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2023 (4) TMI 1012 - AT - Central ExciseTerritorial Jurisdiction of the Commissioner to issue the SCN - Input service Distributor (ISD) - Recovery of CENVAT Credit alongwith interest and penalty - Advertising services (Credit allowed) - Business Auxiliary Services, services of hotels and restaurants, event management services, mandap keeper services and tour operator Services (credit denied) - extended period of limitation. Territorial Jurisdiction - It is submitted that, Commissioner had jurisdiction over Rajasthan where the appellant is located and had no jurisdiction over Gujarat where its head office is located - HELD THAT - We do not find any provision under which the ISD which does not avail or utilize the CENVAT credit but merely passes the credit through ISD invoices to its units can be issued a notice and any wrongly passed CENVAT credit can be recovered from it. On a specific query from the bench, learned counsel for the assessee agrees that there is no provision under which CENVAT credit wrongly passed can be recovered from the ISD These units (availing credit passed by ISD) file returns which show, among other things, the CENVAT credit availed. The jurisdictional officers have to scrutinize and assess them and if any CENVAT credit is irregularly availed on the strength of invoices (including ISD invoices), it can be recovered under Rule 14 of CCR from them. The case laws relied upon by the learned counsel deal with situations where the jurisdictional officer of the assessee who used the CENVAT credit wanted to reassess the duty paid by the manufacturer of the goods - reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE CUSTOMS VERSUS MDS SWITCHGEAR LTD. 2008 (8) TMI 37 - SUPREME COURT and CST, AHMEDABAD VERSUS GODFREY PHILIPS INDIA LTD. 2008 (12) TMI 90 - CESTAT, AHMEDABAD . The SCN was issued correctly by the Commissioner and the impugned order was issued as per his jurisdiction. The question of jurisdiction is answered in favour of the Revenue. Advertising services - Case of Revenue is that at the time the services were availed, Coromandel brand did not belong to the appellant - HELD THAT - A plain reading of Rule 2(l) of CCR allows credit of advertising expenses and it does not place on any restrictions on what type of advertising qualifies for CENVAT credit. So long as the advertisement is for the excisable goods sold or the taxable services rendered, there can be no restriction on availing the CENVAT credit. In particular, there is no condition that the brand which has been advertised should have been owned by the assessee availing CENVAT credit. If company A manufactures goods under the brand name belonging to company B under licence, it is natural for A to advertise its goods with that brand name and such advertising expenses get squarely covered under Rule 2(l) of CCR - the assessee was entitled to CENVAT credit on advertising services and the Commissioner has correctly allowed CENVAT credit - Revenue s appeal deserves to be dismissed. Business Auxiliary Services and Services of hotels and restaurants - HELD THAT - CENVAT credit has to be allowed only if the excise duty paid on the inputs and service tax paid on the input services used in or in relation to the manufacture of the final products. The law does not permit CENVAT credit of any service tax paid on any bill for any service availed in the course of business. If such was the intention of the law, there would have been no need to restrict credit to inputs and input services and further clearly defining these two terms. The term input service has a means clause and an inclusion clause which further enlarges the scope of the term and an exclusion clause which reduces its scope - Since the appellant is claiming the benefit of CENVAT credit, it is for the appellant to show how the services fall within the definition of input service . It is not convincing that celebrating marriage anniversaries, family visits, melas, and buying chocolates and pens, etc. fall within the definition of the input services of the appellant. The detailed reasoning given by the Commissioner in the impugned order for denying CENVAT credit of Rs. 31,96,936/- on business auxiliary services, agreed upon. Event management services - HELD THAT - These services were availed, as recorded in the impugned order, to arrange annual award and other functions/ programmes for the dealers. However, the Commissioner denied CENVAT credit that the invoices did not mention what event was being organized - When one hires a service provider, he may not always indicate in detail the programme which is being organized. Instead, he indicates the services which he provided and the name of the client - the services rendered towards the annual awards or other programmes for the dealers have a direct nexus to sales promotion and CENVAT credit is admissible on such services. Accordingly, we allow CENVAT credit of Rs. 34,800/- availed by the appellant on these services. Mandap keeper services - HELD THAT - If the invoice was issued to the appellant and it was for food for 1100 persons and the appellant claims that it was for their business function, there is no reason to doubt and say that it was for a private function in the absence of any evidence that the invoice meant for a personal function was shown as an invoice for official meeting and billed to the appellant - thus, the appellant was entitled to CENVAT credit of this amount. Tour operator Services - HELD THAT - Given the nature of the invoice in question, it does appear to be an invoice for holiday of a large number of persons. There appears nothing to show that this expense was on account of any business trip. In view of the specific exclusion of the services meant for personal consumption or use of any employee in the definition of input service , thus, no CENVAT credit will be admissible on this account. Assessee s appeal is partly allowed to the extent of allowing CENVAT credit on Event Management services and Mandap Keeper Services and the impugned order stands modified to this extent.
Issues Involved:
1. Jurisdiction of the Commissioner to issue the SCN and pass the impugned order. 2. Allowance of CENVAT credit on advertising services. 3. Denial of CENVAT credit on Business Auxiliary Services, services of hotels and restaurants, event management services, mandap keeper services, and tour operator services. 4. Invocation of extended period of limitation. 5. Imposition of penalty. Jurisdiction: The appellant argued that the SCN should have been issued to the head office in Gujarat, not to the appellant in Rajasthan, as the ISD invoices were issued by the head office. The Revenue countered that the Commissioner had jurisdiction over the appellant in Rajasthan and could recover irregularly availed CENVAT credit under Rule 14 of the CCR. The Tribunal found no provision to recover CENVAT credit from the ISD and held that the SCN was correctly issued by the Commissioner with jurisdiction over the appellant. Thus, the jurisdiction issue was decided in favor of the Revenue. Advertising Services: The Revenue appealed against the allowance of CENVAT credit on advertising services, arguing that the expenses were for advertising the 'Coromandel' brand, which did not belong to the appellant at the relevant time. The Tribunal noted that Rule 2(l) of CCR allows credit for advertising expenses without restrictions on brand ownership. It held that the appellant was entitled to CENVAT credit on advertising services and dismissed the Revenue's appeal. Business Auxiliary Services and Services of Hotels and Restaurants: The appellant contended that the CENVAT credit on restaurant and hotel services was for marketing staff and should be allowed. The Tribunal found that the appellant failed to show how these services fell within the definition of 'input service.' The Commissioner's detailed reasoning for denying CENVAT credit on these services was upheld. Event Management Services: The appellant argued that these services were for events to incentivize dealers and should qualify as sales promotion. The Tribunal agreed, noting that such services have a direct nexus to sales promotion and allowed CENVAT credit of Rs. 34,800/-. Mandap Keeper Services: The appellant claimed that the services were for business functions. The Tribunal found no reason to doubt the appellant's claim that the invoice for food charges was for a business function and allowed the CENVAT credit. Tour Operator Services: The appellant claimed CENVAT credit for tour operator services for dealer travel. The Tribunal found that the invoice appeared to be for a holiday, not a business trip, and upheld the Commissioner's denial of CENVAT credit based on the exclusion clause for personal use. Conclusion: Revenue's appeal was dismissed. The assessee's appeal was partly allowed, granting CENVAT credit on Event Management services and Mandap Keeper Services, while the rest of the impugned order was upheld. The Tribunal modified the impugned order accordingly.
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