2017 (5) TMI 568 - AT - Service Tax

CENVAT credit - credit availed on the strength of debit notes - denial on the ground that debit note is neither invoice nor bill or challan as per prescribed under Rule 9(1)(f) - whether Cenvat credit is allowable on the strength of debit note issued by service provider? - Held that - the debit note is only document which was issued by service provider M/s. BPCL for service charges as well as service tax paid thereof. In this circumstances the said debit note should be accepted as invoice or bill or challan. Thus nomenclature has no significant important criteria is that the information mentioned in Rule 4(A) of Service Tax Rules, 1994 should appear in the documents which is raised for service charges as well as service tax to the service recipient - credit allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether Cenvat credit is allowable on the strength of debit notes issued by the service provider.

Issue-wise Detailed Analysis:

1. Allowability of Cenvat Credit on Debit Notes:
The primary issue in this case is whether the appellant, M/s. Oil & Natural Gas Corporation Ltd, can avail Cenvat credit based on debit notes issued by M/s. BPCL for the period from April 2007 to January 2011. The department contends that as per Rule 9(1)(f) of the Cenvat Credit Rules, 2004, only documents such as invoices, bills, or challans are valid for availing Cenvat credit, and debit notes do not fall under this category. Consequently, the adjudicating authority denied the Cenvat credit, demanded interest, and imposed an equal amount of penalty under Rule 15(2) of the Cenvat Credit Rules, 2004.

Arguments by the Appellant:
The appellant argued that the debit notes issued by M/s. BPCL contained all necessary information as required under Rule 4A of the Service Tax Rules, 1994, such as the name, address, registration number of the service provider, name and address of the service recipient, description, classification, value of the taxable service, and the service tax payable. The only difference was the title of the document being a debit note instead of an invoice, bill, or challan. The appellant cited various judgments supporting their stance that debit notes should be considered valid documents for availing Cenvat credit, including:
- Atlas Documentary Facilitators Co. Pvt. Ltd. Vs. CST
- CCE Vs. Gwalior Chemicals Inds. Ltd.
- Pharmalab Process Equipments Pvt. Ltd. Vs. CCE
- SPM Tools Vs. CCE
- Mahanagar Gas Ltd. Vs. CCE
- Emmes Metals Pvt. Ltd. Vs. CCE

Arguments by the Respondent:
The respondent, represented by the Commissioner (A.R.), reiterated the findings of the impugned order and emphasized that allowing Cenvat credit on documents other than those prescribed (invoice, bill, challan) could lead to misuse. The respondent supported their argument with several judgments, including:
- BANCO Products v/s CCE
- L&T v/s CCE
- CCE v/s Avis Electronics
- Hero Cycle v/s CCE
- CCE v/s Vandana Energy & Steel
- CCE v/s Vision Electronics
- CCE v/s Tayal Steel Pvt. Ltd.
- Union of India v/s Kirloskar Pneumatic Co.

Tribunal's Findings:
The Tribunal examined whether the debit notes issued by M/s. BPCL could be accepted as valid documents for availing Cenvat credit. It noted that the debit notes in question contained all the required information as per Rule 4A of the Service Tax Rules, 1994. The Tribunal emphasized that the nomenclature of the document (whether it is called an invoice, bill, challan, or debit note) is not significant as long as it contains the necessary information. The Tribunal referenced several precedents where debit notes were accepted as valid documents for Cenvat credit, including:

- Atlas Documentary Facilitators Co. Pvt. Ltd. (supra): The Tribunal held that the purpose of prescribing a document for availment of credit is to enable verification of the payment of service tax and the receipt and consumption of service. The format of the document is not prescribed, only the information it must contain.

- Gwalior Chemicals Inds. Ltd. (supra): The Tribunal distinguished this case from others cited by the respondent, noting that the debit notes contained all necessary information and were thus valid for Cenvat credit.

- Pharmalab Process Equipments Pvt. Ltd. (supra): The Tribunal remanded the case to verify if the debit notes contained all required particulars, suggesting that if they did, Cenvat credit should be allowed.

- SPM Tools (supra): The Tribunal found that the debit notes contained all necessary information and allowed Cenvat credit.

- Mahanagar Gas Ltd. (supra): The Tribunal observed that the debit notes contained all particulars required under Rule 9(2) of the Cenvat Credit Rules, 2004, and allowed the credit.

- Emmes Metals Pvt. Ltd. (supra): The Tribunal reiterated that debit notes containing the necessary information as per Rule 4A of the Service Tax Rules, 1994, are valid for Cenvat credit.

Conclusion:
The Tribunal concluded that the debit notes issued by M/s. BPCL contained all the necessary information required under Rule 4A of the Service Tax Rules, 1994, and thus should be accepted as valid documents for availing Cenvat credit. The impugned order was set aside, and the appeal was allowed.