2023 (1) TMI 1184 - AT - Service Tax

CENVAT Credit - providing non-taxable output services also i.e. trading of goods as well as exempted output services - non-maintenance of separate records - Rule 6(2) of Cenvat Credit Rules, 2004 - failure to produce any of the original input service invoices for verification by audit officers and submission of randomly selected photocopies of input services invoices on Cenvat credit availed - HELD THAT - The appellant has violated provisions of Rule 5A (2) of the Service tax Rules, 1994. Further they had availed Cenvat credit amounting to Rs. 7,10,60,401/- by making some consolidated entries in their Cenvat credit register during the period June 2014 to March 2015, which involves hundreds of input service invoices of 2007-2008 to 2013-14. The Cenvat credit has been availed without any proof of having valid documents as prescribed under Rule 9 of the Cenvat Credit Rules, 2004. They have not fulfilled the conditions of Rule 6(3A) of Cenvat Credit Rules 2004 - there is no manipulation in Cenvat credit register and all the documents and information has been provided to the department. All the original invoices are always available at their respective regional office where the input service is received. In this circumstance, the matter should go back to the adjudicating Authority for verification of the invoices /documents and Cenvat credit register maintained by the appellant - this matter is remanded to the adjudicating authority to give another opportunity to the appellant to establish its entitlement. The dispute relating to admissibility of Cenvat credit in the absence of exercise of option to avail proportionate Cenvat credit under the provisions of Rule 6 of Cenvat Credit Rules 2004 is also remanded to the adjudicating authority for a fresh decision - the condition in Rule 6(3A) to intimate the department is only a procedural one and such procedural lapse is condonable and denial of substantive right for such procedural failure is unjustified. The matter is remanded to the adjudicating authority to decide the matter a fresh after verifying the Cenvat records of the assessee - the appeal are allowed by way of remand to the adjudicating authority.

Issues:
1. Violation of principles of natural justice in passing the impugned order.
2. Compliance with Rule 6 of the Cenvat Credit Rules, 2004 regarding availing proportionate Cenvat credit.
3. Denial of Cenvat credit based on the time limit for availing credit.
4. Allegations of discrepancy in the records maintained by the Appellant.
5. Invocation of extended period of limitation.
6. Failure to produce original input service invoices for verification.
7. Admissibility of Cenvat credit without exercising the option under Rule 6 of Cenvat Credit Rules, 2004.

Analysis:

1. The Appellant contended that the impugned order violated principles of natural justice and ignored settled legal positions. They argued that the procedure under Rule 6(3A) of the Cenvat Credit Rules, 2004 was substantially followed, even though there was a procedural lapse in intimating the department. The Appellant cited relevant case laws to support their argument.

2. The Appellant further argued that denial of Cenvat credit based on the time limit for availing credit was unjustified as there was no statutory time limit before a certain date. They provided examples of similar cases and judgments to support their stance.

3. Regarding the allegation of discrepancy in records, the Appellant clarified that the discrepancy was due to different formats used for maintaining the Cenvat Credit Register. They emphasized that there was no discrepancy in the amounts claimed and that no double availing of credit occurred.

4. The Appellant challenged the invocation of the extended period of limitation, stating that the case was solely based on information provided by them. They argued that the invocation was not sustainable in their case.

5. The Appellant also addressed the issue of failure to produce original input service invoices for verification. They claimed that all original invoices were available at their regional offices and that photocopies were provided when requested. The Appellant maintained that there was no violation of Rule 9 of the Cenvat Credit Rules, 2004.

6. The Tribunal remanded the matter to the adjudicating authority for verification of invoices, documents, and Cenvat credit records. They emphasized the need for the Appellant to establish their entitlement and compliance with the rules. The dispute regarding the admissibility of Cenvat credit without exercising the option under Rule 6 was also remanded for a fresh decision, with the Tribunal considering the procedural lapse as condonable.

7. Ultimately, the impugned order was set aside, and the matter was remanded to the adjudicating authority for a fresh decision after verifying the Cenvat records. Both parties were granted the opportunity to produce evidence in their favor, and the appeal was allowed by way of remand.

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