2024 (4) TMI 31 - AT - Central Excise

CENVAT credit allowed on management fee and head office services under Rule 9(2) proviso despite invoice format issues

CESTAT Bangalore allowed appellant's appeals against denial of CENVAT credit on management fee and head office services. The tribunal held that since the ... CENVAT Credit - input services - management fee - common sharing of Head office services - documents on which credit is availed by the appellant are in order or not - Invoices from the service provider were not in the prescribed format - show-cause notices dated 07.02.2011 and 26.03.2014 are hit by limitation or not - HELD THAT:- FMGL has paid service tax on ‘Management fee’ and “common sharing of Head office services” considering the same as “Business Auxiliary Service” was not disputed by the jurisdictional Service Tax authorities of the service provider; hence denying cenvat credit to the appellant as receiver of service, cannot be sustained as held in Hon’ble Madras High Court in the case of M/S. MODULAR AUTO LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [2018 (8) TMI 1691 - MADRAS HIGH COURT]. The department has contended that the appellants have availed cenvat credit on documents, which are not cenvatable documents as they are not in the prescribed form/format under Rule 9(1) of CCR, 2004 - as per proviso to Rule 9(2) of CCR, 2004, when the documents have the particulars/details as mentioned therein and the jurisdictional Deputy Commissioner/ Assistant Commissioner is satisfied that the goods covered by the document have been received and accounted for in the books of the account of the receiver, he may allow the Cenvat credit - the appellant has being availing cenvat credit and filing periodical returns indicating such availment. Extended period of limitation - HELD THAT:- The appellant has been filing the ER-1 returns, hence there is no suppression of facts by the appellant, therefore invocation of extended period is not tenable and imposition of penalties under section 11AC of Central Excise Act, 1994 read with Rule 15 of CCR, 2004 are not sustainable. The impugned orders confirming the demand of cenvat credit along with the interest and imposition of penalties are not sustainable and need to be set aside - the appeals filed by the appellant are allowed. Issues Involved:1. Eligibility to avail cenvat credit on input services.2. Validity of documents for availing credit.3. Applicability of limitation period for show-cause notices.Summary:Eligibility to Avail Cenvat Credit on Input Services:The Tribunal examined whether the appellants are eligible to avail cenvat credit on input services such as 'management fee' and 'common sharing of Head office services'. It was held that these services fall within the definition of 'input service' as per Rule 2(l) of the CCR, 2004. The Tribunal referenced the case of Hindalco Industries Limited Vs. CCE, Kolkata-II, where similar services were deemed admissible for credit. The appellants argued that the service tax paid by the service provider cannot be questioned in the hands of the service receiver, a stance supported by the judgment in Modular Auto Limited Vs. CCE, Chennai.Validity of Documents for Availing Credit:The Tribunal addressed whether the documents on which credit was availed were in order. The appellants contended that they had availed credit on valid documents as per Rule 9 of the CCR, 2004. The Tribunal found that the invoices issued by the service provider FMGL contained all relevant information as prescribed under Rule 4A (1) of Service Tax Rules, 1994. It was concluded that minor procedural defects in documents are curable and should not lead to denial of admissible credit. The Tribunal cited several decisions supporting this view, including Sambhaji & Ors., Vs. Gangaji & Ors., and Commissioner of CGST & CE, Jaipur Vs. M/s Genus Power Infrastructure Ltd.Applicability of Limitation Period for Show-Cause Notices:The Tribunal considered whether the show-cause notices dated 07.02.2011 and 26.03.2014 were barred by limitation. The appellants argued that the demand for the period September 2008 to November 2009 was completely barred by limitation, and the demand for January 2010 to July 2013 was partly time-barred. The Tribunal found that the appellants had been filing ER-1 returns indicating the cenvat credit availed, thus there was no suppression of facts. Consequently, the invocation of the extended period of limitation was deemed unsustainable, referencing the principle laid down in Nizam Sugar Factory Vs. CCE, AP.Conclusion:The Tribunal concluded that the impugned orders confirming the demand of cenvat credit along with interest and penalties were not sustainable and needed to be set aside. The appeals filed by the appellants were allowed with consequential relief as per law.(Order pronounced in Open Court on 25.03.2024)