2016 (12) TMI 147 - AT - Central Excise

Denial of CENVAT credit - bill did not contain the registration number of service provider - Rule 4A(2) of Service Tax Rules - Held that - When it is not disputed that the duty has been paid and input services has been availed by the respondents, the fact that the invoices or the bills did not contain full particulars cannot be considered as a ground for denial of credit. Further, the show cause notice dated 22-03-2013 is issued for the period 2009 to 2011, by invoking extended period. The Commissioner(Appeals) is seen to have imposed penalty of 50% of the amount involved. In Moser Baer India Ltd vs CCE, Noida, 2015 (1) TMI 1093 - CESTAT NEW DELHI , it was observed by the Tribunal that the basic requisite under Rule 7 of Service Tax Rules, 1994, is that the Head Office receives the invoices towards purchase of input services and pays the service tax. That credit on input services is not dependent upon actual receipt of the services in the factory unlike the credit of the duty paid on inputs which is dependant upon the actual receipts of inputs/capital goods within the factory. Tribunal in a number of cases has held that when documents are in the name of Head Office, credit can be availed in the factory belonging to the same manufacturer. Appeal dismissed - decided against Department.

Summary

Issues:
Department's challenge to the order allowing credit on input services based on non-compliance with Rule 4A(2) of Service Tax Rules, 2002. Validity of penalty imposed by Commissioner (Appeals) at 50% of the credit involved.

Analysis:
The appeal was filed by the department against the order of the Commissioner (Appeals) allowing credit on input services. The department alleged that the respondent had irregularly availed Cenvat credit based on certain bills without following Rule 4A(2) of Service Tax Rules, 2002. The department issued a show cause notice confirming the demand of Cenvat credit along with interest and imposing a penalty. The Commissioner (Appeals) set aside the demand of Cenvat credit and reduced the penalty to 50%. The department challenged this decision, arguing that non-compliance with Rule 4A(2) rendered the credit inadmissible.

The department contended that the procedure under Rule 4A(2) is mandatory and non-compliance should disallow the credit. The Commissioner (Appeals) was criticized for allowing the credit while imposing a penalty of 50% of the credit amount. The department's argument focused on the necessity of following the prescribed procedure for availing credit on input services.

The Tribunal noted that the dispute did not concern the payment or utilization of input services but rather the particulars on certain bills/invoices. Despite the incomplete details on the invoices, the duty had been paid, and input services were availed. The Tribunal referenced a previous case where it was established that credit on input services does not depend on the actual receipt of services in the factory, unlike duty paid on inputs. It was also highlighted that when documents are in the name of the Head Office, credit can be availed in the factory of the same manufacturer. Citing relevant case law, the Tribunal emphasized the permissibility of availing credit based on Head Office documents.

Ultimately, the Tribunal found no fault in the Commissioner (Appeals)'s decision and dismissed the department's appeal. The judgment highlighted the importance of following procedural requirements for availing credit on input services while emphasizing the admissibility of credit based on Head Office documents.