TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 346
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....ount of Rs. 27,79,30,282/- out of the above mentioned Rs. 40,57,15,829/- was found to have been availed even before the registration of ISD is ordered to be recovered from the 'Noticee'. 3. I impose a penalty of Rs. 40,57,15,829/- under Section 11AC of the Central Excise Act, 1944 read with the provisions contained in Rule 15(4) of the Cenvat Credit Rules, 2004 on M/s. ONGC Uran Plant. 4. I order M/s. ONGC Ltd. Uran plant to pay interest, at the appropriate rates & as applicable, in force, under Section 11AB of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004 on credit of Rs. 40,57,15,829/- wrongly availed by them. 5. I also imposed penalty on the Input service distributors of M/s. Oil & Natural Gas Corporation Ltd., equivalent to the amount shown respectively against their names under Rule 15(4) of Cenvat Credit Rules, 2004. 2. The fact of the present case is that, the appellants Uran factory is engaged in the manufacture and sale of petroleum products like Naphtha, Lean Gas, Propane, LPG, C2C3 etc. The crude oil required for the production of the above said products are produced from the oil fields of Mumbai offshore. The production p....
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....n input services. The credit was sought to be denied on two grounds namely: The Cenvat Credit distributed by the ISD pertains to input services availed and used exclusively at the oil fields of Mumbai offshore to produce exempted crude oil. Hence, credit of input services used for the production of crude oil cannot be availed at Uran factory of appellants. The Uran factory of the appellants are not entitled to Cenvat credit of service tax paid on the input services received by the administrative divisions prior to the registration as ISD but distributed by the ISD after taking registration. The proposal made in the show cause notice was confirmed by the Respondent vide Order-in-Original dated 6.5.2011 and imposed penalties on the appellants and ISDs. The appellants filed an appeal challenging the Order-in-Original before this Tribunal who vide Final Order reported at 2013 (31) STR 214 (T) affirmed the Order-in-Original against the appellants and imposed penalties. However, the Tribunal set aside the penalties imposed on the ISDs, accordingly appeals of ISDs were allowed. The Tribunal held that the input services are used exclusively at the Mumbai offshore to produce exempted c....
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.... 1994 distributing the credit of service tax paid to the service providers. The Uran factory of the appellants availed cenvat credit on the basis of the original invoices issued by ISD only and the same was made available to the department for verification. (D) The appellants in this connection refer to the provisions of Rule 2(m) of Cenvat Credit Rules, 2004 and submits that the said rule does not stipulates any condition that ISD can not distribute the credit related to purchase of services prior to ISD registration. (E) Rule 3(1) provides that a manufacturer of final products shall be allowed credit of duty paid on inputs and capital goods as well as service tax paid on input services received by him. In the present case, there is no dispute that the input services in question have been received by the appellants. (F) Rule 9(1) specifies the documents on the basis of which cenvat credit can be taken by the manufacturer or service provider or ISD, as the case may be. (G) It is submitted by the appellants that on a combined reading of Rule 3(1) with Rule 9(1), it is clear that a manufacturer can avail cenvat credit on input services on the basis of the specified documents.....
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....rvices received after registration is unwarranted and not provided in law. (K) The Tribunal has examined whether the credit of input services received prior to registration can be availed for providing output service in Imagination Technologies India Ltd. Vs. CCE, Pune-III - 2011 (23) STR 661 (T). After examining the legal provisions under the Cenvat Credit Rules, 2004, the Tribunal has held that there is no provision in the CENVAT Credit Rules specifically prohibiting availment of CENVAT Credit in respect of inputs/input service which have been received prior to their registration as an output service provider. (L) The Tribunal WNS Global Services Pvt. Ltd. Vs. CCE, Nashik - 2013 (32) STR 657 (T) held that credit can be availed if nexus between input service and output services has been established. The Head Office being not registered as ISD will not disentile the appellants from availing the credit of service tax paid on input services received by the Head Office. (M) For similar decisions, kindly refer: (a) C. Metric Solutions Vs. CCE - 2012 (286) ELT 58 (T) (b) Well Known Polyesters Vs. CCE - 2011 (267) ELT 221 (T) (c) CCE Vs. Raja Magnetics - 2009 (241) ELT 79 (T)....
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....s no dispute raised by the department in the present proceeding regarding availably of documents with the ISDs. Hence, the contention of the Ld. A.R. that the appellants have violated procedural condition is incorrect in law and facts. (Q) The department is not prejudiced by the delay of the assessee in getting registered as ISD. The department can verify the factual position regarding invoices at any point. The ISDs can avail credit based on valid documents at any point of time. The registration is not a condition for availing the credit. During the period in dispute the law never provided any time limit for availing the credit. The law has been subsequently been amended to provide time limit for availing the credit. (R) The ISDs can avail the credit of service tax paid on input services based on the invoices by the service provider. In the instant case Hon'ble High Court has held that the services in dispute qualify as input services. 4. On the other hand, Shri. Hitesh Shah, Ld. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. In respect of the issue that credit was disallowed on the ground that input service distribut....
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....utor, which contains the details such opening balance and receipt of service tax to be distributed. In the present case, since at the time of registration by input service distributor, the service tax received earlier cannot be considered as opening balance therefore the same could not have been distributed, in other words data in returns can be shown and submitted only in respect of services received on or after registration as input service distributor, for this reason also input service credit relate to the service received by the input services distributors prior to registration is not eligible to be distributed to the appellant, therefore appellant has wrongly availed the Cenvat Credit. He submits that prior to registration whatsoever services were received are not governed by the provision of input service distributor therefore registration obtained after date of receipt of services cannot be made retrospective effect and therefore services received prior to date of registration cannot be regularized by registration. It is his submission that if it is allowed that distribution of the credit and availment thereof for the service tax paid on the services received prior to the r....
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....nt is in respect of exempted goods i.e. crude oil etc. therefore whether the credit is admissible. Secondly, credit can be allowed in respect of services received by the input service distributor before the registration under input service distributor and distributed the same after the registration. This Tribunal had passed following order: 2013 (31) S.T.R. 214 (Tri- Mumbai) Oil & Natural Gas Corporation Ltd. Versus COMMR. OF C. EX., RAIGAD 7. In view of the above, we hold that credit of service tax paid on input services used in manufacture of Crude oil and Natural gas at Mumbai Offshore is not admissible to Uran Plant. Since credit is not admissible we do not go into second aspect of admissibility of credit only after date of registered as ISD. We therefore, uphold Commissioner's Order regarding confirmation of demand of Rs. 40,57,15,129/- under Rule 14 of CENVAT Credit Rule, 2004 read with Section 11A of the Central Excise Act. Since confirmation of demand is upheld, interest on the demand amount is also recoverable under Rule 14 of Cenvat Credit Rules read with Sec 11AB of Central Excise Act. 7.2 Coming to issue of imposition of penalty on Uran Plant, it is the cont....
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....s clause (ii) which is of relevance. Hence, in order to enable a manufacturer to avail of Cenvat credit, the requirement is that the duty of excise ought to have been paid on any input service received by the manufacturer of a final product. The expression "input service" is defined in rule 2(1) as follows:- "(1) "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 upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairsof a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto 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 upto the p....
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....ption to follow one of two courses of action to a manufacturer not opting to maintain separate accounts. Under Rule 6(5), which has a non obstante provision over-riding sub-rules (1), (2) and (3) credit of the whole of the service tax paid on taxable services of a specified description is allowable unless such a service is used exclusively in or in relation to the manufacture of exempted goods or provision of exempted services. In other words, where a service is of the description which is specified in Rule 6(5), the manufacturer is entitled to credit of the whole of the service tax unless the service is used exclusively, that is to say solely in or in relation to the manufacture of exempted goods or any provision of exempted services. 14. Now, in the present case, ONGC is a manufacturer both of dutiable and exempted products. Crude oil as well as natural gases are exempted products. The Tribunal has held against the Appellant in regard to its entitlement to avail of input service on the ground that crude oil at Mumbai Offshore is in itself a saleable commodity since it is transferred or sold in part to other purchasers at Mumbai Offshore. According to the Tribunal, the input ser....
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....nate legislation fulfill the statutory object and purpose of presenting a cascading effect and burden of duty. They must be given their plain and natural meaning. At the same time, it would be necessary to clarify that Cenvat credit can be availed of only on that quantity of input service which is used in the manufacture of dutiable goods. 15. In arriving at this conclusion, we have placed reliance on two judgements of the Supreme Court. The first judgment is a judgement in Escorts Ltd. v. Commissioner of Central Excise, Delhi - 2004 (171) E.L.T. 145 (S.C.) In Escorts's case, the Appellant manufactured tractors and availed of Modvat credit in respect of duties paid on inputs which were used in the manufacture of parts. The parts were cleared to another factory of the Appellant, without payment of duty, by claiming the benefit of an exemption Notification. The parts were used in the manufacture of tractors on which duty was paid. Modvat credit was denied on the ground that the parts constituted final goods in themselves which were cleared without the payment of duty. The Appellant claimed that the final products were not the parts but tractors and that since duty was paid on t....
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....ible for the duty paid on LSHS. Electricity, as the Supreme Court noted, is not an excisable item. The Supreme Court held that without the utilisation of LSHS, it was not possible to manufacture cement or caustic soda and, therefore, LSHS fell within the ambit of the expression used "in or in relation to manufacture of final products". The wide ambit of the expression "used in or in relation to the manufacture of the final product" has been emphasised by the Supreme Court in the following observations:- "Lastly, we may point out that in order to appreciate the arguments advanced on behalf of the Department one needs to interpret the expression "in or in relation to the manufacture of final products". The expression "in the manufacture of goods" indicates the use of the input in the manufacture of the final product. The said expression normally covers the entire process of converting raw-materials into finished goods such as caustic soda, cement etc. However, the matter does not end with the said expression. The expression also covers inputs "used in relation to the manufacture of final products". It is interesting to note that the said expression, namely, "in relation to" also fi....
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....ement, caustic soda etc. Without such supply the process of electrolysis was not possible. Therefore, keeping in mind the expression "used in relation to the manufacture" in Rule 57A we are of the view that the assessees were entitled to MODVAT credit on LSHS. In our opinion, the present case falls in clause (c), therefore, the assessees were entitled to MODVAT credit under Explanatory clause (c) even before 16-3-95. Inputs used for generation of electricity will qualify for MODVAT credit only if they are used in or in relation to the manufacture of the final product, such as cement, caustic soda etc. Therefore, it is not correct to state that inputs used as fuel for generation of electricity captively consumed will not be covered as inputs under Rule 57A." We are fortified in the conclusion which we have drawn from these binding principles which have been enunciated in the judgements of the Supreme Court. 17. For these reasons, we have come to the conclusion that the Tribunal was in error in coming to the conclusion that the Appellant was dis-entitled to the benefit of Cenvat credit in respect of the input services used in or in relation to the manufacture of dutiable final pr....
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....nvoices under Rule 4(a) of the Service Tax Rules, 1994 towards purchase of inputs services and issues invoices for the purpose of distribution of credit of service tax paid on the said service to such manufacturer or producer or provider, as the case may be. The Rule 2(m) does not stipulates any condition that the invoices issued under Rule 4(a) in respect of purchase of input service should pertain to period prior to the registration or after registration. Therefore it is clear that the purchase of input service by the office of the manufacturer maybe for the period prior to the registration and because of this reason there is no prohibition in the above Rule 2(m) for distributing services and issuance of input service distribution invoices. Rule 3(i) of Cenvat Credit Rules, provides: 3. CENVAT credit. (1) A manufacturer or producer of final products or a provider of output service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of - (i) the duty of excise specified in the First Schedule to the Excise Tariff Act , leviable under the Excise Act ; (ii) the duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable unde....
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....provides documents on which the Cenvat Credit can be availed which is reproduced below: 9. Documents and accounts.- (1) The CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the following documents, namely :- (a) an invoice issued by- (i) a manufacturer for clearance of - (I) inputs or capital goods from his factory or depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer; (II) inputs or capital goods as such; (ii) an importer; (iii) an importer from his depot or from the premises of the consignment agent of the said importer if the said depot or the premises, as the case may be, is registered in terms of the provisions of Central Excise Rules, 2002 ; (iv) a first stage dealer or a second stage dealer, as the case may be, in terms of the provisions of Central Excise Rules, 2002 ; or (b) a supplementary invoice, issued by a manufacturer or importer of inputs or capital goods in terms of the provisions of Central Excise Rules, 2002 from his ....
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....st documents, invoices issued by input service distributors under Rule 4A of Service Tax Rules, 1994. In the present case the appellant has availed credit on invoices issued by the input service distributors under Rule 4A, therefore the documents on which credit was taken is the documents covered under the above rule therefore invoices received by the appellant is not under dispute. As regard the input service distributor they are supposed to take credit on invoices issued by provider of input service. In the present case this is also not under dispute that the input service distributor has taken credit on the invoices issued by the service provider. Therefore the documents i.e. invoices issued by input service distributor could not be said to have been issued illegally. Above provisions also does not provide any restriction clause that the credit is not allowed in respect of invoices issued by input service distributors in respect of service received by them prior to registration as input service distributor, therefore we are of the view that documents issued by input service distributors and availment of cenvat credit by the appellant on such documents cannot be found fault. We a....
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....rrespective of any time limitation. The only condition to be satisfied is that they should have paid the service tax prior to availing the credit. So long as this condition is satisfied, there is no time limit prescribed in the Rule within which the CENVAT credit has to be taken. If that be so, there is no reason why in the case of input service distributor alone, a restriction should be placed with respect to availment of CENVAT credit i.e. input service distributor is permitted to distribute only taxes paid on or after registration. Such a restriction is totally unwarranted and is not provided for in the law. Therefore the order passed by the lower appellate authority is not in accordance with the law and the same is liable to be set aside. From the above judgement it can be seen that the period for which service was received was Feb-2008 to Oct -2008 and the input service distributors registered themselves only on 4/10/2008 and the services received during Feb, 2008 to Oct, 2008 have been distributed. Hon'ble Tribunal has allowed credit and held that there is no restriction under Cenvat Credit Rule, 2004 with regard to the period for availing Cenvat Credit on service tax pa....
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....ited by the ld. D.R. but none of them are applicable to the facts of this case. I, therefore, hold that the Appellant could take the Cenvat credit and distribute the same by issuing invoices to their branches. The impugned order is, therefore, not sustainable. The same is set aside. The appeal is allowed. 2014 (34) S.T.R. 758 (Tri. - Ahmd.) Demosha chemicals pvt. Ltd. Versus Commissioner of c.Ex. & s.t., daman 8. Undisputed facts are appellant is having two units. The invoices which are raised for the services rendered were in the name of the head office and their head office was not registered as input service distributor. 9. On perusal of the records, it transpires that the Cenvat Credit which has been availed for the appellant of the service tax paid based on invoices / challans was in respect of the services provided by the Banks, Insurance Companies, transporters, Telecom Service, CHAs, Couriers, repairing & maintenance services. The invoices were issued on the name of the registered / head office situated at Mumbai. It transpires from the records that there is no dispute as to the fact that the services were rendered in this case. The dispute as correctly pointed out ....
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.... result, demand for Cenvat credit of Rs. 1,07,07,142/- with interest and penalty equal to the same imposed under Section 11AC of Central Excise Act, 1944 are set-aside. Modern Petrofils Vs. Commissioner of Central Excise, Vadodara - 2010 (20) S.T.R. 627 (Tri. - Ahmd.): 4. I have considered the submissions made by both the sides. I find that Commissioner has rightly followed the decision of this Tribunal in the case of DNH Spinners. Even though the appellants have multiple divisions, in the absence of any dispute about the receipt of the services in question by the factory to whom credit has been passed on, the ratio of the cited decision is applicable. In fact Commissioner proceeded to say that the appellants should have followed the procedure of issue of invoices by the head office as an input service distributor but observed that as far as the present appeal is concerned, the proceedings are limited by the ground taken in the show cause notice and upheld in the OIO which was that appellants had taken credit wrongly since invoice was not in their name but in the name of their head office. Because of this ground, the whole case becomes one of the invoice not being in the name o....
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.... be necessarily complied and an embargo occurs under sub-rule [2] of rule 9 of the rules for claiming such Cenvat credit who has not complied with the requirement of sub-rule [1] of rule 9 of the rules, in the present case and as indicated by the appellate commissioner and by the Tribunal, the authorities having found as a matter of fact that in respect of the value of the goods amounting to Rs. 68,052/- the duty, in fact, had been paid at one point or the other and such duty paid goods constitute an input in respect of which assessee had availed of Cenvat credit, that in our opinion, is substantial compliance of the requirement and does not involve a question of law of general importance either for the assessee or for other assessees and for different periods, as in the peculiar circumstances of particular facts of the assessee for the relevant period, the question is answered by the appellate commissioner and affirmed by the Tribunal and therefore we do not find this to be a fit case to be admitted for examination within the scope of section 35G of the Act. 12. Accordingly, the appeal is dismissed. We also agree with the submission of Ld. Counsel that if at all there is any la....
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....is not applicable are not at all correct, I find no merit in the appeal filed by the Revenue and accordingly reject the same. 2013 (288) E.L.T. 291 (Tri. - Ahmd.) Doshion Ltd. Versus Commissioner of Central Excise, Ahmedabad 5. We have considered the submissions made by both sides. We find considerable force in the arguments advanced by the learned counsel. The registered office and Vatva office both are located in the same place and appellant has simply utilised the credit at Vatva instead of distributing it to various units. As submitted by the learned counsel, during the relevant period, there was no restriction for utilisation of such credit without allocating proportionately to various units. The omission to take registration as an Input Service Distributor can at best be considered as procedural irregularity and in view of the decisions cited, has to be considered sympathetically. Further, it is also noticed that appellant has not got any extra benefit by doing this. In fact from the statement of Shri Chandresh C. Shah, as explained that above cenvat credit available to them, 20% of service tax payable only was paid and balance was paid in cash. In fact, proper distribu....
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.... down for said purpose, the credit has been allowed on the ground that registration and issuance of input service distributor invoices is procedural requirements. We agree with these propositions for the reason that important aspect for availing the credit is that service which has been provided by the service provider, it should have service tax paid character, invoices as against sale of service should be tax paid. The registration and issuance of input service distributor invoices is merely a procedural requirement. In this procedure neither input service distributor makes any payment of service tax nor utilized credit for payment of any duty. Procedure for input service distributor is only, in order to maintain co-relation between the purchase of service and distribution thereof to the unit of the registered person who are under same entity. As per the facts of the present case, the case of the appellant is on better footing for the reason that they have availed cenvat credit on the valid invoices issued by input service distributors. As regard the reliance on various judgments by the Ld. A.R. we found that in the case of Showa India (P) Ltd. (supra), the fact was that appellan....