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Custom, Excise & Service Tax Tribunal

Ms Berger Paints India Limited vs Ce & Cgst Noida on 4 September, 2024

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
                  ALLAHABAD

                   REGIONAL BENCH - COURT NO.I

                  Excise Appeal No.70458 of 2021

(Arising out of Order-in-Appeal No.NOI-EXCUS-002-APP-506-21-22 dated
02.08.2021 passed by Commissioner (Appeals) CGST, Noida)

M/s Berger Paints India Ltd.,                        .....Appellant
(A-38, Industrial Area, Sikanderabad,
Bulandshahar, Uttar Pradesh)
                                   VERSUS
Assistant Commissioner of Central Tax, GST &
Central Excise, Bulandshahar              ....Respondent

(C-56/42, Sector-62, Noida) APPEARANCE:

Shri Atul Gupta, Advocate & Ms. Ushmeet Kaur Monga, Advocate for the Appellant Shri A. K. Choudhary, Authorized Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) FINAL ORDER NO.-70559/2024 DATE OF HEARING : 16 May, 2024 DATE OF DECISION : 04.09.2024 P. K. CHOUDHARY:

The present appeal has been filed by the Appellant assailing the Order-in-Appeal No.NOI-EXCUS-002-APP-506-21- 22 dated 02.08.2021 passed by learned Commissioner (Appeals) CGST, Noida.

2. The facts of the case in brief are that the Appellant is engaged in the business of manufacture and sale of paints falling under tariff heading 32091090 of Central Excise Tariff Act, 1985. The Appellants were availing Cenvat credit on capital goods, inputs and input services and further utilizing the same for payment of central excise duty and service tax. The Appellant's premises located in New Delhi acted as Input Service Distributor1 under the Service Tax regime for receipt of credit of the service 1 ISD 2 Excise Appeal No.70458 of 2021 tax paid on common services. The ISD unit took registration on 05.10.2007. The ISD Unit transferred the credit pertaining to the Appellant unit by way of ISD invoices. This transferred credit was being availed by the Appellant. One single invoice of ISD Unit was issued generally for whole of the month covering number of corresponding invoices received by the ISD Unit for the Appellant. For example, invoice No.1 dated 25.07.2007 covers 78 invoices. The Appellant availed such credit and reflected the details of the credit of service tax availed in the returns filed for the impugned period i.e. 2007-2008. The Department carried out audit somewhere in 2008-09. During the audit, an allegation was made regarding inadmissible credit taken in respect of certain invoices of the service providers covered by the invoices of ISD. Notably all the invoices covered by any single ISD invoice were not disputed by the Audit. Only few of the invoices of the service providers referred in an invoice was disputed. For example, only one invoice of J.B. Carriers and Movers P. Ltd providing GTA service appearing at Serial No.75 of the ISD Invoice No.1 dated 25.07.2007 has been disputed. No other invoice covered by this ISD invoice dated 25.07.2007 has been disputed. Similar is the position in respect of other ISD invoices. Invoices of Two types of service providers were disputed in audit (i) GTA Service providers, where the Appellant paid the service tax on reverse charge basis irrespective of the fact whether the service provider was registered or not; (ii) banking services. After about a period of 3 years from the date the audit report was made available to the Department, a Show Cause Notice2 dated 16.01.2012 was issued as to why:-

I. The Cenvat credit amounting to Rs.2,16,736/- (Rupees Two Lac Sixteen Thousands Seven Hundreds Thirty Six only) wrongly availed during the year 2008-09 & 2009-10 should not be demanded and recovered from them under Rule 14 of the Cenvat Credit Rules, 2004 read with proviso to Section 11A of the Central Excise Act, 1944 by invoking extended period;

SCN 3 Excise Appeal No.70458 of 2021 II. Interest at applicable rate on the amount of above said irregular Cenvat credit, should not be charged/recovered from them under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Act, ibid.

III. Penalty should not be imposed upon them under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Act, ibid for the contravention of the provisions of Rules discussed herein above.

Vide the impugned Order-in-Original dated 03.12.2020, Cenvat credit has been disallowed and demand confirmed and ordered for its recovery alongwith interest and penalty of equal amount has been imposed under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Rules, 1994.

3. Being aggrieved, the Assessee filed appeal before the first Appellate Authority and the learned Commissioner (Appeals) vide impugned Order-in-Appeal disallowed the appeal before him by upholding the order of the Adjudicating Authority.

4. Learned Commissioner (Appeals) has observed as under:-

"6. I have gone through the Show Cause Notice, Order-in- Original and written submissions made by the Appellant. I find that an audit of the Appellant was conducted by AGUP, Allahabad and during the course of audit, it was observed that the Appellant had availed some amount of Cenvat Credit on the basis of invalid invoices, as such invoices either were not issued by registered Service Tax Provider or they were not containing the Service Tax Registration no. of the service provider.

6.2. The main contention of the Appellant is that neither the audit party nor the Adjudicating Authority has supplied the copies of invoices on which Cenvat credit was denied. They further submitted that onus of proving wrong availment of Cenvat Credit is upon Department, which was not discharged by the Department. The Department failed to provide the details of documentary evidences. I find that the audit party has clearly given their observation that during the scrutiny of ST-3 returns and invoices issued by the Service Providers of M/s Berger Paints India Ltd., Sikanderabad, it was noticed that the Appellant was taking Cenvat credit against such invoices/ bills of service providers, who were not registered in service tax ranges. The Appellant has availed such credit, without ensuring the 4 Excise Appeal No.70458 of 2021 registration no. of service providers and deposit of service tax in central government.

6.3. I find that the contention of the Appellant is wrong, that the invoices were not provided by the Department. In fact, it was responsibility of the Appellant to provide justification in respect of the invoices which were found invalid for taking Cenvat credit. From Order-in-Original, it is clear that those invoices were identifiable and have been discussed in the body of the Order. The Adjudicating Authority has given their observation, that some invoices do not contain the service tax no., while some of them contain wrong STC No. I find that the Appellant in support of their claim have submitted that these invoices were issued by them as Input Service Distributor from Delhi Branch and thus they have availed Cenvat Credit on the strength of the same. Thus, the submissions of the Appellant is contradictory to each other. On one hand, they are contending that the invoices considered inadmissible by the audit party is unidentifiable and on the other hand, they contending that the same were issued by Delhi branch as Input Service Distributor, Thus, I find that the Department has correctly demanded the inadmissible Cenvat credit from the Appellant under Rule 14 of Cenvat Credit Rules, 2004.

6.4. The Appellant has submitted that the Show Cause Notice was issued on 16.01.2012 for the period 2008-09 and 2009-10, thus extended period of limitation as mentioned under Section 11A(4) is not invocable in the instant case. The matter having been initiated on the Audit objection, ought to have been raised under specific provision of sub-section (5) of the Section 11A of the Central Excise Act, 1994. In this regard, I find that it is immaterial as to whether the show cause notice was issued on the basis of audit objection or on after completion of enquiry or issued by a range officer under Section 11A(4) of the Central Excise Act, 1994. The material fact is that as to whether malafide intention, wilful suppression, fraud etc. are involved in the case. I find that in the present case, the appellant was availing Cenvat credit on the basis of invoices, which were not containing the service tax registration no., due to which, it could not be confirmed as to whether the due service tax was deposited with the government. I find that there is clear wilful suppression in this case, the provision of Section 11A(4) has rightly been invoked in the present case.

7. In view of the above, I disallow the appeal filed by the Appellant and uphold the orders of Adjudicating Authority."

Hence the present appeal before the Tribunal.

5. Learned Advocate appearing on behalf of the Appellant submitted that the Adjudicating Authority confirmed the demand based on the finding that the ISD invoices were not correct. One of the allegations made was that the ISD was not registered in the beginning of the period or the registration number mentioned on the ISD invoice was incorrect, whereas, that was not the case in the SCN or during audit. Because if that would had been the case, then the whole of the credit distributed by such ISD invoices was to be questioned. The Adjudicating Authority failed to follow the basic principle of adjudication that the adjudication cannot go beyond the allegation in the SCN. The following were the 10 invoices of ISD and all were admittedly produced before the audit party as well as before the Adjudicating Authority:-

001/25.07.2007, 007/31.07.2007, 002/30.08.2007, 005/26.12.2007, 004/24.12.2007, 006/26.12.2007, 007/21.02.2007, 008/21.12.2008, 009/21.02.2008, 010/21.02.2008 As stated above, the audit disputed only few invoices covered under the ISD invoices and that is possible only if the audit party would have examined and looked into the ISD invoice. Therefore, it is a perverse finding that such invoices were now presented before the adjudication and not before the Authorities at earlier stages. In any case, such invoices were before the Adjudicating Authority, so, he was bound to allow the credit based on such ISD invoices. The SCN has not specified the documents, which were deficient. The Appellant again produced all the documents in the form of ISD invoices on which credit was taken.

6. Learned Departmental Authorized Representative justified the impugned order and prayed that the appeal filed by the Appellant be dismissed being devoid of any merits.

7. Heard both the sides and perused the appeal records.

8. I find that the dispute in the present appeal is regarding eligibility of Cenvat credit on the invoices issued by ISD. I find that the first Appellate Authority has not disputed the veracity of the fact that the credit was availed on the ISD invoices, but again went on the fact that the Adjudicating Authority has given the observation that some do not contain the service tax no. [registration number] while some of them contain the wrong STC No. It is the case of the Appellant that the issue was not whether such ISD invoices were deficient but the issue was whether the service providers such as GTA was required to be registered and required to make payment of service tax or whether registration number of the banks was available or not. It has not been disputed that the payment of service tax on GST was not made by the Appellant's head office and the registration numbers of the banks was provided with reply. On the conjoint reading of Rule 9 of Cenvat Credit Rules and Rule 4A (2) of the Service Tax Rules, the invoice issued by an ISD unit should contain the following, and upon satisfaction of the same, credit can be availed:-

a) the name, address and registration number of the person providing input services and the serial number and date of invoice, bill, or as the case may be, challan issued under sub-rule (1);

b) the name and address of the said input service distributor;

c) the name and address of the recipient of the credit distributed;

d) the amount of the credit distributed.

The requirements for distributing credit by the ISD unit have been fully met in this case, as evidenced by the invoices provided, which include the registration numbers of service providers along with other details. Therefore, the obligation to provide registration numbers is unequivocally fulfilled. This fact has not been disputed in the impugned orders. Additionally, reliance is placed on the case of Rajender Kumar & Associates vs. Commissioner reported at 2020 (11) TMI- 621 - CESTAT New Delhi where it was held that once the 7 Excise Appeal No.70458 of 2021 requirement of relevant rules for issuance of invoices is met, credit cannot be disallowed on the ground that the ISD was not registered. The mandate to obtain ISD registration is not prescribed in law for distribution, and thus, denying the Credit based on allegation that the New Delhi unit was not registered as an ISD unit for three invoices lacks statutory backing and should not impede the Appellant's vested rights.

9. I find that the facts of the present case are squarely covered by following decisions:-

1. Commissioner of C. Ex., S.T. & Cus., Bengaluru Vs. Hinduja Global Solutions Ltd. 2022 (61) G.S.T.L. 417 (Kar.).

2. Trident Powercraft Pvt. Ltd. Vs. CCE & ST (LTU), Bangalore reported at 2016 (41) S.T.R. 687 (Tri. - Bang.).

3. Bhusan Power & Steel Ltd. vs. Commissioner of C. EX. Kolkata - IV 2017 (52) S.T.R. 305 (Tri- Kolkata).

4. CCE Vs. Dashion Ltd. reported at 2016 (41) S.T.R. 884 (Guj.).

10. I find that the Appellant was claiming the Cenvat credit on the basis of ISD invoices which were issued by their Delhi office and the Delhi office was registered with the Service Tax Department for issuing such invoices. Thus, the dispute, if any, regarding availment of credit is to be taken at the end of the ISD and not at the end of the Appellant, who is merely a recipient of such credit. Further reliance is placed on:-

a) Mafatlal Industries Ltd. vs. Commr. Of C. EX. & ST, Ahmedabad 2020 (43) GSTL 562 (Tri- Ahmd.).

b) United Phosphorus Ltd. vs. Commissioner of C. EX., Surat- II 2013 (30) STR 509(Tri- Ahmd.).

c) Castrol India Limited vs. Commissioner of Central Excise, VAPI 2013(291) ELT 469(Tri- Ahmd.).

Section 11A (1) of the Central Excise Act states that the demand could be raised against the Assessee in cases of default only within a period of one year. The proviso extended the normal period of limitation only in cases where there is fraud, suppression, or misstatement of facts on the part of the 8 Excise Appeal No.70458 of 2021 Assessee. The Appellant has declared all the relevant details pertaining to availment of credit in the returns filed thereby bringing all the information to the knowledge of the Department. The audit was conducted within the normal period of limitation and noted all the facts from the records and did not raise any doubt on the bona fide of the Appellant. It only stated that the Appellant did not take care properly without alleging that such credit was taken intentionally on incomplete documents. Hence, the extended period cannot be invoked as has been held in the case of Commissioner of Central Excise, 19 Mumbai-III vs. Essel Propack Ltd., 2015 (323) E.L.T. 248 (S.C.).

11. In view of the above discussion, the impugned order cannot be sustained and is accordingly set aside and the appeal filed by the Appellant is allowed with consequential relief, as per law.

(Order pronounced in open court on - 04.09.2024) (P. K. CHOUDHARY) MEMBER (JUDICIAL) LKS