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TMI Blog2010 (12) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by Head Office as ISD, which appears to have some substance, this is not a case for total waiver. - E/724-726/2010 - 698/2010-EX(PB) , 1016-1018/2010-EX(PB) - Dated:- 20-12-2010 - Justice R.M.S. Khandeparkar, Shri Rakesh Kumar, JJ. REPRESENTED BY : S/Shri Tarun Gulati, Vikram Nankani and Sparsh Bhargava, Advocates, for the Appellant. Shri Virender Choudhary, DR, for the Respondent. [Order per : Rakesh Kumar, Member (T)]. Commissioner of Central Excise, Meerut-II vide order-in-original No. 67/Commr./M-II/2009 dated 29-12-2009 confirmed Cenvat credit of Rs. 1,26,60,631/- (Rupees One Crore Twenty Six Lakhs Sixty Thousand Six Hundred Thirty One) against M/s. Hindustan Coca Cola Beverages Pvt. Ltd. (hereinafter referred to as the appellant company), alleged to have been wrongly taken during July 2005 to July 2006 period, alongwith interest on it at the applicable rate as per the provisions of Section 11AB, imposed penalty of equal amount on the appellant company under Rule 15 of Cenvat Credit Rules, 2004 (hereinafter referred to as CCR, 2004 readwith Section 11AC of CEA, 1944 and imposed penalty of Rupees ten lakhs and Rupees five lakhs under Rule 26 of Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration was granted to them on 26-5-06. However, in course of scrutiny of the Central Excise records of the appellant company it was found that the Delhi office of the appellant company, even prior to 26-5-06, the date on which the ISD registration was granted to them, had issued invoices for passing on service tax credit and on the basis of those invoices, the Cenvat credit amounting had been taken by the manufacturing unit at Hapur, Ghaziabad, which did not appear to be correct. The explanation given for this by Shri Sandeep Bahl, Senior Finance Manager and Shri Vishal Agarwal, Manager Finance of the appellant company did not appear to be satisfactory. It also appeared that initially credit had been taken by the Appellant company s factory at Hapur on the basis of Service tax invoices issued by the service providers to their Delhi office, but subsequently the entries regarding service tax credit availment on the basis of the service provider s invoices were substituted by the invoices, issued by Delhi office as ISD. It is on this basis that a show cause notice dated 27-2-2009 was issued to the appellant company, Shri Sandeep Bahl and Shri Vishal Agarwal for - (a) recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had issued invoices and passed on Modvat credit to the consignee of the goods and when the department taking objection, sought to deny the credit to the consignees and such dispute reached the High Court, Hon ble Gujarat High Court in the case of Vimal Enterprise v. Union of India reported in 2006 (195) E.L.T. 267 (Guj.) held that it would be travesty of justice if the assessee is denied benefit to which he is otherwise entitled for none of his fault, that in the present case it is not in dispute that the services in respect of which the credit had been taken, had actually been received by the company, that through out the period when the credit was being taken, the same has been declared in the ER-1 returns and no objection was raised and thus the longer limitation period is not available to the department, that since there was no mala fide on the part of the appellant, there is no justification for imposition of penalty on the appellant company under Rule 15 of this Cenvat Credit Rules, 2004 readwith Section 11AC of the Central Excise Act or on Shri Vishal Agarwal, Manager Finance and Sandeep Bahl, Senior Manager Finance of the appellant company, and that the appellant have a st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e admitted as additional evidence. The miscellaneous petition No. E/Misc./312/2010-EX for admission of additional evidence is, therefore, dismissed. 5. Coming to the stay application, the first point of dispute in this case is as to whether during the period prior to 26-5-05, the Delhi office of the appellant company could issue invoices to their factory at Masuri-Gulaothi Road, Tehsil Hapur, District Ghaziabad for passing on service tax credit as input service distributor, when no registration in this regard had been obtained and whether such invoices not bearing any service tax registration number were valid documents for taking Cenvat credit. 6. Concept of Input Service Distributor was introduced for the first time in CCR, 2004 effective from 10-9-04 readwith Service Tax Rules, 1994. Rule 2(m) of the CCR, 2004 defines an Input Service Distributor as an office of the manufacturer or producer of final product or provider of output service, which receives invoices issued under Rule 4A of the Service tax Rules, 1994 towards purchases of input services and issues invoices, bills, or, as the case may be, challans for the purpose the distributing the credit of service tax paid on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for paying service tax, and has centralised billing system or centralised accounting system in respect of such service, and such centralised billing or centralised accounting system are located in one or more premises, he may, at his option, register such premises or offices from where centralised billing or centralised accounting systems are located. (3) The registration under sub-rule (2), shall be granted by the Commissioner of Central Excise in whose jurisdiction the premises or offices, from where centralised billing or accounting is done, are located : Provided that nothing contained in this sub-rule shall have any effect on the registration granted to the premises or offices having such centralised billing or centralised accounting system, prior to the 2nd day of November, 2006.] (3A) Where an assessee is providing a taxable service from more than one premises or offices, and does not have any centralized billing or systems or centralized accounting systems, as the case may be, he shall make separate applications for registration in respect of each of such premises or offices to the jurisdictional Superintendent of Central Excise.] (4) Where an assessee is providin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill or, as the case may be, challan shall be serially numbered and shall contain the following, namely :- (i) the name, address and registration number of the person providing input services and the serial number and date of invoice, bill, or as the case may be, challan issued under sub-rule (1); (ii) the name and address of the said input service distributor; (iii) the name and address of the recipient of the credit distributed; (iv) the amount of the credit distributed : Provided that in case the input service distributor is an office of a banking company or a financial institution including a non-banking financial company, or any other body corporate or [any other person], providing service to a customer, in relation to banking and other financial services, an invoice, a bill or, as the case may be, challan shall include any document, by whatever name called, whether or not serially numbered but containing other information in such documents as required under this sub-rule.] 7.1 From a plain reading of this sub-rule, it is clear that there is no provision in this sub-rule that an Input Service Distributor before issue of invoice, bill or challan for passing on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Distributor was introduced only w.e.f. 7th June 2005 by Service Tax (Registration of Special Category of Persons) Rules, 2005 and w.e.f. this date only a provision was made in the Cenvat Credit Rules, 2004 for filing of a return by the Input Service Distributor in a prescribed form. The question arises as to whether during the period from 10-9-04 to 6-6-05 Cenvat credit could be taken on the basis of invoice, bill or challan issued by an Input Service Distributor. From a reading of Rule 9(1)(g) readwith Rule 2(m) of CCR, 2004 and Rule 4 and Rule 4A(2) of the Service Tax Rules, 1994, we are of the prima facie view that during this period, there was no provision that an Input Service Distributor before issuing an invoice, bill or challan had to obtain registration or that without such registration he cannot issue such invoices. We are, therefore, of prima facie view that Cenvat credit during the period of dispute cannot be denied to the appellant just because their Delhi office had not obtained service tax registration as ISD for the simple reason that during this period neither there was any provision for an ISD to obtain a registration nor any procedure in this regard has been p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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