2016 (12) TMI 983 - AT - Central Excise

Denial of CENVAT credit - Rent-a-Cab service - Security service - mobile phones - denial on the ground that invoice in respect of such distribution of credit is not in proper format and service provided at job workers place where the job worker is carrying out cutting process of paper on behalf of the appellant - distribution of credit by ISD before obtaining registration - Held that - As regard the issue, where the appellant has taken the credit not on valid invoice but on the allocation chart, I find that whatever document on which credit was passed on, if it contains all the information as required under Rule 4A of Service Tax Rules, 1994, the said document should be accepted and the credit cannot be denied. As regard the registration issue whether the ISD can distribute the credit before obtaining registration has been settled in the judgments in the case of Commissioner of C. Ex. Vs. Dashion Ltd. 2016 (2) TMI 183 - GUJARAT HIGH COURT , where it was held that there is nothing in the said Rules which would automatically and without any additional reasons disentitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. It was in this background that the Tribunal viewed the requirement as curable. Particularly when it was found that full records were maintained and the irregularity, if at all, was procedural. As regards rent-a-cab service, the vehicle is used for transportation of employee for the purpose of factories activity. Therefore Rent-a-Cab service falls within the ambit of definition of input service. As regards security service, since the security service was received by the appellant even though at job worker s place but it is in relation to job work activity carried out on behalf of the appellant, the job work activity is part and parcel of the over all manufacturing of the final product. Therefore the security service is used in or in relation to the manufacture of final product. In my considered view the credit is admissible on the security service. As regard credit on mobile phone which was denied on the ground that it does not have nexus with in or in relation to the manufacturer, it was found that as per the submission of the Ld. Counsel they are not contesting the same, as they already reversed the credit of ₹ 1847/-. On that count, I therefore uphold the demand of ₹ 1847/- related to mobile phone service. Penalties set aside, as major portion of demand is dropped - appeal disposed off - decided partly in favor of assessee.

Issues Involved:
1. Denial of Cenvat Credit for distribution by the Head Office before obtaining registration.
2. Validity of the invoice format for ISD credit.
3. Admissibility of credit on Rent-a-Cab service.
4. Admissibility of credit on Security service at the job worker's place.
5. Denial of credit on mobile phone service.

Detailed Analysis:

1. Denial of Cenvat Credit for Distribution by the Head Office Before Obtaining Registration:
The adjudicating authority denied the Cenvat Credit on the grounds that the Head Office distributed the credit before obtaining registration. The appellant argued that even if the credit was distributed before registration, it should not be denied, citing various judgments such as Commissioner of Central Excise vs. Dashion Ltd., Commissioner of Central Excise Vs. Smita Conductors Ltd., and Bhansali Engg. Polymers Ltd. Vs. Commissioner of C.Ex., Bhopal. These judgments established that non-registration of the unit as an input service distributor does not automatically disentitle an input service distributor from availing Cenvat credit. The Tribunal upheld this view, stating that procedural irregularities in registration do not justify denying the credit if full records are maintained and verifiable.

2. Validity of the Invoice Format for ISD Credit:
The appellant contended that the allocation chart used for credit distribution contained all necessary information required under Rule 4A of the Service Tax Rules, 1994, and should be considered a valid document. The Tribunal agreed, referencing judgments such as Shriram Pistons & Rings Ltd. Vs. Commissioner of C.Ex., Commissioner of C.Ex., Bangalore Vs. Tikmani Steel Company Ltd., and Vodafone Cellular Ltd. Vs. Commissioner of Central Excise, Pune-III. These cases supported the view that documents containing all required details, even if not in the traditional invoice format, are valid for availing credit.

3. Admissibility of Credit on Rent-a-Cab Service:
The appellant claimed that the Rent-a-Cab service was used for transporting employees to and from the factory, making it eligible for credit. The Tribunal referred to Circular 943/4/2011-CX dated 29-Apr-2011 and judgments such as Principal Commissioner Vs. Essar Oil Ltd. and Indian Oil Corporation Ltd. Vs. Commissioner of C.Ex., Mumbai-II, which confirmed that Rent-a-Cab services used for business activities fall within the definition of input service and are eligible for credit.

4. Admissibility of Credit on Security Service at Job Worker’s Place:
The appellant argued that the security service provided at the job worker's premises was necessary for the security and safety of their materials, making it an integral part of the manufacturing process. The Tribunal agreed, stating that since the security service was related to the job work activity, which is part of the overall manufacturing process, it qualifies as an input service. Thus, credit on security service was deemed admissible.

5. Denial of Credit on Mobile Phone Service:
The appellant did not contest the denial of credit on mobile phone service, as the amount involved was minimal (?1,847) and had already been reversed. The Tribunal upheld the demand for this amount but set aside the penalties associated with the larger demand, allowing the appeal in part.

Conclusion:
The Tribunal allowed the appellant to avail Cenvat Credit of ?48,56,153/-, denied the credit of ?1,847/- related to mobile phone service, and set aside the penalties. The appeal was partly allowed, providing significant relief to the appellant.

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