9911796707
TMI Blog2010 (12) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 Central Excise Rules, 2002 on Shri Sandeep Bahl, Senior Finance Manager and Shri Vishal Agarwal, Manager Finance of the appellant company respectively. These appeals alongwith stay applications have been filed by the appellant company, Shri Sandeep Bahl and Shri Vishal Agarwal against the above order of the Commissioner of Central Excise, Meerut-II. In these stay applications, the appellants have prayed for waiver from the requirement of pre-deposit of the Cenvat credit demand, interest and penalty and also stay on recovery thereof till the disposal of the appeals. The Appellant company has also filed a miscellaneous application No. 312 of 2010-EX under Rule 23 of the CESTAT (Procedure) Rules, 1982 for admitting a certificate dated 22-3-2010 issued by Chartered Accountant as additional evidence. 1.2 The appellant company is engaged in manufacture of Aerated waters and mineral water chargeable to Central Excise Duty under sub-heading 2202 10 10 and 2201 10 20 respectively of Central Excise Tariff Act, 1985. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fice 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) recovery of allegedly wrongly taken Cenvat credit amounting to Rs. 1,26,60,631/- alongwith interest during July 2005 to July 2006 period; (b) imposition of the penalty on the appellant company under Rule 15 of CCR, 2004 readwith Section 11AC of the Central Excise Act, 1944; and (c) imposition of penalty on Shri Sandeep Bahl and Shri Vishal Agarwal under Rule 26 of the Central Excise Rules, 2002. It is in respect of this show cause notice that the impugned order-in-original has been passed confirming the Cenvat credit demand alongwith interest and imposing penalty on the appellants. 2. Heard both the sides. 2.1 Shri Tarun Gulati, Shri Vikram Nankani and Shri Sparsh Bhargava, Advocates the learned counsels for the appellants, pleaded that the head office of the appellant company and the factory are the part of the same company, that the input services had been received by the appellant company in respect of which the invoices have been received by the head off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 strong prima facie case and hence the requirement of pre-deposit may be waived for hearing of the appeals. He also prayed for admission, as additional evidence of a Chartered Accountant's certificate dated 22-3-2010 certifying that no excess credit had been taken by the Appellant. 2.2 Shri Virender Choudhary, the learned Departmental Representative, opposing the appellant's plea for waiver from the requirement of pre-deposit, pleaded that while the appellant's Delhi office applied for registration of the ISD on 4-5-06 and was issued the registration certificate only on 26-5-06, even during prior to period 26-5-06, without even registration, the Delhi office had issued the invoices to the appellant's factory in Hapur for passing on the service tax credit, that the invoices, thus, are invalid invoices and hence no Cenvat credit could be taken by the appellants factory on the basis of those invoices, that this is not a technical violation as the appellant company neve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 the such services to such manufacturer or producer or provider, as the case may be. Under Rule 9(1)(g) of Cenvat Credit Rules, 2004 an invoice, bill or challan issued by an Input Service Distributor under Rule 4A of Service Tax Rules, 1994 is a valid document for taking Cenvat credit. As per Rule 2(1)(ccc) of the Service Tax Rules, 1994, the term "Input Service Distributor" has meaning assign to it in Clause (m) of Rule 2 of the Cenvat Credit Rules, 2004. Clause (ccc) of sub-rule (1) of Rule 2 of the Service Tax Rules, 1994 had been inserted w.e.f. 10-9-04. Rule 4 of the Service Tax Rules, 1994 provides for obtaining registration by the persons liable for paying the Service Tax. This Rule did not contain any provision regarding obtaining of registration by Input Service Distributor and it provides for registration of only the persons liable for paying the service tax. Rule 4 of the Service Tax Rules, 1994 is reproduced below. "Registration - (1) Every perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counting 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 providing more than one taxable service, he may make a single application, mentioning therein all the taxable services provided by him, to the concerned [Superintendent of Central Excise]. (5) The [Superintendent of Central Excise] shall after due verification of the application form, [or an intimation under sub-rule (5A), as the case may be,] grant a certificate of registration in Form ST-2 within seven days from the date of receipt of the application [or the intimation]. If the registration certificate is not granted within the said period, the registration application for shall be deemed to have been granted. [(5A) Where there is a change in any information or details furnished by an assessee in Form ST-1 at the time of obtaining registration or he intends to furnish any additional information or detail, such change or information or details shall be intimated, in writing, by the assessee, to the jurisdictional Assistant Commissioner or Deputy Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 service tax credit must have a registration and quote such registration number in the invoices, bills or challans issued by him. Though Rule 4A in its present form had come into effect from 10-9-04, there is no provision in sub-rule (2) of Rule 4A that this sub-rule will be effective only when the procedure for obtaining registration by Input Service Distributor is notified or that it is necessary for an "Input Service Distributor", as defined in Rule 2(1)(ccc) of the Service Tax Rules, 1994 readwith Rule 2(m) of the Cenvat Credit Rules, 2004, to obtain registration before he could issue the invoices, bills or challans for passing on the Cenvat credit. 8. By Notification No. 27/05-S.T., dated 7th June 2005, Service Tax (Registration of Special Category of Persons) Rules, 2005 were notified and Rule 3(1) of these rules provided for an Input Service Distributor to make an application to the Jurisdictional Central Excise Superin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 prescribed. 10. The Department's allegation against the appellant, however, is that during the period of dispute they had initially taken the service tax credit on the basis of invoices issued by service providers in the name of their Delhi office, which was not permissible, but on this irregularity being pointed out by the audit, they replaced those entries by the entries based on the invoices issued by Delhi Office as ISD and that the invoices by Delhi office as ISD had been issued much later in back date and that on the dates on which Cenvat credit had been taken, there were no invoices issued by Delhi office as ISD. According to the Department, the invoice numbers of the 12 invoices issued by Head Office during July, 2005-2006 period -- Invoice No. HCCB/005/2006, dated 29-7-2005, Invoice No. HCCB/006/2006, dated 26-8-05; Invoice No. HCCB/007/2006, dated 1-8-05; Invoice No. HCCB/008/2006/dated 22-10-05; Invoice No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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