2018 (12) TMI 1032 - AT - Central Excise

CENVAT Credit - input services - construction service - Civil constructions - banking and financial services - consulting engineering services - maintenance or repair service - contract service - club membership - insurance service - rent-a-cab travel by air services - denial on account of nexus - denial also on the ground of invalid documents. Duty paying documents - Rule 9 of Cenvat Credit Rules - Held that - Rule 9 of Cenvat Credit Rules, require the assessee to mandatorily submit such documents as are mentioned therein. But perusal of record shows that details of bills have duly been submitted by the appellant as has also been acknowledged by the adjudicating authorities - Even if the documents as mentioned in Rule 9 (1) are not available, the competent authority as mentioned has a discretion to still allow the credit. In the present case, the documents placed have all the above mentioned details except for Service Tax Registration - There is no allegation in the show cause notice that the services have not been received by the appellant nor that they have not been accounted in the books of accounts of the appellant. In such circumstances, the denial of cenvat credit for want of STTG Certificate is not sustainable. Non-availability of Service Tax Registration - Held that - Hon ble High Court of Karnataka in the case of Commissioner vs. Bill Forge Pvt. Ltd. 2011 (4) TMI 969 - KARNATAKA HIGH COURT , wherein the credit was denied with regard to input services on the ground that in the bills Service Tax Registration is not mentioned and that the bills are not in the prescribed format - credit cannot be denied. Denial on the ground that these are not input services and also for want of evidence as that of contract/ agreement, drawing/design etc. - Held that - In the present case there is no allegation in the show cause noticed that services in question were not received or not utilized by the Noticee. There is not even the allegation that services were not received under the cover of invoice and that the Service Tax was not paid. The documents placed on record as also been duly acknowledged by the adjudicating authorities below are in the form of invoices. The perusal thereof makes it clear that the payments for receiving the services mentioned therein i.e. of general insurance service, consultancy service, membership fee service etc. are being made by the company - credit cannot be denied. Time Limitation - Held that - There is no other evidence of the Department to prove any act of the appellant to have an intention to evade the duty. As a result, the Department was not entitled to invoke proviso to Section 73 of Central Excise Act. The show cause notice for the demand beyond the normal period of one year is barred by time. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Admissibility of Cenvat Credit on various input services.
2. Validity of documents for availing Cenvat Credit.
3. Denial of Cenvat Credit for want of contract/agreement.
4. Denial of Cenvat Credit for lack of Service Tax Registration.
5. Denial of Cenvat Credit on membership charges.
6. Limitation period for issuing the show cause notice.

Detailed Analysis:

1. Admissibility of Cenvat Credit on Various Input Services:
The Department observed that the appellant had availed inadmissible input service credit on services like construction service, civil constructions, banking and financial services, consulting engineering services, maintenance or repair service, contract service, club membership, insurance service, rent-a-cab, travel by air services, etc. These were alleged not to be specified input services as per Rule 2(l) of the Cenvat Credit Rules, 2004, as they were not used for manufacturing the final product.

2. Validity of Documents for Availing Cenvat Credit:
The Department disallowed the Cenvat Credit for want of STTG Certificate as required by the Notification dated 22nd August 2014. The appellant argued that the period in dispute was from August 2011 to March 2012, and the 2014 Notification should not be applied retrospectively. The Tribunal agreed, stating that the Notification could not be applied retrospectively and disallowing the credit for want of a document not statutorily required for the period in question was wrong.

3. Denial of Cenvat Credit for Want of Contract/Agreement:
The credit was denied for services mentioned in Annexure D of the show cause notice due to the absence of contracts or agreements. The appellant argued that invoices were provided, containing all necessary details proving the activities were related to the business. The Tribunal found that the absence of contracts or agreements was insufficient to deny the credit, especially when other documents substantiated the services received.

4. Denial of Cenvat Credit for Lack of Service Tax Registration:
The denial of Cenvat Credit for services like consultancy and general insurance services was based on the lack of Service Tax Registration. The Tribunal relied on precedents where the absence of Service Tax Registration was deemed a procedural lapse, and the credit could not be denied if the transaction was bona fide and all other requisite details were present.

5. Denial of Cenvat Credit on Membership Charges:
The credit for membership charges was denied, assuming it was for personal entertainment. The appellant clarified that the membership was for an industrial association, relevant to the business. The Tribunal agreed, stating that the membership was related to business activities and not for personal use.

6. Limitation Period for Issuing the Show Cause Notice:
The appellant contested the show cause notice dated 18.09.2015, arguing it was barred by limitation since it covered the period from September 2010 to July 2015. The Tribunal noted that there were no allegations of duty evasion, and the Department proceeded on presumptions. Therefore, the extended period of limitation could not be invoked, making the demand beyond the normal period of one year barred by time.

Conclusion:
The Tribunal set aside the order under challenge, allowing the appeal. The denial of Cenvat Credit on the grounds mentioned was found unsustainable, and the show cause notice was deemed barred by limitation for the period beyond one year. The appeal was thus allowed in favor of the appellant.