2019 (7) TMI 1183 - AT - Service Tax

CENVAT Credit - input services - tours travels - hotel expenses - HELD THAT - It is considered proper to remand the matter to the original adjudicating authority to re-determine the admissibility/ in admissibility of Cenvat Credit on the basis of the documents already produced by the appellant before it since scrutinization of such voluminous documents at the second appeal late stage would amount to mini trial which is not supposed to be done in an appeal proceeding. Requirement of CA certificate though not a mandatory requirement under the provision of CCR 2004 could act as an additional corroborative evidence in support of appellant s claim for which no finding on the legality of the Commissioner s order for production of CA certificate is required to be given at this stage. Appeal allowed by way of remand.

Summary

Issues: Denial of Cenvat Credit on tax paid towards input services of tours & travels and hotel expenses.

In this case, the appellant, engaged in stock broking and financial services, challenged the denial of Cenvat Credit leading to duty demand, interest, and penalties. The appellant faced show cause notices alleging wrong availment of credit, which were contested. The Commissioner confirmed duty demand in both Order-In-Original and Order-In-Appeal. The appellant appealed this decision. The Commissioner (Appeals) rejected the appeal based on outdated judgments, which were later overruled by larger Bench decisions. The appellant argued that relevant documents proving nexus between input and output services were submitted, but were not considered. The appellant contended that the denial of credit on foreign travel expenses lacked legal basis as per CCR rule. The respondent department argued that the appellant failed to establish the linkage between input and output services.

Upon review, it was found that the lower authorities misinterpreted the CCR rule 2004 by denying credit on travel benefits for employees, which did not align with the rule's admissibility criteria. The legal position evolved after the Supreme Court's decision in Ramala Sahakari Chini Mills Ltd. case, expanding the definition of "includes" in Rule 2a of the Cenvat Credit rule 2004. The appellant provided detailed explanations and evidence regarding official tours and expenses, demonstrating the legitimate use of credit. The Tribunal decided to remand the matter to the original adjudicating authority for re-determination based on the documents already submitted. The requirement of a CA certificate was deemed unnecessary at this stage. Therefore, the appeal was allowed for remand to re-adjudicate the admissibility of Cenvat Credit based on the observations made.

This detailed analysis of the judgment highlights the issues related to the denial of Cenvat Credit on input services of tours & travels and hotel expenses, the legal arguments presented by both parties, the misinterpretation of the CCR rule by lower authorities, and the decision to remand the case for re-evaluation based on the evidence provided by the appellant.