2019 (6) TMI 898 - AT - Central Excise

CENVAT Credit - duty paying invoices - Rule 9(1)(b) of CENVAT Credit Rules, 2004 - supplementary invoices issued was only relating to inputs and capital goods . There is no mention of input services in the said provision till the said Rule was amended by insertion of Rule 9(1)(bb) to the said CENVAT Credit Rules, 2004 w.e.f. 01.04.2011 - reverse charge mechanism - HELD THAT - On being pointed out by the Revenue in July 2009, the Appellants have discharged Service Tax for the services received from overseas clients under Section 66A of Finance Act, 1994. Consequently, they availed CENVAT Credit of the service tax amount so paid considering the same as an input service. Revenue does not dispute the said service as input service but it is their contention that since the Service Tax was recovered from the Appellant, which was initially not paid by the Appellant due to wilful mis-statement or suppression of facts, therefore, the credit of the amount so paid is not admissible to them in view of Rule 9(1)(b) of CENVAT Credit Rules, 2004. Tribunal analysing the circumstances under which the service tax was paid by the Appellant for the value of sales commission paid to the overseas buyers under reverse charge mechanism have arrived at the conclusion that there was no suppression, mis-statement etc on the part of the Appellant in discharging the service tax even though it was paid after being pointed by the department. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Entitlement to avail CENVAT Credit for Service Tax paid on overseas services
- Interpretation of Rule 9(1)(b) of CENVAT Credit Rules, 2004

Entitlement to avail CENVAT Credit for Service Tax paid on overseas services:
The appeal was filed against an Order-in-Original regarding the non-payment of Service Tax by the Appellant for services received from overseas providers. The Appellants, engaged in pump manufacturing, paid the Service Tax after a delay and claimed credit for the same. The main issue was whether the Appellants were entitled to avail CENVAT Credit of the Service Tax paid on sales commission to overseas service providers under reverse charge basis. The Revenue contended that since the Service Tax was initially not paid due to wilful misstatement or suppression of facts, the credit was not admissible under Rule 9(1)(b) of CENVAT Credit Rules, 2004.

Interpretation of Rule 9(1)(b) of CENVAT Credit Rules, 2004:
The Tribunal analyzed the provisions of Rule 9(1)(b) prior to its amendment and referred to a judgment of the Hon'ble Madras High Court in a similar case. The Madras High Court clarified that Rule 9(1)(b) allows CENVAT credit against supplementary invoices issued by a manufacturer or importer of inputs or capital goods, with no reference to input service providers. The Tribunal concurred with this interpretation, stating that the Appellant correctly availed the CENVAT credit based on invoices. The Tribunal also noted that there was no suppression or misstatement by the Appellant in discharging the Service Tax, even though it was paid after being pointed out by the department.

In conclusion, the Tribunal found no justification to deny the Appellant the CENVAT Credit amount and set aside the impugned order, allowing the appeal with any consequential relief as per law. The judgment emphasized the correct interpretation of Rule 9(1)(b) and the absence of any intent to evade payment of duty by the Appellant, leading to the decision in favor of the Appellant.