2017 (1) TMI 428 - AT - Central Excise

Recovery of CENVAT credit - traveling expenses incurred by their executive during their travel for sales purpose - security services availed at their Cot Putty Mines located away from the factory - Held that - the appellants have claimed that the travel expenses and the services relating thereto works for the purpose of sales promotion and therefore are covered in the exclusive part of the definition. The use of services for sales promotion has not been challenged. As a result, credit of Service Tax amounting to ₹ 38,246/- needs to be allowed. As regards Security services received at the Mines are covered by the decision of Hon ble Apex Court in the case of Vikram Cement 2006 (1) TMI 130 - SUPREME COURT OF INDIA . In view of the above, the credit of ₹ 76,408/- is also admissible. It is seen that the appellant could have certain bona fide doubt in respect of admissibility of credit on a few of the services like construction of residential colony, colony repairs, colony beautification, repair to road/fountain, fencing wall, maintenance of garden etc. In view of the above, it is felt that the penalties imposed are excessive. Appeal partly allowed - decided partly in favor of appellant.

Summary

Issues:
Recovery of credit availed on 19 inputs services, admissibility of credit on traveling expenses for sales promotion, admissibility of credit on security services at Cot Putty Mines, denial of credit on services received from BIS without invoices, denial of credit on invoices lacking service description, penalty imposition.

Analysis:
The appellant, M/s ACC Ltd., received notice for credit recovery on 19 inputs services, including traveling expenses and security services at Cot Putty Mines. They contested the denial of credit on traveling expenses and security services, arguing that they were for sales promotion and qualified as input services. The appellant relied on the decision of the Hon'ble Apex Court in Vikram Cement case to support their argument. They also mentioned a Tribunal decision in the case of Manikgarh Cement to justify their belief in availing credit. The appellant did not contest the denial of credit on services received from BIS without invoices or invoices lacking service descriptions. The appellant sought waiver of penalties due to their bona fide belief in availing the credit based on previous decisions.

The learned Counsel for the appellant argued that the traveling expenses for sales promotion and security services at the Mines were valid input services as per the definition. The appellant challenged a portion of the total demand, emphasizing the purpose of the services for sales promotion. The Tribunal found merit in the appellant's arguments regarding the admissibility of credit for traveling expenses and security services, citing the decision of the Hon'ble Apex Court in Vikram Cement case. The Tribunal also acknowledged the appellant's genuine doubt regarding the admissibility of credit on certain services like construction, repairs, beautification, and maintenance, leading to a revision of imposed penalties.

The learned Assistant Commissioner relied on the impugned order, emphasizing that credit taken on invoices lacking service descriptions or without invoices was unlawful. The Tribunal reviewed the submissions and found that the appellant's claims regarding traveling expenses and security services for sales promotion were valid. Consequently, the Tribunal allowed the credit for these services, considering them as admissible input services. The Tribunal also recognized the appellant's genuine doubts regarding certain services, leading to a reduction in the imposed penalties. The penalties in the notices were revised, with some reduced significantly, and the appeals were partly allowed based on the merits of the arguments presented.

In conclusion, the Tribunal upheld the admissibility of credit on traveling expenses and security services, considering them as valid input services for sales promotion. The penalties imposed were revised based on the appellant's genuine doubts regarding certain services, leading to a reduction in the penalty amounts. The judgment highlighted the importance of bona fide belief in availing credits based on previous decisions and the definition of input services as per relevant legal precedents.