2015 (6) TMI 1063 - AT - Central Excise

Cenvat credit - Business Auxiliary services - service tax paid by dealers / commission agents on the strength of debit notes - debit note is not appropriate proper document as per Rule 9 of Cenvat Credit Rule, 2004 to avail Cenvat Credit and further Business Auxiliary services availed by the appellant is post manufacturing activity - Held that - it is found that in the appellants own case for their units in Wazirpur and Bhiwadi, this Tribunal on the identical issue of availment of cenvat credit on the strength of debit note for business auxiliary service has been allowed. In these circumstances, I hold that appellant is entitled to take cenvat credit on the strength of debit notes which contains the details as per Rule 9 of CCR, 2004 for availment of cenvat credit. I also hold that the activity of business auxiliary service has been availed by the appellant in the course of their business of manufacturing of excisable goods. Therefore, appellants are entitled to take cenvat credit. - Decided in favour of appellant

Summary

Issues:
- Denial of Cenvat Credit on Business Auxiliary services due to the use of debit notes not considered appropriate documents as per Rule 9 of Cenvat Credit Rule, 2004.
- Whether the Business Auxiliary services availed by the appellant are post-manufacturing activities, thus affecting their entitlement to Cenvat Credit.

Analysis:

Issue 1: Denial of Cenvat Credit based on the use of debit notes:
The appellant appealed against the denial of Cenvat Credit on Business Auxiliary services, contending that the Revenue questioned the debit note's validity as a proper document for availing Cenvat Credit under Rule 9 of CCR, 2004. The appellant, a manufacturer of bathroom fittings, procured bulk orders through dealers or commission agents, paying them commissions subject to service tax. The Revenue argued that debit notes were inadequate for Cenvat Credit and that Business Auxiliary services were post-manufacturing activities, thus disqualifying the appellant from claiming Cenvat Credit. The proceedings initiated for the period 2006-07 to 2008-09 resulted in the denial of Cenvat Credit, confirmed duty demand, interest, and penalties. The appellant challenged this decision.

Issue 2: Nature of Business Auxiliary services and entitlement to Cenvat Credit:
The appellant argued that the debit notes contained all necessary details for Cenvat Credit under Rule 9 of CCR, 2004, and that the Business Auxiliary services were availed before goods clearance, justifying their entitlement to Cenvat Credit. They also objected to the invocation of an extended period of limitation in the show cause notice issued. Citing precedents and legal provisions, the appellant contended that services availed in the course of business allowed for Cenvat Credit. The Revenue opposed these arguments, emphasizing the post-manufacturing nature of the services and the inadequacy of the debit notes. They requested a remand due to incomplete investigation based on a single sample debit note and highlighted the vagueness of the produced debit note.

Judgment:
After considering the contentions, the Tribunal found in favor of the appellant. Referring to a similar case involving the appellant's other units, the Tribunal allowed Cenvat Credit based on debit notes meeting Rule 9 requirements. It determined that the Business Auxiliary services were part of the manufacturing business, entitling the appellant to Cenvat Credit. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief. The judgment emphasized the appellant's entitlement to Cenvat Credit based on proper debit notes and the nature of the services availed in the manufacturing process.