2018 (1) TMI 1198 - AT - Central Excise

CENVAT credit - input services (related to export of goods) - ACD collection - Terminal handling Charges collection - documentation charges - fumigation charges - credit has been denied merely alleging that the documents are irregular - Held that - same issue had come up for analysis in the appellant s own case 2016 (10) TMI 1158 - CESTAT CHENNAI , where the Tribunal had observed that the appellant would be eligible for credit if the invoices issued by sub-contractors can be matched and correlated with the invoices issued by the CHA - the matter requires to be remanded to the adjudicating authority who is directed to verify and check whether there is correlation between the invoices issued by the sub-contractor / service provided appointed by the CHA and the consolidated invoices issued by the CHA to the appellant - appeal allowed by way of remand.

Summary

Issues:
- Availment of CENVAT credit on input services for export of goods
- Denial of credit by department alleging irregular documents
- Applicability of Rule 5 of Service Tax (Determination of Value) Rules, 2006
- Previous Tribunal decision in appellant's own case regarding correlation of invoices
- Remand to original adjudicating authority for verification

Issue 1: Availment of CENVAT credit on input services for export of goods
The appellants availed input service credit for services related to the export of goods, such as ACD collection, Terminal handling Charges collection, documentation charges, and fumigation charges. The department proposed to recover the credit, along with interest and penalty, citing irregularly availed credit based on invoices issued by third parties. The appellant argued that the services were consumed for export, and payments were made through principal contractors who acted as pure agents under Rule 5 of Service Tax Rules. The appellant relied on a circular and a previous Tribunal decision supporting their claim.

Issue 2: Denial of credit by department alleging irregular documents
The department denied the credit, alleging irregularity in the documents despite not disputing the service tax payment or service consumption. The appellant contended that the denial was unfounded as the services were provided by subcontractors through principal contractors, and payments were made through them. The appellant emphasized that the invoices were issued in the name of the principal contractor/CHA, and the credit availed was correct and proper.

Issue 3: Applicability of Rule 5 of Service Tax (Determination of Value) Rules, 2006
The appellant argued that the payments made through principal contractors, acting as pure agents under Rule 5, justified the availed credit on the invoices issued by subcontractors. The appellant presented the Circular F.No.119/13/2009-ST and a Tribunal decision in support of their position, emphasizing the correctness of the credit availed based on the specific arrangement with subcontractors and principal contractors.

Issue 4: Previous Tribunal decision in appellant's own case regarding correlation of invoices
The Tribunal referred to a previous decision in the appellant's case where it was observed that the appellant would be eligible for credit if the invoices issued by subcontractors could be matched and correlated with the invoices issued by the CHA. The Tribunal directed the matter to be remanded to the original adjudicating authority to verify the correlation between the invoices, indicating that once the correlation is established, the appellant would be eligible for credit, rectifying the alleged document defect.

Issue 5: Remand to original adjudicating authority for verification
Based on the previous Tribunal decision in the appellant's case, the current Tribunal remanded the matter to the adjudicating authority to verify the correlation between the invoices issued by subcontractors and the consolidated invoices issued by the CHA to the appellant. The Tribunal directed that upon establishing the correlation, the appellant would be eligible for credit, allowing the appeal by way of remand with consequential relief if any.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal provisions invoked, and the Tribunal's decision to remand the matter for further verification, ensuring a comprehensive understanding of the case.