2016 (12) TMI 1224 - AT - Central Excise

CENVAT credit - denial on the ground of discrepancies on CENVATable invoices - input services - invoices not in the name of the appellant but it is in the name of the directors and the employees of the company - Held that - credit should be allowed for the reason that all these expenditure were incurred by the appellant company and the same is not under dispute, therefore even though the invoices are not in the name of the company but in the name of the directors/employees and the same has been booked as expenditure in the books of appellant, credit is admissible. Cenvatable bills/invoices were not available - Held that - appellant submitted that now they are in possession of most of the invoices which can be produced before the authority for verification - matter on remand. Services not considered as input services - Held that - services involved are of construction of foundation in the factory, construction of security cabin, construction of scrap yard, shifting of machines, services are directly related to activity of the manufacturing unit and the same are clearly included in the inclusion part of the definition of the input services, credit admissible - As regard the services of civil works, these services are not related to the factory but is related to the staff quarters, therefore, cannot be treated as input service - As regard the air fair and cleaning services, it is related to the business activity of the appellant company, credit admissible. Service tax registration number not mentioned in invoice - Held that - merely non mention of the registration number on the invoice, Cenvat credit cannot be denied particularly when there is no dispute that the invoices was raised to the appellant, services were received by the appellant. Denial of Cenvat credit on the bank charges - Held that - in the Cenvat Credit Rules, relaxation is specifically provided that for banking services, even if there are no invoices but from any documents of the bank if it is established the payment of service tax, credit must be allowed. Credit allowed - Appeal allowed by way of remand.

Summary

Issues Involved:
Denial of Cenvat credit on various grounds including invoices not in the name of the appellant, untraceable invoices, services not considered as input services, missing service tax registration numbers on invoices, and denial of credit on banking charges.

Analysis:

1. Invoices not in the name of the appellant:
The appellant argued that even though certain invoices were not in the name of the company but in the name of directors or employees, the expenses were incurred by the company and accounted for in its books. The Tribunal agreed that as long as the expenses were legitimately incurred by the company, credit should be allowed irrespective of the name on the invoices.

2. Untraceable Invoices:
The appellant stated that most of the previously untraceable invoices were now available and could be produced for verification. The Tribunal decided to remand the matter so that the appellant could present the invoices for verification, and if found valid, the credit should be allowed.

3. Services not considered as input services:
The Tribunal differentiated between services directly related to the manufacturing unit, such as construction work within the factory premises, which were considered as input services eligible for credit. However, services related to staff quarters or other non-factory areas were not considered as input services. The Tribunal allowed credit for services directly linked to the business activity.

4. Missing Service Tax Registration Numbers:
The Tribunal held that the absence of a service tax registration number on certain invoices should not be a reason to deny Cenvat credit, especially when there is no dispute regarding the services received by the appellant. The Tribunal emphasized that credit should not be disallowed solely based on the absence of the registration number.

5. Denial of Credit on Banking Charges:
Regarding banking charges, the appellant argued that as per the Cenvat Credit Rules, even without invoices, proof of service tax payment through bank documents should suffice for allowing credit. The Tribunal agreed that the absence of invoices for banking charges should not lead to the denial of credit, as relaxation is provided in the rules for such cases.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for a fresh decision, considering the observations made. The appellant was deemed prima facie entitled to the Cenvat credit that was previously disallowed, subject to verification of the invoices to be produced. The appeal was disposed of through remand for further adjudication.