2025 (4) TMI 1190 - AT - Service Tax

Wrongful availment of CENVAT Credit - scope of SCN - impugned order passed beyond the allegation in the SCN - HELD THAT - At the time of issuance of show cause notice the appellant could not produced all the documents to satisfy that they have correctly availed the Cenvat Credit on the capital goods but while filing the reply to show cause notice the appellant produced all relevant valid documents on which credit was availed under Rule 9(1)(f) of the Credit Rules and the original authority after fully satisfied with the documents provided by the appellant dropped the proceedings initiated in the show cause notice and allowed the Cenvat Credit. It is pertinent to note that the original authority has observed that the appellant has submitted all the relevant/prescribed documents i.e. concerned bills of entry invoices vide letter dated 04.10.2021 alongwith complete documents as Annexure A at the time of adjudicating process. Excess Cenvat Credit so availed at the time of audit was examined in terms of Rule 9 of Credit Rules and found relevant. The original authority has also observed that the bills of entry are in the name of Nando s Bangalore and not in the name of the appellant but the credit has been availed apparently on the basis of bills of entry and not on the basis of exporter s invoice. The substantial benefit cannot be denied merely on procedural infirmities as held by the Tribunal in the case of M/s Bharat Sanchar Nigam Limited 2008 (10) TMI 141 - CESTAT CHENNAI wherein it has been held that a substantive benefit cannot be denied on a procedural or technical ground where the beneficiary has satisfied the substantive conditions for benefits. It is also found that the appellant has produced the Chartered Accountant Certificate certifying that the head office at Bangalore has not availed Cenvat Credit on the import of goods and the same is also proved from the ST-3 returns filed by the appellant on record. Conclusion - The denial on the sole ground of invoices being in the name of head office is not justified. The impugned order is not sustainable in law - Appeal allowed.

The core legal questions considered in this appeal revolve around the eligibility and entitlement of the appellant to avail Cenvat Credit on capital goods imported and utilized at its branch office in Chandigarh, despite the bills of entry being in the name of the head office located in Bangalore. Specifically, the issues include:

1. Whether the appellant was entitled to avail Cenvat Credit under Rule 9(1)(f) of the Cenvat Credit Rules, 2004 on capital goods imported, when the bills of entry were in the name of the head office but the goods were used at the branch office in Chandigarh.

2. Whether the appellant fulfilled the documentary requirements prescribed under the Credit Rules to substantiate the claim of Cenvat Credit.

3. Whether procedural or technical deficiencies, such as the name on the bills of entry, can be grounds for denial of substantive credit benefits.

4. The correctness of the impugned order passed by the Commissioner (Appeals) setting aside the Order-in-Original which had allowed the appellant's claim of Cenvat Credit.

Issue-wise Detailed Analysis

Issue 1: Entitlement to Cenvat Credit on capital goods imported under bills of entry in the name of head office but used at branch office

The relevant legal framework includes Rule 9(1)(f) of the Cenvat Credit Rules, 2004, which governs the availing of credit on inputs, capital goods, and input services used in or in relation to the manufacture of final products or provision of taxable services. The Circular No. 179/13/96-CE dated 29.02.1996 issued by the CBEC clarifies that Cenvat Credit should not be denied to a branch office merely because the bill of entry is in the name of the head office.

The Court noted that the bills of entry were in the name of the head office in Bangalore, but the goods were received and utilized at the branch office in Chandigarh, as evidenced by the bill of lading and other documents. The appellant produced documentary evidence including bills of entry, invoices, and ST-3 returns, and a Chartered Accountant certificate confirming that the head office did not avail credit on the imported goods.

Precedents relied upon include the Tribunal's decision in M/s Parekh Plast India Private Limited, which held that invoices in the name of the head office are valid documents for credit purposes and defects of this nature are curable and condonable. Similarly, the Tribunal in M/s Bharat Sanchar Nigam Limited emphasized that substantive benefits cannot be denied on procedural or technical grounds if substantive conditions are met.

The Court applied these principles to the facts, observing that the appellant's branch office legitimately used the capital goods and the credit was availed on the basis of valid documents, notwithstanding the bills of entry being in the head office's name. The Court rejected the Revenue's argument that the credit was ineligible solely on this ground.

Issue 2: Compliance with documentary requirements under Rule 9(1)(f) of the Cenvat Credit Rules

The show cause notice initially alleged non-production of valid documents for availing Cenvat Credit. However, the appellant produced all relevant documents including bills of entry, invoices, and other supporting papers during the adjudication proceedings. The Deputy Commissioner, after examining these documents, was satisfied and accordingly dropped the demand raised in the show cause notice.

The Commissioner (Appeals), however, set aside this order, holding the credit as wrongly availed. The Court found that the impugned order failed to appreciate the documents produced by the appellant and the satisfaction expressed by the original adjudicating authority. The Court emphasized that the appellant had complied with the documentary requirements under the Credit Rules and had substantiated the credit claim adequately.

Issue 3: Effect of procedural or technical deficiencies on substantive credit benefits

The Court referred to the principle established in various precedents that procedural or technical defects should not result in denial of substantive benefits when the beneficiary has satisfied substantive conditions. The Tribunal's view in M/s Parekh Plast and M/s Bharat Sanchar Nigam Limited was cited to reinforce that defects such as the name on invoices being that of the head office are curable and do not justify denial of credit.

The Court held that the impugned order's denial of credit on the sole ground of bills of entry being in the head office's name was not justified and was contrary to established legal principles.

Issue 4: Validity of the impugned order passed by Commissioner (Appeals)

The impugned order allowed the Revenue's appeal and set aside the Order-in-Original which had quashed the demand. The Court found the impugned order unsustainable in law as it did not properly consider the documentary evidence and legal provisions. The original authority had rightly examined the documents and found the credit eligible. The Court noted that the appellant had produced a Chartered Accountant certificate and ST-3 returns confirming non-availment of credit at the head office, thereby eliminating the possibility of double credit.

Consequently, the Court set aside the impugned order and restored the Order-in-Original allowing the appellant's claim of Cenvat Credit.

Significant Holdings

"The tribunal's decision relied upon by ld. Advocate is clearly to the effect that the invoices, even in the name of head office, are eligible documents for the purpose of credit. The said defects are omissions, which are totally curable defects and are condonable. As such, I find that the denial on the sole ground of invoices being in the name of head office, is not justified."

"A substantive benefit cannot be denied on a procedural or technical ground where the beneficiary has satisfied the substantive conditions for benefits."

"CBEC vide its Circular No. 179/13/96-CE dated 29.02.1996 has clarified that the Cenvat Credit should not be denied to the branch office merely because the bill of entry is in the name of head office."

In conclusion, the Court held that the appellant was entitled to avail the Cenvat Credit of Rs. 2,78,521/- as claimed, having complied with the provisions of the Cenvat Credit Rules and having produced all relevant documents. The impugned order was set aside and the appeal allowed.

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