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TMI Blog2022 (7) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... ut service for the appellant being used in manufacture of his final product. Thus, it stands clear that appellant was entitled for availment of Cenvat credit - credit allowed. Rejection on the ground that the Cenvat Credit is availed based upon such supplementary invoices which were raised by those service providers who short paid the service tax with mala fide intent - HELD THAT:- In the present case, there is no dispute about availment of Cenvat Credit by the appellant on the amount of initial invoices which was for service charges in respect of providing manpower services to the appellant. The dispute is only with respect to the Cenvat Credit availed on the amount of service tax which was paid for certain reimbursable amounts which were demanded by the service providers by way of supplementary invoices due to the reason that an investigation had initiated against them in February, 2012 denying them the exemption from the tax liability towards the reimbursable amounts - Since the service providers had voluntarily paid the said duty demand that they issued the supplementary invoices to the appellants claiming the amount of tax liability already discharged by them. Non-pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (Appeals) himself has set aside the penalty as was imposed under section 78 of Finance Act observing no malafide on part of the appellant. Confirmation of demand still relying upon section 9 (1) (bb) is therefore held wrong. It is further observed that neither the SCN nor the impugned Order-in-Original dated 04.12.2017 alleges that the invoices were not genuine, the services were not received or the same were not utilized in the manufacture of dutiable final product. Mere fact that the differential amount of service tax was paid by the service provider on being pointed out by central excise officers doesn't establish that the service tax was short paid or was not paid by reason of fraud, suppression, misstatement etc. with an intent to evade the payment of service tax - penalty set aside. Extended period of Limitation - HELD THAT:- The issuance of Show Cause Notice in the year 2017 is apparently beyond the reasonable time for issuing the same. At least it stands clear that fact of availment of Cenvat credit on disputed supplementary invoices was in the notice of the Department since the year 2012-2013. The Department is not entitled to invoke the extended period of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant and Ms.Tamanna Alam, Authorised Representative for the respondent. 3. It is submitted on behalf of the appellant that Rule 9 (bb) of Cenvat Credit Rules has wrongly been invoked by Commissioner (Appeals) for the reason that the proceedings had already initiated against both the service providers of the appellant at the stage of their investigation itself, the differential duty demanded from them was voluntarily paid by them. It is also submitted that in fact service providers used to raise two separate bills for providing the manpower services to the appellants during the period 2006-2007 to 2011-2012. The first bill was for reimbursement of actual wages including employees EPF and employees ESI paid to the workers. The service provider did not charge any service tax on such reimbursement and accordingly, the same was not paid by the appellant. The second bill used to be for service charges in respect of the services provided. Service Tax charged on this amount has always been paid by the appellant and Cenvat Credit thereupon has regularly been availed. 3.1 It is submitted that there has been a bonafide understanding with the service providers as well as the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availed based upon such supplementary invoices which were raised by those service providers who short paid the service tax with mala fide intent. (3) The appellant suppress the fact of availment of Cenvat Credit on the strength of supplementary invoices. 5.1 With respect to first ground of rejection, I observe that Rule 3 (1)of Cenvat Credit Rules, 2004 is relevant to ascertain about who can avail the Cenvat Credit. It reads as follows:- Rule 3 (1) A manufacturer or producer of final products or a provider of output service shall be allowed to take credit (hereinafter referred to as the C#ENVAT credit) of (i) - (xi) .. (xi) (i) any input or capital goods received in the factory of manufacture of final product or by the provider of output service on or after the 10th day of September, 2004; and (ii) any input service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004. 5.2 The Rule clarifies that credit can be availed by manufacturer of final product for any input service received by him. In the present case apparently and admittedly, appellant is the manufacturer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses in valuation of service rules. Hon ble Apex Court also observed that it is only by virtue of Rule 5 of Cenvat Credit Rules that the expenses which are incurred while rendering the services and were reimbursed i.e. for which the service receiver has made payment to the assessee were brought within the sweep of taxable amount / the value of taxable service. Rule 5 came into effect from May, 2014 to 2015 the Hon ble Apex Court vide the aforesaid decision has held that since this amendment has brought a substantive change to section 67 it has to be prospective in nature. From this observation and keeping in view that the period of dispute in the present case is the period prior to May, 2015 I hold that the appellant as well as its service providers were rightly under the bonafide belief that there is no service tax liability as far as the reimbursable part of the salary/ wages is concerned. This Tribunal in the case M/s. Hitech Manpower (supra) while relying upon the decision of Apex Court in the case of M/s. Intercontinental Consultants (supra) has held that Section 67 of Finance Act, 1994 dealing with valuation of taxable services, does not include reimbursable expenses for prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority, it is observed that the entire amount of service tax along with interest as agreed by the service providers in their statements dated 21/03/2012 was deposited by the service provider voluntarily that too before Adjudication. The Adjudicating Authority has appropriated the said amount. After noting the said facts, the Adjudicating Authority has not imposed any penalty under section 76, 77 and 78 of the Finance Act, 1992. Section 78 of the Finance Act provides for imposition of penalty due to suppression of facts or contravention of provision of law on part of the assessee with the intent to evade payment of duty etc. As already observed above that the service tax liability was duly discharged by the appellant and by the service provider with reference to the amount charged for providing manpower and that there is no denial about the same. It has also been appreciated that there was decision of Hon ble Apex Court declining reimbursable expenses to form the part of taxable value. Therefore, the proviso to Rule-9(1)(bb) containing exclusion clause cannot be pressed into service to deny CENVAT Credit against supplementary invoices. Above all, Commissioner (Appeals) himself has s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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