2013 (12) TMI 742 - AT - Service Tax

Denying of CENVAT Credit - Availment of credit on the basis of Advice of Transfer Debit - Penalty under rule 15(1) and 15(2) of CCR 2004 - Held that - assessee has not complied with provisions of CCR 2004 read with Central Excise Rules, 2002 strictly. However, existence of original invoice and its genuineness is not disputed by Revenue. In fact, such documents were produced before lower authorities. Therefore, the duty involved has been paid and there is no dispute that the equipment in question has been used at the sites where credits were taken. In such circumstances, considering the commercial practice which was necessary for efficient procuring the equipment in question, this procedural lapse cannot be considered as a reason to deny Cenvat credit involved - Decided in favour of assessee.

Summary

Issues:
- Denial of Cenvat credit based on the specified documents under Rule 9 of CCR, 2004
- Imposition of penalties under rule 15 (1) and 15 (2) of CCR 2004
- Appeal against the orders of the Commissioner (Appeals) by both Revenue and the assessee

Analysis:

Issue 1: Denial of Cenvat credit based on specified documents
The case involved the denial of Cenvat credit by the Revenue due to the use of Advice of Transfer Debit (ATD) as a document for claiming credit, which was not specified under Rule 9 of CCR, 2004. The assessee, engaged in providing telephone services, centrally procured capital goods necessary for their services through a Designated Authority at Madurai. The Designated Authority delivered the goods to different offices of the assessee along with ATDs. The Revenue contended that ATD was not a specified document for claiming credit. However, the Tribunal found that the original invoices supporting the ATDs were genuine and the duty on the goods had been paid. Considering the commercial necessity of central procurement and efficient logistics, the Tribunal allowed the Cenvat credit based on precedent decisions. The Tribunal held that the procedural lapse in following Rule 9 of CCR, 2004 could not be a reason to deny the credit.

Issue 2: Imposition of penalties
The Revenue had imposed penalties under rule 15 (1) and 15 (2) of CCR 2004 in addition to denying the Cenvat credit. However, the Tribunal, after considering the submissions from both sides, found that there was no revenue loss to the department due to the procedural lapse by the assessee. Since the duty was paid, and the equipment was used for providing taxable services, the Tribunal held that there was no justification for imposing penalties. The Tribunal emphasized that the procedural lapse in compliance with CCR 2004 could not warrant the imposition of penalties, especially when there was no revenue loss.

Issue 3: Appeals against the orders of the Commissioner (Appeals)
The appeals involved challenges against the orders of the Commissioner (Appeals) by both the Revenue and the assessee. The Revenue appealed for the restoration of the adjudication order, including penalties, while the assessee appealed for the allowance of credit in the case where it was denied by the Commissioner (Appeals). The Tribunal, after considering the arguments from both sides, allowed the appeal filed by the assessee and rejected the appeals filed by the Revenue. The Tribunal disposed of all the appeals accordingly, emphasizing the importance of following commercial practices and efficiency in procurement processes.

In conclusion, the Tribunal's judgment in this case centered on allowing Cenvat credit based on genuine documents supporting the procurement of capital goods, rejecting the imposition of penalties due to a procedural lapse, and upholding the importance of commercial practices in efficient operations.