Briefly the facts of the case are that the appellant is engaged in the manufacture of pharmaceutical products and medicaments falling under Chapter 30 of Central Excise Tariff Act 1985 and is also providing related services. During the course of the manufacturing activities the appellant has used various input services in the nature of Custom House Agent Services, Courier Services, Management Maintenance & Repair Services, Transportation of employees, Rent-a-Cab Services, Security Services and Pandal Services etc during the course of its export of goods and the service tax paid on such service was availed as cenvat credit. During the month of May and June 2010 the records of the appellants were audited by the Commissioner of Central Excise and Service Tax and they have found that the appellant has availed inadmissible cenvat credit on certain input services such as custom clearance charges, courier charges and some other service charges and thereafter 7 show-cause notices were issued pertaining to different services for different periods. The appellant filed the reply to the show-cause notice controverted the allegations in the show-cause notices and the Assistant Commissioner vide various Order-in-Original confirmed the demand by denying the benefit of cenvat credit and also invoked the extended period of limitation to demand interest and equal penalty. Against the Order-in-Original the appellant filed an appeal before the Commissioner (Appeals) and the Commissioner (Appeals) vide his common order in all the seven appeals decided on 27.12.2011 upheld the Order-in-Original and hence the present appeals.
3. Learned counsel for the appellant submitted that the total cenvat credit of Rs. 7,84,989/- (Rupees Seven Lakhs Eighty Four Thousand Nine Hundred and Eighty Nine only) has been sought to be denied to the appellant on various input services for the period from March 2006 to October 2010. He further submitted that out of the total cenvat credit an amount of Rs. 1,24,195/- (Rupees One Lakh Twenty Four Thousand One Hundred and Ninety Five only) was denied only on the ground that the registration number of service provider is not indicated in the invoices furnished by the appellant and further the amount of cenvat credit to the tune of Rs. 2,45,066/- (Rupees Two Lakhs Forty Five Thousand and Sixty Six only) are sought to be denied on the ground that the input services like Rent-a-Cab, Courier, Manpower Supply Services, Technical Testing and Analysis Services do not qualify as input services and are not related to manufacturing process and thirdly the amount of cenvat credit to the tune of Rs. 4,15,728/- (Rupees Four Lakhs Fifteen Thousand Seven Hundred and Twenty Eight only) are sought to be denied on the ground that the invoices issued by the service provider are in the name of the Head Office and not the factory where the credit is availed and therefore the appellants are not eligible to take cenvat credit in all the three categories. As far as cenvat credit amounting to 1,24,195/- (Rupees One Lakh Twenty Four Thousand One Hundred and Ninety Five only) is concerned, the learned counsel submitted that the cenvat credit has wrongly been denied merely on technical and procedural lapse. He further submitted that prior to 01.04.2007 it was not mandatory to mention the registration number of the service provider in the invoices issued by him and it is only after 01.04.2007 it is required to mention the registration number. He also submitted that though on the invoices registration number is not mentioned but the appellant submitted the registration number of the service provider and it is nowhere provided in the show-cause notice that the services have not been received and utilized. Further he submitted that the various input services like Rent-a-Cab, Courier and Manpower Supply Service and Technical Testing and Analysis Services are very much input services and fall in the definition of input services as contained in Rule 2(l) and has also been upheld by the various Courts and the Tribunal to be input services and cenvat credit has been allowed with regard to these input services. He also submitted that the Revenue has denied the cenvat credit of Rs. 4,15,728/- (Rupees Four Lakhs Fifteen Thousand Seven Hundred and Twenty Eight only) only on the ground that the invoices for various services is in the name of the Head Office and not the factory where the credit is availed. This according to him is also a procedural violation whereas there is no allegation in the show-cause notice issued by the Revenue that these services have not received/utilized by the appellant and there is no dispute that such input services were not properly accounted for.
4. On the other hand the learned AR reiterated the findings of the Commissioner (Appeals) and submitted that non-mentioning of the service registration number on the invoices issued by the service provider is in violation of the Rules and therefore the appellant is not entitled to the cenvat credit. Secondly he submitted that the various services like Rent-a-Cab, Courier Services, Manpower Supply Services, CHA Services, Technical Testing and Analysis Services, Telecommunication Services are not input services as they are not directly related to the manufacturing process and are post manufacturing expenses and therefore not eligible for cenvat credit. He also submitted that it is mandatory that the Head Office should be registered as input service distributor for distributing the credit availed by the factory and in this case the Head Office was not registered and therefore the appellant is not entitled to avail cenvat credit on those invoices issued in the name of Head Office.
5. I have heard the learned counsels for both the parties and perused the records. In order to decide the lis it is important to analyze the definition of input services as contained in Rule 2(1) of Cenvat Credit Rules 2004 which is herein reproduced.
input service means any service,-
(i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal. Reading of the definition of input service as provided above it includes all the services which are rendered in relation to setting up of the business and all activities relating to business which is wide enough to include all the services involved in this case. Learned counsel for the applicant also clarified that each and every services involved in this case is related to the business directly or indirectly and therefore qualify as input service under the inclusive definition of input services under Rule 2(l) of Cenvat Credit Rules 2004. On perusal of the records I found that the various input services involved in the present case are related to the business of the appellant. As far as Custom House Agent Services are concerned, I find that these services are used for export of finished goods and therefore they qualify as input service and the service tax paid on CHA services are eligible as cenvat credit as held in CCE, Mysore Vs. Chamundi Textiles Ltd. reported in [2010 (258) E.L.T. 41 (Tri.-Bang.)] and CCE, Rajkot Vs. Rolex Rings Pvt. Ltd. reported in [2008 (230) E.L.T. 569 (Tri.-Ahmd.)]. Leaned counsel also in support of his submission cited the circular issued by the CBEC dated 20.10.2014 and the case of M/s. Madras Cements Ltd. Vs. Additional Commissioner of Central Excise reported in [2015-TIOL-1682-HC-KAR-CX] and another case of Allspheres Entertainment Pvt. Ltd. Vs. CCE, Meerut reported in [2015-TIOL-1629-CESTAT-DEL.] I have gone through the judgments cited at bar and I am of the opinion that mere non-mentioning of the registration number of the service provider on invoices is not fatal to the case of the appellant as it is only a procedural violation and substantive rights cannot be denied on mere procedural violations. I also hold that the appellant cannot be denied the cenvat credit with regard to the service tax paid on the invoices issued to the Head Office rather than the factory which has actually utilized the services so long as the inputs services are received and utilized by the appellant. This at best can only be termed as procedural violation which is not fatal to the right of the appellant. Therefore keeping in view the submissions made by both the parties and the law cited at bar, I am of the considered opinion that the impugned order is not sustainable in law and the same is set aside by allowing all the appeals of the appellant with consequential relief, if any.
(Order pronounced in Open Court on )
(S.S.GARG)
JUDICIAL MEMBER
iss