2018 (4) TMI 1223 - AT - Central Excise

CENVAT credit - duty paying documents - documents on which credits were taken where addressed to a non-registered address - ISD invoices, where there are no evidences that such services were actually services used for taxable manufacturing or output service - Held that - these services were in fact used for setting up of Semmankuppam facility can very well being established by supporting evidence like work order, invoices raised by the service provider linked to such work order, payment of tax by the appellant on such invoices and linking all these documents to the effect to satisfactorily establish that these input services were in fact used for setting up of Semmankuppam facility - The fact that these services were in fact used for setting up of Semmankuppam facility and the services were indeed availed by the appellant can be verified with supporting document - matter on remand. Credit can be availed by the service recipient if the documents issued contain all the essential requirement of Rule 9 of CENVAT Credit Rules, 2004. In fact, the said rule provides for certain discretion to the jurisdictional Assistant Commissioner which can also be exercised to such satisfaction of the conditions. Credit also denied on the ground that the appellant did not pay the full consideration for the services received - Held that - appellant submitted that for certain service providers they have retained some portion of the invoice amount as security, however, they have paid the full tax shown in the invoice. This requires verification of original documents with supporting evidence. CENVAT credit - input services - tour operator services - maintenance service - construction of helipad etc. - denial on the ground of nexus - Held that - appellant submitted that these are essentially to link their manufacturing operation. They can establish the same with supporting evidence - matter requires reconsideration. Appeal allowed by way of remand.

Issues:
1. Eligibility of the appellant to avail credits on various input services.
2. Denial of credit on invoices meant for other units.
3. Denial of credit based on documents not meeting essential requirements.
4. Denial of credit due to partial payment for services received.
5. Denial of credit on input services without nexus to manufacturing activity.

Analysis:
Issue 1: The primary dispute in the appeals was the eligibility of the appellant to avail credits on various input services. The Revenue contended that the credits were not available as many documents were addressed to a non-registered address of the appellant, and there was no evidence that the services were used for taxable manufacturing or output service. The original authority disallowed all credits and imposed a penalty. However, the appellant argued that the services were indeed used for setting up the manufacturing facility, and supporting evidence like work orders and invoices could establish this fact. The Tribunal noted that the denial of credit based on the address technicality was not justified, and remanded the matter for verification by the jurisdictional officer with supporting evidence.

Issue 2: Another issue involved the denial of credit on invoices meant for other units of the appellant. The appellant clarified that most invoices were related to the Semmankuppam factory, with only one instance of mistakenly availing credit for the Karaikal unit, which was later reversed. The Tribunal emphasized that credits could be availed if the documents met the essential requirements of the CENVAT Credit Rules, 2004, and discretion could be exercised by the Assistant Commissioner in such cases.

Issue 3: The denial of credit on certain documents deemed ineligible was also raised. The appellant argued that documents like debit notes and work orders contained all relevant particulars required for availing credit. The Tribunal highlighted that if the documents fulfilled the essential requirements, credit could be availed, subject to verification of payment of full tax to the service provider.

Issue 4: Credits were also denied based on the appellant not paying the full consideration for services received. The appellant explained that they retained a portion of the invoice amount as security but paid the full tax shown in the invoice. The Tribunal directed verification of original documents with supporting evidence to ensure that credit could not be denied if full tax payment was confirmed.

Issue 5: Lastly, credits were denied on certain input services like tour operator services, maintenance services, and construction of a helipad, as they were deemed to have no nexus to the manufacturing activity. The appellant contended that these services were essential to link their manufacturing operation and could provide supporting evidence to establish the connection. The Tribunal remanded the matter for readjudication by the original authority based on relevant case laws available after the impugned order.

In conclusion, the Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority for a fresh decision, considering the observations made regarding the eligibility of credits on various input services and related issues. The appeals were allowed by way of remand, and miscellaneous applications for a change of cause title were also allowed.

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