2018 (5) TMI 967 - AT - Central Excise

CENVAT credit - credit availed on the invoices issued by Bosch Rexroth and Siskon Engineering - denial on the ground that no evidences have been furnished to show that the repairs and maintenance charges are included in the transaction value and as part of the sales warranty being a after sales activity - Held that - the appellant has given the detailed information in the form of tabulated statement which have been enclosed with the appeal papers along with sample invoices for both the input service and output taxes paid but both the authorities have not examined these documents in order to decide whether the credit availed is right or wrong - the said services of repair were not rendered as part of warranty requirement or as having any nexus to the manufacture and clearance of final products but the said credit of the invoices raised by the input services providers have been availed. CENVAT credit - invoices issued by Ajax Engineering Pvt. Ltd. - Held that - appellant has produced on record the copy of the said agreement dt. 31/09/2009 which has been renewed and valid up to 01/04/2014 but the same has not been considered by the authorities below and have wrongly come to the conclusion that the said agreement has lapsed after 01/04/2009 - credit wrongly denied. CENVAT credit - invoices issued by Jayalakshmi Enterprises - denial on the ground that the temporary registration is issued in the name of the buyer and not in the name of the appellant and the said activity has been wrongly considered as having no relation to manufacturing activity - Held that - without obtaining temporary registration from RTO it is not possible for the appellant to effect any clearance in view of the requirement of Motor Vehicles Acts and Rules - the appellant has availed the credit pertaining to common input services as distributed by the Yeshwanthpur office of the appellant which is also holding ISD registration under Service Tax and the said credit has been distributed by the Yeshwanthpur office to the factory of the appellant herein under challans after excluding 10% of the amount proportionately for the trading turnover and hence only 90% of the credit as per the input service invoices had actually been taken in the said factory and more over the appellant has only one manufacturing unit and there is no dispute regarding the receipt of the services and its utilization thereof. Since the appellant has only one factory and the credit was availed on the registered office and not at the factory is only technical lapse and the cenvat credit cannot be denied for technical infractions. The CENVAT credit availed on the invoices issued by M/s. Gomti Incinco and M/s. Saleh Ahmed amounting to 33, 305/- with interest of 9, 242/which have already been reversed / paid before issue of show-cause notice the imposition of penalty is not warranted. Appeals allowed subject to verification of the documents concerning the CENVAT credit of 4, 62, 870/- and 33, 063/- - appeal allowed by way of remand.

Summary

Issues:
1. Denial of CENVAT credit on ineligible input services.
2. Denial of credit on invoices issued by specific service providers.
3. Denial of credit on invoices not addressed to registered premises.
4. Imposition of penalty on reversed CENVAT credit.

Analysis:
1. The case involved appeals against an order rejecting the appellant's claims and upholding the Orders-in-Original regarding availed CENVAT credit. The appellant, a manufacturer of excisable goods, was accused of availing ineligible input service credit. The demand for irregular credit availed, along with penalties, was contested by the appellant. The Additional Commissioner confirmed a significant demand, which was further upheld by the Commissioner (Appeals), leading to the present appeals.

2. The appellant argued that the impugned order failed to consider their submissions and legal positions properly. They contended that the denial of credit on certain invoices was unjustified, as the services were used for providing taxable output services. The appellant provided detailed documentation and legal references to support their claims, which were allegedly ignored by the authorities. The appellant emphasized that the denial of credit on various grounds lacked legal merit and factual basis.

3. The defense argued in favor of the impugned order, supporting the denial of credit and penalties imposed on the appellant. However, upon thorough consideration of submissions and records, the Judicial Member found discrepancies in the denial of credit. The Member concluded that the denial of credit on specific invoices lacked justification, as the services were indeed utilized for taxable output services. Legal precedents were cited to support the appellant's claims, highlighting the authorities' failure to adequately assess the provided documentation.

4. Ultimately, the Judicial Member allowed both appeals, subject to verification of specific documents related to CENVAT credit amounts. The matter was remanded to the original authority for further verification, emphasizing that the denial of credit on technical grounds or without proper assessment of documentation was not justified. The imposition of penalties on reversed CENVAT credit was deemed unwarranted, providing a favorable outcome for the appellant based on the detailed analysis and legal considerations presented in the judgment.