2017 (7) TMI 397 - AT - Central Excise

CENVAT credit - input services - services provided by Transenergy to the appellants under sub-lease agreement - Held that - disputed services were provided by Transenergy to the appellants under sub-lease agreement wherein it had been agreed upon that the former shall provide these services either directly or by engaging third party service provider - the services provided by Transenergy to the appellants whether directly or through a third party service provider cannot be disallowed, so long as they are found to be eligible input services for the purpose of Rule 2 (l) of Cenvat Credit Rules, 2004. CENVAT credit - duty paying invoices - denial on the ground that invoices in particular that they do not indicate any specific service provided by Transenergy to the appellants and that there is no clarity on whether the services otherwise provided on common basis, to all the manufacturers in the sub-leased area, have been properly apportioned - Held that - at least some of the services, though are eligible services for the purpose of availment of cenvat credit, it is not possible to permit the same in view of the defects found in the invoices - considering the Ld. Advocate s submission that these defects can be cured at this stage and that they have the exact apportioned figures in respect of each service provided to them by Transenergy, on the basis of authenticated documents given by the latter and also certified by Cost Accountant, the interests of justice would be best served if the appellants are given another opportunity to satisfy the adjudicating authority on this aspect. Appeal allowed by way of remand.

Summary

Issues: Disputed credit availed by the appellants based on invoices related to services provided by M/s. Transenergy Ltd., eligibility of services for Cenvat credit, nexus of services with manufacturing activity, defects in the invoices, and apportionment of common services among manufacturers in the sub-leased area.

Analysis:
1. Disputed Credit and Eligibility of Services: The appellants had taken credit on invoices for services provided by M/s. Transenergy Ltd., which were not exclusively utilized by them but common to other companies in the same premises. The department initiated proceedings against the appellants, which were confirmed by the adjudicating authority and upheld by the Commissioner (Appeals). The Ld. Advocate argued that the services availed had a nexus with the manufacture of final products. The adjudicating authority accepted this plea but found that the services were not provided directly to the appellants, leading to the denial of service tax credit. The Ld. Advocate requested a remand to provide necessary details to establish eligibility for credit.

2. Defects in Invoices and Apportionment of Services: The department contended that the invoices did not specify eligible services for Cenvat credit and lacked clarity on the apportionment of common services among manufacturers in the sub-leased area. The Tribunal acknowledged the requirement for specific details in the invoices but noted the provision allowing credit even in case of defects, subject to the satisfaction of the concerned authority. The Tribunal found that the appellants could rectify the defects by providing exact apportioned figures for each service, supported by authenticated documents from Transenergy and certified by a Cost Accountant. Consequently, the Tribunal allowed the appeals by way of remand to address these issues and left all matters open for consideration in the denovo proceedings.

In conclusion, the Tribunal held that services provided by M/s. Transenergy Ltd. to the appellants, whether directly or through a third party service provider, could not be disallowed if found to be eligible input services. The Tribunal emphasized the importance of rectifying defects in the invoices to avail Cenvat credit and granted the appellants the opportunity to provide necessary details for consideration by the adjudicating authority.