Custom, Excise & Service Tax Tribunal
M/S Shriram Pistons & Rings Ltd vs Cce, Ghaziabad on 13 December, 2011
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi. Date of hearing/decision: 13.12.2011 For approval and signature: Honble Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, 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? Excise Stay No. 874 of 2011 with Excise Appeal No. 731 of 2011 (Arising out of order in original No. 31/COMMR/GZB/2010 dated 20.12.2010 passed by the Commissioner of Customs, Central Excise & Service Tax, Ghaziabad) M/s Shriram Pistons & Rings Ltd. Appellants Meerut Road Industrial Area Ghaziabad. Vs. CCE, Ghaziabad Respondent
Appearance:
Rep. by Sh. B.L. Narasimhan, Advocate for the appellants. Rep. by Sh. N. Pathak, DR for the respondent.
Coram: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Sh. Rakesh Kumar, Member (Technical) ORDER NO._______ Per: Rakesh Kumar:
The Appellant are manufacturers of pistons, piston bare, piston sets, piston castings, gudgeon pin, rings, engine valves etc. chargeable to central excise duty under chapter heading 84 of the Central Excise Tariff Act, 1985. They availed facility of cenvat credit of central excise duty paid on inputs and capital goods and service tax paid on input services under the provisions of Cenvat Credit Rules, 2004. While the appellants factory is situated at Meerut Road Industrial Area (Site-III), Meerut Road, Ghaziabad, their Head Office is situated at 23, Kasturba Gandhi Marg, New Delhi. A show cause notice dated 17.11.2009 was issued to the appellant for demand and recovery of allegedly wrongly taken cenvat credit amounting to Rs. 9,16,11,628/- alongwith interest and also imposition of penalty on them mainly on the ground that this credit has been taken by them on the basis of the documents which are just letters issued by their Head office as input service distributor, during the period from January 2005 to April 2009, while in terms of the provisions of Rule 9 of the Cenvat Credit Rules, 2004, when the invoices for input services are in the name of the head office, the manufacturing unit can take cenvat credit only on the basis of the invoices or challans issued by the head office as input service distributor. The show cause notice was adjudicated by the Commissioner vide No. 31/Comm/ Ghaziabad/ 2010 dated 20.12.2010 by which the cenvat credit demand of Rs. 9,15,77,724/- was confirmed against the appellant alongwith interest and besides this penalty of equal amount was imposed on them under Rule 15(2) read with Section 11AC of the Central Excise Act, 1944. Against this order of the Commissioner this appeal and stay application have been filed.
2. Heard both the sides. Though this matter was listed for hearing of the stay application, after hearing both sides for some time, we are of the view that the appeal itself can be taken up for final disposal. Accordingly, with the consent of both the sides, the matter was taken up for final disposal after waiving the pre-deposit.
3. Shri B.L. Narasimhan, Advocate, the learned Counsel for the appellant, pleaded that during the period of dispute the head office was registered as input service distributor; that the head office had issued challans, not just letters for passing on the cenvat credit to the appellant unit; that alongwith the challans issued by the head office the input service providers invoices were also enclosed; that all the details required to be mentioned in the invoices are mentioned in the challans; that in some cases credit has been denied on the ground that the invoices have been issued in the name of the individuals of the appellant company even though the name of the appellant company is also mentioned in such invoices; that in a number of cases cenvat credit has been taken on the basis of the documents regarding payment of service tax where the appellant as service recipient had paid the service tax in terms of Section 66A of the Finance Act, 1994; that in such cases the documents regarding the payment of service tax are valid documents for availment of cenvat credit; that the appellant are entitled to cenvat credit even on the basis of invoice for input services issued in the name of Head Office, even if the head office were not registered as ISD, that all the services in respect of which cenvat credit has been taken qualify as input service and that in view of this, the impugned order is not correct.
4. Sh. N. Pathak, the learned DR defended impugned order and reiterated the finding of the Commissioner in it.
5. We have carefully considered the submissions from both the sides and perused the records. In this case the bulk of the service tax credit, in question, has been denied on the ground that the same was availed on the basis of the letters issued by the head office distributing the credit, which are not valid documents for availing cenvat credit. However, the appellants plea is that during the period of dispute, the head office had issued challans for passing of the credit and in every case alongwith those challans, the invoices of the input service providers, which are in the name of the head office, had been enclosed and the challans alongwith the invoices contain all the details of the service providers as well as the details of the services provided and service tax paid, which could be verified by the department. In our view when certain input services have been received by a manufacturer under the invoices of the service providers issued in the name of the head office, the head office had taken cenvat credit and thereafter passed on the same to its manufacturing units, the cenvat credit to a manufacturing unit cannot be denied even if the same has been passed on by letters and not the document bearing the name invoices or challans provided and letters or documents issued by the head office contain all the details which are required to be mentioned in the invoices/ challans issued by the input service distributor. When the Appellant as service recipient had discharged the service tax liability in respect of the services received, under Rule 2(1)(d) of the Service Tax Rules, 1994, they would be eligible for the credit on the basis of the challans under which the service tax had been paid on the service received if the services received are covered by the definition of input service.
6. The impugned order is, therefore, set aside and the matter is remanded to the Commissioner for denovo adjudication after verification as to whether the services in respect of which the cenvat credit had been passed on by the head office to the appellant unit, had been received or not, whether the documents issued by the head office read with the enclosed invoices of the services providers contain all the requisite particulars. Wherever the credit has been taken on the basis of challans under which the service tax was paid by the appellant as service recipient under reverse charge mechanism under Rule 2(1)(d) of Service Tax Rules, 1994, the credit is to be allowed on the basis of said challans. The appeal and stay application stand disposed of as above.
(Operative portion of the order pronounced in the open Court) (Archana Wadhwa) Member (Judicial) (Rakesh Kumar) Member (Technical) Pant 4