2016 (10) TMI 960 - AT - Service Tax

Denial of CENVAT credit - validity of duty paying documents - fake invoices - some invoices in the name of other division of the company and some invoices do not have the name of the company or its location - Rule 9(2) of the Cenvat Credit Rules 2004 - Held that - the appellants training division is housed along with several other divisions of the company in the same premises in New Delhi. Further, the training division has been transferred to M/s. GE India Pvt. Ltd. (appellant) w.e.f. February 2005 only. Consequently, many invoices based on which Cenvat Credit have been availed did not contain full details such as correct name of appellant. However, we find that the appellant is now in a position to satisfy the Revenue authorities about the genuineness of each and every invoice involved in the present proceedings. It is also submitted before us that such a reconciliation statement backed by a Certificate from Chartered Accountant has been produced before the Adjudicating authority. However, the same does not appear to have been considered. We find that Rule 9(2) of the Cenvat Credit Rules 2004 provides for such eventualities - The rule vests the jurisdictional Assistant Commissioner or Deputy Commissioner with the power to admit documents subject to verification. Similar issue decided in the case EUPEC-Welspun Coatings India Ltd. Vs. CCE 2008 (8) TMI 515 - CESTAT, AHMEDABAD and the reliance placed in the decision where it was held that all the details are available except name and address of the factory on the bill of entry. The only omission is that instead of endorsing the bill of entry itself in the name of the assessee, the importer has issued separate certificate/declaration. It has to be seen in as part of the bill of entry and both of them cannot be segregated and seen isolation as done by the Department. It is quite clear that the credit has to be allowed in view of the provisions of Rule 9(2) in this case. Therefore appeal is allowed with consequential relief to appellants. Imposition of penalty u/s 77 of the Finance Act 1994 - Under the facts and circumstances of this case we find no justification for imposing such penalty and is hence vacated. The matter needs to be remanded to the original adjudicating authority for undertaking verification of the reconciliation chart along with supporting documents which the appellant is presently in a position to submit. The appellant is directed to produce all necessary details and facilitate quick and smooth verification of the same, after which the original adjudicating authority will pass a denovo order in the matter - appeal allowed.

Summary

Issues: Disallowance of Cenvat Credit based on invoices not in appellant's name, Rule 9(2) of Cenvat Credit Rules 2004, Similar judgments by Tribunal, Remand for verification, Penalty under section 77 of Finance Act 1994

In the case before the Appellate Tribunal CESTAT New Delhi, the appeal was against the order disallowing the demand of Cenvat Credit amounting to ?64,85,023/- due to invoices not being in the name of the appellant. The appellant, a division of G.E. India Industrial Pvt. Ltd., explained that their training division shared premises with other divisions, causing discrepancies in invoice details. They presented a Chartered Accountant's certificate and vendor-wise confirmation to prove utilization of services covered by the invoices. Out of the total demand, a liability of ?9,30,920/- was admitted by the appellant.

The Tribunal noted that the appellant's training division was part of M/s. GE India Pvt. Ltd. since February 2005, leading to incomplete details on some invoices. However, the appellant demonstrated the genuineness of each invoice and provided a reconciliation statement supported by a Chartered Accountant's certificate, as required by Rule 9(2) of the Cenvat Credit Rules 2004. This rule empowers the jurisdictional Assistant Commissioner or Deputy Commissioner to admit documents subject to verification.

Referring to previous Tribunal decisions like EUPEC-Welspun Coatings India Ltd. and Idea Mobile Communications Ltd., the Tribunal emphasized that credit should not be denied solely based on incomplete particulars if the document contains essential details like payment of duty, goods description, assessable value, and factory details of the receiver. Following the precedent, the Tribunal remanded the matter to the original adjudicating authority for verification of the reconciliation chart and supporting documents provided by the appellant.

Regarding the penalty imposed under section 77 of the Finance Act 1994, the Tribunal found no justification for it in the present case and thus vacated the penalty. Ultimately, the appeal was allowed by way of remand, directing the appellant to produce all necessary details for verification, after which the original adjudicating authority would issue a fresh order in the matter.

In conclusion, the Tribunal's decision focused on upholding the principles of Rule 9(2) of the Cenvat Credit Rules 2004, ensuring that genuine claims for Cenvat Credit are not unjustly denied due to technical discrepancies. The judgment underscored the importance of thorough verification and adherence to legal provisions in tax matters, leading to the remand of the case for further examination and the removal of an unjust penalty.