2022 (11) TMI 690 - AT - Central Excise

CENVAT Credit - fake documents or not - documents did not contain the registration number of the service provider and correct address of the appellant - input service or not - ineligible credit availed on the portion of money retained by the appellant. Fake documents or not - denial on the ground that the invoices are addressed to the Mettur Plant-II and not to the address of the appellant at Cuddalore - HELD THAT - Though it is alleged that the invoices are mentioned in the name of the Mettur Plant, the Department does not have a case that the services have been availed by the Mettur Plant. The appellant has submitted that the name of the unit was wrongly mentioned by the vendor. Taking note of this aspect, the denial of credit on this ground to the tune of Rs.958/- is allowed. Denial of credit on the ground that the Service Tax registration number of the service provider is not mentioned in the invoices - HELD THAT - When the registration number of the service provider is available for verification, the credit ought not to have been denied merely because it is not mentioned as a part of the invoice when the same has been included later - the denial of credit on this ground cannot be justified. CENVAT Credit - credit was availed on the debit notes issued by the Input Service Distributor - denial on the ground that the same is not a prescribed document as per Rule 9 of the CENVAT Credit Rules, 2004 - HELD THAT - In case of any doubt, the Assistant Commissioner or Deputy Commissioner, as the case may be, can verify and call for further information. In the present case, the appellant has stated that the credit has been availed on the debit notes which have been issued by their Head Office, which has taken ISD registration. When there is no doubt with regard to the services availed and the tax paid, the credit ought not to have been denied - the credit is eligible. CENVAT Credit - denial on the ground that the appellant had not furnished the necessary documents - HELD THAT - The credit in respect of the services provided by M/s. SMK Construction, M/s. Madras Chemicals Polymers, etc., has been denied alleging that the appellant has not produced the necessary documents in this regard. The total credit disallowed in this regard is to the tune of Rs. 43,739/- and Rs.91,926/- respectively. It is seen that with regard to the amount of Rs.43,739/-, the appellant had produced documents and it is noted by the Original Authority that these documents were addressed to the registered Head Office - the issue with respect to non-production of documents and documents issued in the name of the Head Office to the tune of Rs.43,739/- and Rs.91,926/- requires to be remanded back to the Original Authority for verification. Helipad Repair and Maintenance services - credit has been availed by the appellant prior to 01.04.2011 - input services or not - HELD THAT - During the said period, the definition of input service had a wide ambit as it included services in relation to business activities. It is seen that almost all the services would be covered during this period and for this reason, the denial of credit alleging that the said services do not have nexus with the manufacturing activity is erroneous. The credit is eligible. Credit in respect of Banking Charges - Credit denied by the Department stating that these amounts incurred by the appellant are with regard to the reimbursement of travel expenses - HELD THAT - The Banking Charges along with Service Tax were paid by the appellant on the amount that has been transacted through the bank. The credit on such Banking Charges is eligible and is, therefore, allowed. It is noted that a major portion of the disallowance of credit is in respect of the input Service Tax credit with regard to retention of money by the appellant - the appellant has paid Service Tax on the entire consideration. Only ten per cent has been deducted from the consideration and this amount does not include the Service Tax element. For example, if the consideration paid is Rs.48,000/-, the appellant has paid 10% Service Tax plus applicable cesses Rs.4,800/- Rs.96/- Rs.48/- (invoice at page 53, Annexure-C to the Appeal Memorandum). The grand total including the consideration plus Service Tax is mentioned as Rs.52,944/-. The appellant has retained 10% i.e., Rs.4,800/- and not 10% of Rs.52,944/-. Thus, the entire consideration has suffered Service Tax even though 10% of the consideration has been retained by the appellant. The credit in respect of all the services are eligible, except for those which have been denied on the allegation that documents have not been produced, to the tune of Rs.43,739/- and Rs.91,926/- which are remanded to the Original Authority. The impugned order is modified to the extent of setting aside the disallowance of credit on all the services, except those services in regard to the amounts of Rs.43,739/- and Rs.91,926/-. Appeal allowed in part and part matter remanded.

Summary

Issues:
1. Denial of CENVAT Credit availed by the appellant from October 2009 to September 2011.
2. Grounds for denial: Defective documents, incorrect address, ineligible credit, etc.
3. Arguments presented by the appellant regarding each ground of denial.
4. Department's response to the appellant's arguments.
5. Judgment on each ground of denial and eligibility of CENVAT Credit.

Analysis:

Issue 1 - Denial of CENVAT Credit:
The appellant, engaged in manufacturing PVC Resin, availed CENVAT Credit on Excise Duty paid inputs and Service Tax on input services. Show Cause Notices were issued proposing denial of credit due to defective documents and ineligible credit availed. The Original Authority partially allowed credit and imposed penalties. The Commissioner (Appeals) upheld the decision, leading to the current appeal.

Issue 2 - Grounds for Denial:
Grounds for denial included incorrect address on invoices, missing service provider registration numbers, availing credit on debit notes, lack of necessary documents, and denial based on retained money. The appellant argued each point, providing explanations and clarifications.

Issue 3 - Appellant's Arguments:
The appellant's counsel argued that errors in invoices were vendor mistakes, registration numbers were later added, credit on debit notes was valid, all necessary documents were now produced, and services like Helipad repair and Banking Charges were eligible for credit due to business nexus.

Issue 4 - Department's Response:
The Department's Authorized Representative supported the denial, citing lack of document verification, absence of nexus for certain services, and insufficient correlation between retained money and credit availed.

Issue 5 - Judgment on Denial and Eligibility:
The judgment allowed credit where invoices had minor errors, registration numbers were later added, and credit was availed on valid documents. Credit was remanded for further verification where necessary documents were not initially produced. Services like Helipad repair and Banking Charges were deemed eligible for credit due to business nexus. The judgment upheld most of the appellant's arguments, setting aside the denial of credit on most services except for specific amounts remanded for verification.

In conclusion, the appeal was partly allowed, providing relief on most grounds of denial and remanding specific amounts for further verification, ensuring a fair assessment of CENVAT Credit eligibility for the appellant.