2022 (3) TMI 913 - AT - Central Excise

CENVAT Credit - duty paying document / invoices - cenvat credit availed on the strength of railway receipt which contained all the details as prescribed under Rule 9 of the Cenvat Credit Rules - Revenue alleged that since this certificate for transportation of goods by the appellant has been prescribed by the rules w.e.f. 27.08.2014, the cenvat credit availed by them on the basis of railway receipts in respect of the said services received from Railway is improper - HELD THAT - There is no dispute that in terms of the definition of input services as per Rule 2(k), the services against which the credit has been availed are the input services for the appellant. Admissibility of the cenvat credit is determined as per Rule 3 of the Cenvat Credit Rules. Rule 9 prescribes the documents against which cenvat credit can be taken by the appellant. It does not determine the admissibility of cenvat credit in any manner. Sub-rule (fa) subsequently provided for the documents issued by the Railway as documents for availing cenvat credit. However, such prescription w.e.f. 27.8.2014 could not have been the reason for holding that the credit availed against the railway receipts containing all the details was inadmissible. Rule 9 is subservient to Rule 3 for determining the admissibility of cenvat credit. If the requirements of Rule 3 are satisfied, the credit could not have been denied. Further, Rule 9(2) read with Rule 4A of the Service Tax Rules provides that any document which contains the details as prescribed under Rule 4A shall be considered as a proper duty paying document for all the purposes including availment of cenvat credit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Admissibility of cenvat credit based on railway receipts.
2. Impact of Rule 9 amendment on cenvat credit availed.
3. Justification for denial of cenvat credit by the Commissioner.
4. Applicability of Rule 3 and Rule 9 in determining cenvat credit admissibility.
5. Comparison with previous judgments on cenvat credit eligibility.

Analysis:
1. The appeal challenged the Order-in-Original confirming a demand of ?17,13,10,995 under Section 11A(10) of the Central Excise Act, 1944, along with interest and penalty imposed by the Commissioner. The appellant availed cenvat credit based on railway receipts, which the Revenue alleged to be improper post an amendment to Rule 9 by Notification No. 26/2014-CE. A show cause notice was issued, leading to the impugned order.

2. The amendment to Rule 9 added sub-rule (fa) requiring a Service Tax Certificate for Transportation of goods by Rail for availing cenvat credit. The Revenue contended that since this certificate was prescribed from 27.08.2014, the credit availed by the appellant earlier was inadmissible. However, the Tribunal noted that Rule 9 is subservient to Rule 3 for determining credit admissibility.

3. The Commissioner's order denying cenvat credit was based on the amended Rule 9 and the absence of the newly prescribed certificate. The appellant challenged this decision, arguing that compliance with Rule 3 is crucial for credit admissibility, and the amendment to Rule 9 does not automatically render prior credit availed invalid.

4. The Tribunal analyzed Rule 3, Rule 9, and Rule 4A of the Service Tax Rules to establish that fulfillment of Rule 3 requirements is essential for cenvat credit eligibility. The Tribunal emphasized that if the conditions of Rule 3 are met, denial of credit solely based on the absence of the newly prescribed certificate is unjustified.

5. The Tribunal referenced the Hon'ble Bombay High Court's judgment in Essel Propack Ltd., highlighting that the absence of specific documents for availing credit during a particular period does not preclude credit eligibility. The judgment emphasized the importance of genuine documents reflecting tax payment for credit availment, irrespective of procedural aspects like Rule 9.

In conclusion, the Tribunal found no merit in the Commissioner's order and allowed the appeal, setting aside the demand and penalties imposed. The decision emphasized the primacy of Rule 3 in determining cenvat credit admissibility and highlighted the significance of genuine documents reflecting tax payment for credit availment, as established in previous legal precedents.