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2025 (11) TMI 1092
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....cts of steel and had taken Central Excise Registration. They had their office in the same address, where the office of the assessee (distinct from factory) is located, they have also obtained registration as an Input Service Distributor (hereinafter referred to as ISD), under Service Tax. The Appellant-1 have availed credit of Service Tax during the years 2009-10 and 2010-11, based on the invoices issued by their ISD. 2.2 As it appeared that some of the input ServiceTax Credit is incorrect and not as per the law, a Show Cause Notice No. 9/2015 in C. No. V/15/22/2015-Cx.Adjn. was issued to the Appellants on 31.03.2015. 2.3 After due process, the CENVAT Credit of Rs.78,17,595/- was disallowed; along with interest under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 on incorrect CENVAT credit availed and a Penalty of Rs.39,08,797/- was imposed on the Appellant under Rule 15 of CENVAT Credit Rules, 2004 read with sub section (1)(b) of erstwhile Section 11 AC of the Central Excise Act, 1944. Further a penalty of Rs.10,00,000/- was imposed on M/s. Tulsyan NEC Ltd., Input Service Distributor, under sub rule 2(ii) of Rule 26 of Central ....
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....pellant submitted that the period involved in this case is from March 2010 to January 2011 and the Show Cause Notice was issued, by invoking the extended period of demand, on 31.03.2015. Such invocation was sought to be justified in para 9.1 of the SCN (Page No. 74 of the Paper book). The appellant wishes to submit that the reasons adduced in the said para are not at all justifiable to invoke the extended period of demand and hence the demand is hit by time bar. In the impugned order, no finding has been given as to how extended period of demand can be invoked in this case. 4.5 Further, the Ld. Counsel has placed reliance on the following decisions. (i) Commissioner of CE Vs. Dashion Ltd. 2016 (41) STR 291 884 Guj. (ii) Trident Powercraft Pvt. Ltd. Vs. CCE - 2016 (41) STR 687 Tri-Bang in which it has been held that not obtaining registration is only a procedural mistake and credit cannot be denied. In the instant case, ISD registration has been obtained and for the reason that the invoices were not addressed to ISD, credit cannot be denied. Further, it is submitted that it is settled position of law that there is no one to one correlation in distributing the credit as held in th....
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.... be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be;" 8.1.2 The scope and mechanism of ISD have been explained by the Board vide Circular No. 97/8/2007 dated 23.08.2007 and the relevant portion of the Circular reads as under: - "2.3 An "input service distributor‟ is an office or establishment of a manufacturer of excisable goods or provider of taxable service. It receives tax paid invoices/bills of input services procured (on which CENVAT credits can be taken) and distributes such credits to its units providing taxable services or manufacturing excisable goods. The distribution of credit is subject to the conditions that, - (a) the credit distributed against an eligible document shall not exceed the amount of service tax paid thereon, and (b) credit of service tax attributable to services used in a unit either exclusively manufacturing exempted goods or exclusively providing exempted services shall not be distributed. An input service distributor is required (under section 69 of the Act, read with notification no.26/2005-ST) to take a se....
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....1 To this the Appellant's contention was that the Adjudicating Authority has confirmed the demand on the ground that as per the definition of "input service distributor" an ISD is the one, which receives invoices for input services and hence when the invoices are raised in the name of Gummidipoondi unit of the appellant, the credit in respect of such invoices cannot at all be distributed by the ISD, in as much as the said invoices are not received by the ISD. Though these invoices were raised in the name of Gummidipoondi unit of the appellant, such invoices were "received" by the head office of the appellant at Nungambakkam and paid from there. Thus, distribution of such credit by the appellant's head office, in its capacity as ISD cannot be faulted. In support of this contention, reliance has been placed on the decision in the case of Mahindra & Mahindra Ltd. Vs Commissioner - 2015 (38) STR 839 TriMumbai, wherein it has been held that credit cannot be denied when invoices are issued in the name of the branch office, but accounted and paid from head office, which is registered as ISD. In the instant case also, the invoices are paid from the appellant's head office, which....
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....eal paper Book). We find that Department has not done any such exercise to show statutory exclusion or lack of nexus resulting in misuse or any evidence of fabricated invoices, shell suppliers or circular payments, mere technical defects in supplier invoices (invoice addressed to another unit; absence of non-essential particulars) are not sufficient to disallow ISD distributed credit despite this issue emanating out of investigation proceedings. 10.4 The Appellant has relied upon the decision in the case of Mahindra & Mahindra Ltd. Vs. Commissioner - 2015(38) STR 839 Tri-Mumbai, wherein it has been held that credit cannot be denied when invoices are issued in the name of the branch office, but accounted and paid from head office, which is registered as ISD. In the instant case also, the invoices are paid from the appellant's head office, which is registered as ISD. It has been held in Para 6 of the order that: - "6. Having considered the rival contentions, in view of the fact that the branch offices have no separate accounting system and their accounts form part of the head office accounts, which is registered as an ISD, I hold that the appellant has rightly avai....
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....y M/s. Alwin Cargo Services. Thus these services are procured through Alwin Cargo Services and the ISD of the appellant have mentioned the name of Alwin Cargo Services as the service provider. But the details of the actual service providers are very much available in the Debit Notes and its enclosures. Hence denial of credit on these grounds is not tenable in Law. 11.2 On this issue from Para 12(iii) of the impugned order it can be seen that: - " ....... It is obvious from the said Rule 4A of the Service Tax Rules 1994, that input service distributor may distribute input service tax credit only on the basis of invoices received by such input service distributor. Invoices received by the respective units cannot be taken up for distribution of Service tax credit by the input service distributor. Alwin Cargo Services are not the original service' providers except in the case of clearing and forwarding services. The details of the original service providers who actually provided the services were not furnished in the ISD invoices. Distribution of input service tax credit in this manner by SD to Tulsyan, Ambattur, is incorrect as it is in contravention of Rule 2(m) and R....
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....rvice Tax Registration and other details. The Input Service Distributor can distribute input service tax credit only on the basis of invoices received by him. Hence, I conclude that the credits availed are incorrect." 12.2 In this regard, the appellant has submitted that: - i. The above credit has been disallowed on the ground that the services in question were actually used in furnace Division and Rolling Division of Gummidipoondi plant. ii. The credit cannot be denied in the hands of Ambattur Unit of the appellant, though the services were consumed in Gummidipoondi unit, as similar demand has already been held in favour of the Appellant as not maintainable. iii. That in respect of certain instances, the details of service providers are not indicated in the ISD invoices. The list of such cases are available in page 7 of the SCN (Page 72 of the paper book). The appellant has submitted that in these cases Service Tax was paid by them under reverse charge in respect of the GTA services availed and hence the credit is distributed on the basis of their own challans towards payment of service Tax. 12.3 We find that Only Ledger proof is insufficient by it....
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....led along with the returns filed by the respondents. But in future, the respondent has undertaken that along with invoice of input service distributor, they will file annexure showing the details of registration number of input service provider etc., as required under Rule 4 A (2) of STR, 1994. 4. In view of these observations, I do not find any infirmity in the impugned order. Same is upheld and the appeal filed by the Revenue is rejected but the respondents are directed that, in future, they will file all the details along with input service distributor's invoice as required under Rule 4A (2) of Service Tax Rules, 1994. The appellant is at liberty to verify whether the credit taken by the respondents is correct or not." In Final Order dated 16-3-2018, the Tribunal held as under:- "After hearing both sides duly represented by Shri M. Karthikeyan, learned Advocate for the appellants and Shri R. Subramaniyan, AC (AR) for the Revenue, we note that the appellants have been denied the Cenvat credit of service tax paid on various input services, which stand availed by them on the basis of the invoices issued by the Head Office, which is registered as an IS....
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....ords were maintained and the irregularity, if at all, was procedural and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, in our opinion, rightly did not disentitle the assessee from the entire Cenvat credit availed for payment of duty. Question No. 1 therefore shall have to be answered in favour of the respondent and against the assessee. 8. Coming to the question of penalty, right from the show cause notice stage till the final disposal of the show cause notice proceedings, we find little evidence to support the allegations of wilful misstatement, suppression, fraud or collusion on the part of the assessee. In fact, perusal of the show cause notice would show that the entire basis of the Revenue was wrongfully availment of the credit. Mere wrongfully availment without element of mens rea and that too for the purpose of evading payment of duty would not be sufficient to impose penalty. The adjudicating authority, without any basis or evidence, merely mechanically recorded that the assessee had, by reason of wilful misstatement, suppression of fact or in contravention of the provisions of the Rules, evaded p....
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....ide claim; however, essential deficiencies (no supplier identity, no payments, forged documents) will justify denial. 18. All the case Law before us ultimately prove that Courts/Tribunals have consistently held that ISD distributed credit should not be denied on mere technicalities where the substantive documentary trail establishes genuine receipt of service and lawful distribution. 19. In the absence of any evidence of fabricated invoices, shell suppliers or circular payments, mere technical defects in supplier invoices (invoice addressed to a unit; absence of non-essential particulars) are not sufficient to disallow ISD distributed credit. 20. Based on our findings and relying upon the ratio of the above decisions placed before us, we are very clear that the impugned order is not tenable and so ordered to be aside. 21. Thus, the Appeal fails on the grounds of merit. The questions (i) to (iii) are answered in favour of the Appellants. 22.1 Regarding limitation, we find that there is no discussion on the justification for invocation of extended period for fraud, suppression etc., in the impugned order. The impugned order justified only the imposition of penalty in P....
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....the ER-1 Returns and CENVAT availment details are captured in the returns. 25. Section 11 A of the Central Excise Act, is the provision meant to raise demands for no levy or short levy has two limbs, whereby, the demand/recovery is either under the normal period of limitation (1 year) or under an extended period of limitation (5 years). The Law provides for the recovery of duty under the extended time limit, if there is an element of mens-rea. While accepting the reason behind the imposition of a mandatory penalty under Section 11 AC of the Act, there should be an element of fraud or collusion or any wilful misstatement or suppression of facts with intent to evade payment of duty which has not been established in this case. 26. It is also appropriate at this juncture to refer to the decision of the Apex Court in Uniworth Textiles Ltd v CCE, Raipur, [2013 (288) ELT 161 (SC)], wherein the Apex Court has held that it is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. Further, it was held therein that mere non-payment of duties is not equivalent to collusion or willful misstatement or suppression of facts,....