2016 (2) TMI 592 - AT - Central Excise

Denial of Cenvat Credit of service tax - Recovery of duty under Section 11A(1)- violation of Rule 3 of CENVAT Credit Rules 2004 - invoice raised in respect of Calico land which was not incorporated in the manufacturing premises and in respect of certain invoice credit was sought to be denied on the ground that service tax registration no. of supplier were not mentioned in their invoices - Held that - It is a fact that the land belonging to Calico was purchased by the appellant in an auction got conducted by the Gujarat High Court and appellant took possession of the same in the year 2005. They applied for inclusion of Calico land in their RC vide their letter dated 20.12.2007 and the same was granted by the excise authorities with effect from 16.05.2008. It is also a fact that the wall around the Calico land was got constructed by the appellant; purchase order as well as invoice are also in the name of HPCL i.e. the appellant. In view of this mere non-inclusion of Calico land in the excise registration at the time when the services were availed is only a procedural lapse which was rectified subsequently by the service tax authorities w.e.f 16.05.2008 by including the said land in the registration certificate of the appellant. Thus in considered view input service credit cannot be denied on this mere procedural lapse to the appellant It is pertinent to note that in respect of few invoices issued by the service providers the appellant had admitted the wrong availment of Cenvat Credit of 72, 675/- and have already reversed the same along with interest. Now coming to the alleged total demand of 5, 55, 112/- the appellant are entitled to Cenvat Credit of 3, 73, 507/- and 1, 08, 930/- totalling 4, 82, 437/- and the remaining amount of 72, 675/- has already been reversed by the appellant along with interest. Admittedly appellant had wrongly availed Cenvat Credit of 72, 675/- therefore the appellant is liable to penalty of equal amount under Rule 15(3) of CENVAT Credit Rules 2004 read with Rule 25 of Central Excise Rules 2002. In view of the foregoing the appeal of the appellant is partly allowed to the extent that they are entitled to Cenvat Credit of 4, 82, 437/- but they are liable to penalty of equal amount of the credit wrongly availed to the tune of 72, 675/-.

Summary

Issues:
1. Denial of Cenvat Credit for service tax on the grounds of procedural lapses.
2. Denial of Cenvat Credit for service tax due to missing service tax registration number on invoices.

Analysis:

Issue 1: Denial of Cenvat Credit for service tax due to procedural lapses
The case involved the appellant, engaged in manufacturing excisable goods, facing a show-cause notice for recovery of duty under Section 11A(1) of the Act for alleged violations of Rule 3 of CENVAT Credit Rules, 2004. The appellant claimed service tax credit based on an invoice for Calico land not incorporated in their manufacturing premises and faced denial of credit due to missing service tax registration numbers on certain invoices. The appellant argued that the lapses were procedural and condonable, emphasizing that the Calico land was later included in their registration certificate. The Tribunal acknowledged the rectification by service tax authorities and deemed the non-inclusion of Calico land during service availing as a procedural lapse, allowing the Cenvat Credit for the appellant.

Issue 2: Denial of Cenvat Credit for service tax due to missing service tax registration number on invoices
The denial of Cenvat Credit for service tax on invoices lacking the service tax registration number was also contested. The appellant demonstrated that the service provider did possess a valid service tax registration, although the number was inadvertently omitted from the invoices. The Tribunal noted that the authorities overlooked this fact and reduced the alleged demand by the amount in question, citing relevant legal precedents to support their argument. Additionally, the appellant had already admitted and reversed the wrongful availment of Cenvat Credit for certain invoices, further impacting the total demand amount. Ultimately, the Tribunal partially allowed the appeal, granting Cenvat Credit while imposing a penalty equal to the wrongly availed credit amount.

In conclusion, the judgment addressed the issues of denial of Cenvat Credit for service tax based on procedural lapses and missing service tax registration numbers on invoices. The Tribunal recognized rectifications made by the appellant and service tax authorities, allowing the Cenvat Credit in question. Legal precedents were cited to support the arguments, and the appellant's admission of wrongful availment for certain invoices influenced the final decision, resulting in a partial allowance of the appeal with a corresponding penalty imposed.