2016 (3) TMI 1181 - AT - Central Excise

CENVAT credit - denial on the ground that Since the said services have not been provided by the service provider to the appellant, taking of cenvat credit of service tax paid on is not available to the appellant - Held that - the appellant had not entered into any agreement with Nathani Industrial Pvt. Ltd for providing the disputed taxable services. Since the agreement was confined only to supply of goods and in fact the disputed taxable services have not been provided by Nathani Industrial Pvt. Ltd to the appellant, taking of cenvat credit on the strength of disputed invoices issued by the supplier is not in conformity with the cenvat statute - credit rightly denied. Penalty u/r 15(2) of the CCR, 2004 - Held that - Since the issue relates to interpretation of the statutory provisions as to whether the appellant is eligible to take cenvat credit on the disputed service, in my view, the allegation cannot be leveled that fraud, collusion or suppression is involved to defraud the Government Revenue - penalty set aside. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
- Availing cenvat credit on disputed services
- Imposition of penalty under Rule 15(2) of the Cenvat Credit Rules, 2004

Availing cenvat credit on disputed services:
The case involved the appellant availing cenvat credit on services provided by M/s Nathani Industrial Services Pvt. Ltd., Mumbai, namely 'Clearing and Forwarding' and 'Inland Haulage Charges'. The Central Excise Department objected to this credit, stating that the services were provided to the supplier by its Mumbai office, not directly to the appellant. The appellant argued that these services were indirectly related to the goods procured and should be considered as input services for cenvat credit. The Tribunal noted that the appellant had not entered into any agreement with the supplier for these services, and thus, taking cenvat credit based on the disputed invoices was not in line with the cenvat statute. The impugned order denying the cenvat benefit to the appellant was upheld.

Imposition of penalty under Rule 15(2) of the Cenvat Credit Rules, 2004:
The Tribunal found that although the appellant had taken cenvat credit on the disputed services, there was no evidence of fraud, collusion, or suppression to defraud government revenue. The credit was based on valid and proper invoices issued by the service provider. As the issue revolved around the interpretation of statutory provisions regarding cenvat credit eligibility, the Tribunal concluded that the penalty imposed under Rule 15(2) of the Cenvat Credit Rules, 2004 was not justified. Consequently, the impugned order was set aside, and the appeals were allowed only to the extent of the penalty imposition.

In conclusion, the Tribunal upheld the denial of cenvat credit on disputed services due to the lack of a direct agreement between the appellant and the service provider. However, it ruled that the penalty imposed on the appellant was unwarranted as there was no evidence of fraudulent intent in availing the credit.