2008 (9) TMI 74 - AT - Service Tax

Input services - provisions of rule 9(1)(b) read with Explanation under CCR - appellants submission that documents for availment of input service tax credit were specified under clauses (e), (f) and (g) only, that clause (b) invoked in the show-cause notice and by the adjudicating authority did not refer to any document covering input service tax and that the Explanation to clause (b) was, therefore, not relevant to the invoices in question, is acceptable credit allowable

Summary

Issues:
1. Denial of Cenvat credit on input services by the Commissioner.
2. Interpretation of Rule 9(1) of the CENVAT Credit Rules, 2004.
3. Applicability of the Explanation clause to different clauses of Rule 9(1).

Analysis:
1. The case involved an appeal against the Commissioner's order denying Cenvat credit of Rs. 53,52,737 on input services, demanding equal duty, and imposing penalties based on invoices issued by the input service provider. The Commissioner held that the invoices did not comply with Rule 9(1)(b) and its Explanation under the CENVAT Credit Rules, 2004. The appellants argued that the Explanation was not applicable to clauses (e), (f), and (g) of Rule 9(1) and that the Commissioner's interpretation was incorrect. The Tribunal found that the invoices did not fall under Rule 9(1)(b) and that the Explanation was not relevant to the invoices in question, as they pertained to service tax on input services specified under clauses (e), (f), and (g) of Rule 9(1).

2. The Tribunal analyzed Rule 9(1) of the CENVAT Credit Rules, 2004, which outlines the documents for availing CENVAT credit. The rule specifies various documents, including invoices, bills, challans, and certificates, for different scenarios. The Explanation clause clarifies the scope of a "supplementary invoice" and its inclusion of challans or similar documents for additional duty leviable under the Customs Tariff Act. The appellants contended that the Explanation was erroneously applied to clauses (e), (f), and (g) of Rule 9(1) when it was intended for clause (b) only. The Tribunal agreed with the appellants, emphasizing that the Explanation did not apply to the specific clauses governing input service tax credit.

3. The Tribunal concluded that the Commissioner's interpretation, invoking the Explanation clause in a manner not intended by the legislative authority, was incorrect. The invoices in question related to service tax on input services, falling under clauses (e), (f), and (g) of Rule 9(1), and not clause (b) to which the Explanation applied. Therefore, the denial of credit by the Commissioner was unfounded. The Tribunal allowed the appeals, setting aside the impugned orders and ruling in favor of the appellants, emphasizing the correct application of Rule 9(1) and the Explanation clause in the context of availing CENVAT credit on input services.