2020 (7) TMI 54 - AT - Service Tax

Validity of Cenvat credit upheld in appeal challenging denial based on document issues

Commissioner of Central Excise, Shillong Versus M/s. Bharat Sanchar Nigam Limited

The appeal focused on the validity of documents under Rule 9 of Cenvat Credit Rules, 2004, and the denial of Cenvat credit and imposition of penalties. ... CENVAT Credit - duty paying invoices - photocopies of invoices, audited Trial Balance, Advice of Transfer/Transfer Advice Note - valid documents as specified in Rule 9 of Cenvat Credit Rules, 2004 or not - HELD THAT:- The existence of original invoice and its genuineness is not disputed by Revenue. In fact such documents were produced before the lower authorities. Therefore, the duty involved has been paid and there is no dispute that the equipment in question has been used at the sites where credits were taken. In such circumstances, considering the commercial practice which was necessary for efficient procurement of the equipments in question, this procedural lapse cannot be considered a reason to deny Cenvat credit involved. Appeal dismissed - decided against Revenue. Issues Involved:- Validity of documents under Rule 9 of Cenvat Credit Rules, 2004- Denial of Cenvat credit and imposition of penalty- Procedural lapse in procurement process- Dispute over Cenvat credit amount taken on improper documents- Dispute over Cenvat credit taken on customs dutyValidity of documents under Rule 9 of Cenvat Credit Rules, 2004:The appeal was filed against the dropping of the demand of a significant amount based on the validity of documents specified in Rule 9 of Cenvat Credit Rules, 2004. The dispute arose regarding whether Transfer Advice is a specified document under Rule 9. The Revenue contended that the Transfer Advice was supported only by a photocopy of the invoice, which was not sufficient. However, the respondent argued that the procurement process was centralized for efficiency and competitive bids, and the necessary documentation was in place, despite a procedural lapse of not getting registered as a dealer. The adjudicating authority found that the duty was paid, the equipment was used as intended, and the procedural lapse did not warrant denying the Cenvat credit.Denial of Cenvat credit and imposition of penalty:The Revenue alleged wrongful Cenvat credit taken on improper documents during specific periods. However, the respondent provided evidence supporting their claim, including certified copies of original documents. The adjudicating authority examined the records and found the allegations unfounded for certain periods, deducting the amounts proposed to be recovered. In other instances, the respondent explained the discrepancies in the Cenvat credit amounts taken, supported by audited trial balance and invoice details. The investigation failed to provide evidence contrary to the respondent's submissions, leading to the rejection of the allegations.Procedural lapse in procurement process:The respondent's procurement process, though centralized for efficiency, had a procedural lapse as the procuring office was not registered as a dealer as required by Rule 9 of the Central Excise Rules 2002. Despite this lapse, all invoices and Transfer Advice were available, and the equipment was used for taxable services without dispute. The adjudicating authority considered this lapse as a procedural matter that did not justify denying the Cenvat credit, following Tribunal precedents.Dispute over Cenvat credit amount taken on improper documents:The adjudicating authority reviewed the allegations of wrongful Cenvat credit taken on improper documents during specific periods. The respondent provided explanations and evidence to support their claims, including audited trial balance and invoice details. The investigation lacked evidence to challenge the respondent's submissions, leading to the rejection of the allegations for those periods.Dispute over Cenvat credit taken on customs duty:Regarding the alleged wrongful Cenvat credit taken on customs duty, the respondent admitted to the error in availing Cenvat credit on customs duty. However, there was a dispute over the amount involved. The adjudicating authority found that the basis for the calculation of the amount was not provided by the investigation. As the respondent's contentions were supported by audited trial balance figures, the authority accepted the lower amount claimed by the respondent and directed recovery with interest. The Revenue's appeal was dismissed based on the genuineness of documents, payment of duty, and usage of equipment at the designated sites.