2017 (9) TMI 219 - AT - Central Excise

CENVAT credit - duty paying documents - whether the appellants are entitled to CENVAT credit availed on the debit notes relating to reimbursement of expenses? - Held that - though said services availed by M/s Laffans Petrochemicals Ltd. in terms of Logistics Agreement the same can not be made cenvatable in as much as M/s Laffans Petrochemicals Ltd. quoting their own Service Tax Registration No. along with particulars of service tax & Invoice Nos. of respective service providers cannot be considered as valid duty paying document in terms of provisions of Rulem9(1) of Cenvat Credit Rules 2004 - service tax amount shown in the debit notes representing reimbursable expenses is inadmissible to credit - appeal dismissed - decided against appellant.

Summary

Issues:
1. Entitlement to CENVAT credit of &8377; 3,85,670/- availed on debit notes relating to reimbursement of expenses.

Analysis:
The limited issue in this case revolved around whether the appellants were entitled to claim CENVAT credit of &8377; 3,85,670/- on debit notes related to reimbursement of expenses. The advocate for the appellants argued that the Commissioner (Appeals) allowed the credit for logistic services provided by a specific service provider but denied the credit for reimbursement of expenses from other service providers mentioned in the debit notes.

The Revenue's representative supported the Commissioner's decision by referring to specific sections of the order where it was noted that the service provider had indeed provided services to the appellants, meeting the requirements of service tax invoices for credit eligibility. However, the Commissioner found that the services mentioned in the debit notes for reimbursement of expenses were not admissible for credit as they were expenses incurred for services provided by other entities.

Upon analysis, the Commissioner had allowed a credit of &8377; 3,59,214/- for logistic services based on the fulfillment of invoice requirements by the service provider. However, for expenses reimbursement debit notes, the Commissioner found them inadmissible for credit as they did not meet the criteria for valid duty-paying documents under the CENVAT Credit Rules, 2004. Additionally, the appellants failed to demonstrate compliance with the Pure Agents provision under Rule 5(2) of Valuation Rules regarding expenses incurred on their behalf.

The judgment upheld the Commissioner's decision, stating that while credit was allowed for debit notes meeting invoice requirements, the service tax amount shown on debit notes for reimbursable expenses was deemed inadmissible for credit. Consequently, the appeal was dismissed, affirming the impugned order.