2019 (6) TMI 361 - AT - Central Excise

CENVAT Credit - duty paying documents - invoices issued by ISD - denial of credit on the ground that ISD was not registered at the time of issuance of invoices - denial of credit was also on the ground that invoices are deficient for want of ISD registration number, description of input services and payment of service tax by the service provider. Denial of CENVAT credit on the ground that the appellant have availed the cenvat credit on ISD invoices issued by the unregistered ISD - HELD THAT - The invoices along with attachment contain of the registration number of the input service provider and there is a clear correlation with ISD invoices. There is no dispute that services in respect of which credit was passed on are duly service tax paid, there is no finding of the adjudication authority that the appellant have not used the services covered under ISD invoices in their factory. The only deficiency is that the ISD is not registered while issuing ISD invoices - the issue is settled that even though the credit by the head office is passed on to the manufacturing the unit without having registration, only on this ground credit cannot be denied. Denial of CENVAT credit on the ground that the ISD invoices were not contained the details as required under Rule 4A of service tax Rules, 1994 - HELD THAT - The relevant sub Rule in case of ISD is sub Rule (2) of Rule 4A. According to which the ISD invoices should contain the information was provided under Clause 1 to 4 above. On the perusal of the ISD invoices, that along with its attachment found that all the four details as required under sub-Rule 2 Clause (i) to (iv) are clearly mentioned in the invoices and its attachment. The adjudicating authority has gone beyond the requirement mentioned in sub Rule (2) of Rule 4A and denied the credit on the ground that certain information as provided under Rule 4A(1) are not mention in the ISD invoices - on reading of Rule 4A, we found that the details required under Clause (i) to (iv) of sub-Rule 4A(1) is required only for an invoice issued by a service provider and not by the ISD, therefore, expecting information by the adjudicating authority is without authority of any legal provision, therefore, on this ground also the credit cannot be denied. Denial of credit on the eligibility of the input services - scope of SCN - HELD THAT - No such allegation was made in the SCN. Hence, the admissibility of input services which was not raised in the SCN, the adjudicating authority has no jurisdiction to decide an issue which was not available in the SCN, therefore, the impugned order on this count has clearly travelled beyond the scope of SCN. Penalty - enhancement of penalty - HELD THAT - The Revenue s appeal since it is only for the enhancement of the penalty which is consequential to the demand which is not sustained, the Revenue s appeals only on the penalty will not survive, hence, the Revenue s appeal is dismissed. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved
1. Denial of Cenvat Credit due to ISD not being registered at the time of invoice issuance.
2. Deficiency of invoices for lack of ISD registration number, description of input services, and payment of service tax by the service provider.
3. Eligibility of certain input services under the definition of input services.

Detailed Analysis

Issue 1: Denial of Cenvat Credit due to ISD not being registered at the time of invoice issuance
The appellant was denied Cenvat Credit on the grounds that the invoices were issued by ISD units in Kolkata and Chennai before they obtained ISD registration. The appellant argued that they believed they could apply for ISD registration only after obtaining centralized registration, which was granted on 08.08.2006. The Tribunal found that the invoices contained the registration number of the input service provider and had a clear correlation with ISD invoices. It was established that services in respect of which credit was passed on were duly service tax paid, and the services covered under ISD invoices were used in the appellant’s factory. The Tribunal held that credit cannot be denied merely because the ISD was not registered at the time of issuing invoices, citing the case of Dashion Ltd., which was upheld by the Hon'ble Gujarat High Court.

Issue 2: Deficiency of invoices for lack of ISD registration number, description of input services, and payment of service tax by the service provider
The appellant contended that the ISD invoices were compliant with Rule 4A(2) of the Service Tax Rules, 1994, which requires specific details such as the name, address, and registration number of the input service provider, the name and address of the ISD, the name and address of the recipient of the credit, and the amount of credit distributed. The Tribunal found that the ISD invoices and their attachments contained all the necessary details as per Rule 4A(2). The adjudicating authority's expectation for additional information as per Rule 4A(1), which applies to service providers and not ISDs, was deemed incorrect. Thus, the denial of credit on this ground was not justified.

Issue 3: Eligibility of certain input services under the definition of input services
The adjudicating authority had disputed the eligibility of certain input services, such as Tour Operator Service, Rail Travel Agent Services, and Air Travel Agent Services, claiming they did not qualify under the definition of input services. However, the Tribunal noted that this issue was not raised in the Show Cause Notice (SCN). It was emphasized that the adjudicating authority cannot decide on issues not mentioned in the SCN. The appellant cited the case of Coca Cola (India) Pvt. Ltd., where the Hon'ble Bombay High Court held that the definition of input services is inclusive and expansive, covering any input services used in or related to business activities. Consequently, the Tribunal found that the appellant was entitled to avail credit for these input services.

Conclusion
The Tribunal allowed the appellant's appeals, stating that the denial of Cenvat Credit on the grounds of ISD registration and invoice deficiencies was not justified. The Revenue's appeal for enhancement of the penalty was dismissed as it was consequential to the demand, which was not sustained. The Tribunal emphasized that procedural irregularities should not lead to the denial of substantive benefits, especially when the records are available for verification and no revenue loss is caused.