2017 (9) TMI 205 - AT - Central Excise

CENVAT credit - Place of removal - various input services - scope of Rule 2 (l) of Cenvat Credit Rules, 2004 - Rent - Common Area Maintenance Charges and Amenities Charges - Freight & Cartage - Postage & Courier - Security - Legal & Professional - Advertisement - Insurance - Software & Website maintenance and development - Commission charges - Service provided by Commission Agents from State of J&K - Input Service Distributor - the main point of dispute in these appeals is the determination of place of removal of excisable goods - Held that - The main appellant-assessee categorically stated that they transfer their goods to their warehouses from where they further transport them to the retail outlets or warehouses of their commission agents, from where the goods were sold. Hence, it was pleaded that place of removal in terms of Section 4 of Central Excise Act 1044 should be retail outlet/warehouses of commission agents. The goods remain in their ownership, till the time of sale from these retail outlets owned by them or up to the warehouses of commission agents, as the case may be. Freight also is paid by the main appellant-assessee up to the retail outlets/commission agents warehouses. We note that the original adjudicating authority fell in error in arriving at the correct factual position regarding place of removal. The Revenue presumed that the services should be in or in relation to manufacture of ready-made garments, whereas Rule 2(l) clearly talks about services used by manufacturers, whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products up to the place of removal. A plain reading of the said statutory provision will indicate that the presumption of the Revenue is not sustainable. Registration of the main appellant assessee as ISD - Held that - On examination of provision of Rule 2(m) of the Cenvat Credit Rules, 2004, the Commissioner (Appeals) clearly recorded that, a manufacturer who wants to avail benefit of Service Tax should get registered himself as service provider and then he will be able to account for all the input Service Tax paid in the headquarters and distribute the same to various units. After examining the provisions of Rule 7 of Cenvat Credit Rules, the Commissioner (Appeals) concluded that as the manufacturer was having various retail outlets and office besides the factory for manufacture, in order to utilise the credit of input service got registered with the department as ISD. CENVAT credit - duty paying invoices - debit notes - Held that - the appellant-assessee issued challans under Rule 4A of Service Tax Rule, 1994 which contain all the required details. Even in case certain particulars were found missing in the relevant documents, we note that substantial benefit of Cenvat credit cannot be denied on this ground - mention of wrong address of the Service Tax Department on the documents is not a bar to avail the credit. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Denial of Cenvat Credit on various services.
2. Determination of 'place of removal.'
3. Eligibility of the main appellant-assessee for Input Service Distributor (ISD) registration.
4. Legitimacy of credit availed based on debit notes.

Detailed Analysis:

1. Denial of Cenvat Credit on Various Services:
The main appellant, Cantabil Retail India Ltd, contested the denial of Cenvat Credit amounting to ?86,35,176 for the period from September 2012 to February 2013. The services in question included rent, common area maintenance, freight and cartage, postage and courier, security, legal and professional services, advertisement, insurance, software and website maintenance, and commission charges. The original authority held that these services did not qualify as 'input services' under Rule 2(l) of the Cenvat Credit Rules, 2004, and thus denied the credit. The Commissioner (Appeals), however, found that these services were essential for the business operations and thus eligible for credit.

2. Determination of 'Place of Removal':
The primary dispute revolved around the determination of the 'place of removal.' The main appellant argued that the 'place of removal' should be considered as their retail outlets or the warehouses of their commission agents, as the goods remained in their ownership until sold from these locations. The original authority erroneously considered the factory gate as the 'place of removal.' The Commissioner (Appeals) and the Tribunal, referencing Section 4 of the Central Excise Act, 1944, and previous case law, concluded that the 'place of removal' should indeed be the retail outlets or commission agents' warehouses, thus making the services availed at these locations eligible for credit.

3. Eligibility for Input Service Distributor (ISD) Registration:
The original authority also disputed the main appellant's eligibility for ISD registration. The Commissioner (Appeals) clarified that under Rule 2(m) of the Cenvat Credit Rules, 2004, a manufacturer with multiple retail outlets and offices besides the factory must register as an ISD to distribute the input service credit. The Tribunal upheld this view, agreeing that the main appellant was correctly registered as an ISD and eligible to distribute the credit accordingly.

4. Legitimacy of Credit Based on Debit Notes:
Another issue was the legitimacy of credit availed based on debit notes, which were deemed ineligible documents by the original authority. The Tribunal noted that the appellant-assessee issued challans under Rule 4A of the Service Tax Rules, 1994, containing all required details. Even if certain particulars were missing, the substantial benefit of Cenvat credit could not be denied on this ground. The Tribunal referenced the proviso to sub-rule (2) of Rule 9 of the CENVAT Credit Rules, 2004, which allows discretionary powers to the jurisdictional Asstt. Commissioner to permit credit in such situations, thus ruling in favor of the appellant.

Conclusion:
The Tribunal set aside the order dated 30.09.2013 of the Commissioner, allowing the appeals of the main appellant-assessee and others. The order dated 14.03.2014 of the Commissioner (Appeals) was upheld, and the three appeals by the Revenue were dismissed. The Tribunal concluded that the services in question were indeed 'input services' as defined under Rule 2(l) of the Cenvat Credit Rules, 2004, and that the 'place of removal' should be the retail outlets or warehouses of commission agents. The main appellant was correctly registered as an ISD, and credit based on debit notes was legitimate.