2025 (2) TMI 588 - AT - Central Excise

CENVAT Credit - input service - advertisement services tour operator services used for consignment agents and installation/dismantling of machinery at Haridwar Unit of the appellant - Tour Operator Service - duty paying invoices - invoices not in the name of the assessee - extended period of limitation - penalty. Services in terms of the inclusive part of the definition of input service under Rule 2(l) - HELD THAT - The appellant was manufacturing at their Bhiwadi Unit LED TV Condenser Coils Evaporatire Coils and Air Conditioners for Railways only whereas CENVAT Credit of Rs.73, 56, 722/- was availed in respect of service tax paid for advertising of the air conditioners meant for domestic purpose which were manufactured at another unit of the appellant. That CENVAT Credit of service tax paid on advertisement service can be availed only in terms of Rule 2(l) of CCR - There is no co-relation of the input services received and consumed in the unit at Bhiwadi. The appellant failed to discharge the burden that the input service taken and utilised was related to manufacture clearance and sale of the final products manufactured by them - The appellant is not entitled to the CENVAT Credit on account of advertisement services relating to the Air Conditioners for domestic purpose which were manufactured at another unit of the appellant. Tour Operator Service - Input services or not - consignment agents were carrying out the function of sales promotion for the appellant as they were entrusted with the responsibility of interacting with the buyers arranging sale of the goods to the buyers and also for pitching further sales to buyers - HELD THAT - These services do not fall within the definition of input service as it has no relation to manufacture of their finished goods manufactured by the Bhiwadi unit in as much as these services have been utilised at their other unit at Haridwar. Moreover as noted by the Adjudicating Authority the services of execution of contract construction services and service of foundation or making of structure for support of capital goods as well as tour operator service have been mentioned under the exclusion clause of the definition of input service definition. Hence the appellant is not entitled to avail the CENVAT Credit on the said amount. Credit of service tax taken in respect of invoices which are not in the name of the assessee - HELD THAT - To be a valid document in terms of Rule 9(2) it is necessary that the document contains all particulars as mentioned therein to avail the credit. The name of the consignee or service receiver on the invoice is the basic requirement for availing the CENVAT Credit. Considering the facts of the present case it is undisputed that the invoices were not in the name of the appellant and therefore cannot be said to be valid documents as per Rule 9(2). The appellant was therefore not eligible to avail the CENVAT Credit on the basis of the invoices which were not in their name. Extended period of limitation - penalty - a ppellant had already reversed the credit before the issuance of the show cause notice - HELD THAT - The appellant has wrongly availed and utilised the credit amounting to Rs.80, 95, 227/- on in-eligible input services by suppressing material facts with intent to evade payment of duty and have also contravened the provisions of Rule 2 and 3 of CCR hence the said amount is recoverable and the appellant has rightly debited the said wrongly availed credit which has to be approspriated to the Government Account. Under the circumstances the appellant is also liable to penal action under the provisions of Rule 15(2) of CCR read with section 11 AC (1)(c)of the Act. Conclusion - i) The appellant is not entitled to the CENVAT Credit on account of advertisement services relating to the Air Conditioners for domestic purpose which were manufactured at another unit of the appellant. ii) The services of execution of contract construction services and service of foundation or making of structure for support of capital goods as well as tour operator service have been mentioned under the exclusion clause of the definition of input service definition. Hence the appellant is not entitled to avail the CENVAT Credit on the said amount. iii) The invoices were not in the name of the appellant and therefore cannot be said to be valid documents as per Rule 9(2). The appellant was therefore not eligible to avail the CENVAT Credit on the basis of the invoices which were not in their name. iv) Extended period of limitation and penalties also invoked. There are no infirmity in the impugned order and the same is hereby affirmed. The appeal is accordingly dismissed.

Summary

The issues presented and considered in the legal judgment are as follows:1. Whether the appellant wrongly availed CENVAT Credit on ineligible input services during a specific period.2. Whether the CENVAT Credit on advertisement services, tour operator services used for consignment agents, and installation/dismantling of machinery at a specific unit of the appellant is admissible.3. Whether the appellant is entitled to challenge the invocation of the extended period of limitation and imposition of penalty for wrongly availing in-eligible input services.Issue-wise detailed analysis:Issue 1:The appellant was found to have wrongly availed CENVAT Credit on ineligible input services during a specific period, leading to a demand for repayment along with penalties. The appellant challenged this order on the grounds that interest should not be recoverable as their closing balance was never less than the amount of CENVAT Credit in question.Issue 2:The main issue for consideration was the admissibility of CENVAT Credit on advertisement services, tour operator services for consignment agents, and installation/dismantling of machinery at a specific unit of the appellant. The appellant argued that these services were eligible for credit as they were related to sales promotion and other business activities. However, the Adjudicating Authority found that the appellant failed to establish a direct correlation between these services and the manufacture, clearance, and sale of their final products.The Adjudicating Authority referred to legal precedents to support its decision, emphasizing the need for an integral connection between the services and the business of manufacturing final products to qualify for CENVAT Credit. The Tribunal affirmed the Adjudicating Authority's decision, stating that the appellant was not entitled to the CENVAT Credit on the mentioned services.Issue 3:The appellant also challenged the invocation of the extended period of limitation and imposition of penalties for wrongly availing in-eligible input services. The appellant argued that they had already reversed the credit before the issuance of the show cause notice. However, the Tribunal held that the appellant had wrongly availed and utilized the credit on ineligible input services, contravening the provisions of the CENVAT Credit Rules. Therefore, the Tribunal affirmed the imposition of penalties and the recovery of the wrongly availed credit.Significant holdings:The Tribunal affirmed the Adjudicating Authority's decision regarding the in-admissibility of CENVAT Credit on certain services due to the lack of a direct correlation with the appellant's manufacturing activities. The Tribunal also upheld the imposition of penalties and the recovery of wrongly availed credits, emphasizing the appellant's failure to comply with the CENVAT Credit Rules.In conclusion, the Tribunal dismissed the appeal and affirmed the impugned order, holding the appellant liable for the repayment of wrongly availed credits and penalties.[Order pronounced on 14th February, 2025]