Service Tax Appeal No. 11124 of 2018-DB
(Arising out of OIA-AHM-EXCUS-001-COM-014-17-18 Dated- 20/02/2018 passed by
Principle Commissioner Customs, Excise and Service Tax-SERVICE TAX – AHMEDABAD)
Jmc Projects India Ltd
VERSUS
C.S.T.-Service Tax – Ahmedabad
APPEARANCE:
Shri. Jigar Shah, Advocate for the Appellant
Shri. Prabhat K. Rameshwaram, Additional Commissioner (AR) for the Respondent
CORAM:
HON’BLE MR. RAMESH NAIR, MEMBER (JUDICIAL)
HON’BLE MR. RAJU, MEMBER (TECHNICAL)
Final Order No. A/ 10103 /2023
DATE OF HEARING: 21.09.2022
DATE OF DECISION:20.01.2023
RAMESH NAIR
Brief facts of the case are that during the course of audit of the
records of the Appellant, it was observed that while providing taxable output
service, the appellant was availing and untilizing Cenvat credit facility on
various input services. It was also observed that the appellant was engaged
in providing non-taxable output services also i.e. trading of goods as well as
exempted output services. Appellant had not maintained separate records
for providing taxable and non-taxable as well as exempted output service as
contemplated in Rule 6(2) of Cenvat Credit Rules, 2004. It was noticed that
appellant have taken Cenvat credit of Rs. 7,10,60,401/- in the year 2014-15
for the input services said to have been received/ pertaining to the year
2007-08 to 2014-15. Appellant were asked to furnish the proof of having not
availed Cenvat credit for the period from the financial year 2007-08 to 2013-
14 in respective financial year, which they have availed in the financial year
2014-15. However Appellant failed to produce any of the original input
services invoices for verification by the audit officers. Accordingly, show
cause notice dated 28.03.2016 was issued proposing for recovery of Cenvat
credit along with interest and for imposition of penalty. In adjudication, the
Ld. Commissioner vide impugned order dated 20.02.2018 disallowed and
ordered for recovery of Cenvat Credit along with interest; imposed penalties.
Aggrieved with the said order the appellant have filed the present appeal
before us.
Shri. Jigar Shah, Learned Counsel appearing on behalf of the Appellant
submits that the impugned order–in-original is passed in violation of
principles of natural justice and ignoring the settled legal position and
therefore, not sustainable and liable to be set aside. Rule 6 of the Cenvat
credit Rules, 2004 deals with obligation of the service provider engaged in
providing taxable as well as exempted services. As per Rule 6(3A) of the
Cenvat Credit Rules, 2004 if an assessee wants to avail only proportionate
Cenvat credit of service tax paid on common input services has to give
intimation to range Superintendent of Central Excise. In the present case,
the appellant have chosen to follow the provisions of Rule 6(3)(b)(ii) of
Cenvat Credit Rules, 2004 i.e avail the Cenvat credit of service tax paid on
common input services in the proportion it is used for providing taxable
services. Accordingly, the appellant have to reverse the Cenvat credit of
service tax paid on common input services to the extent it is used for
exempted service. However, for exercising this option the Appellant had to
follow the procedure as mentioned in Rule 6(3A) of the Cenvat Credit Rules,
- In the present case, undisputedly, the Appellants have followed the
procedure as mentioned in Rule 6(3)(b)(ii) of Cenvat Credit Rules, 2004 but
the Appellant have not given the intimation at the time of exercising the
option as mentioned in Rule 6(3A) of Cenvat Credit Rules, 2004. However, at
the time of availing the proportionate Cenvat credit of common input
services, the Appellants vide their letter dated 26.09.2014 duly informed the
Superintendent of Central Excise. Therefore, substantially, the Appellants
have followed the procedures as mentioned in Rule 6(3A) of the Cenvat
Credit Rules, 2004.
2.1 Without prejudice, he also submits that only on the basis of
procedural lapse substantive benefit cannot be denied. He placed reliance on
the following decisions.
Reliance Life Insurance Co. Ltd. – 2018-VIL-02-CESTAT, Mumbai
Tata Technologies Ltd. 2016-VIL-118-CESTAT, Mumbai
Mercedes Benz India (P) Ltd. – 2015(40)STR 381 (T)
Foods, Fats & Fertilizers 2009(247)ELT 209 (T)
2.2 He further submits that one of the allegations in the show cause notice
is that the appellant availed the proportionate Cenvat credit of service tax
paid on common input services after a gap of 7 years. However prior to
01.09.2014 there was no time limit prescribed for availing the Cenvat credit.
Undisputedly in the facts of the present case the appellant have availed the
Cenvat credit of approx. of Rs. 3.46 Crores for the period 2007-08 in the
month of July 2014 and therefore, there was no time limit for availing such
Cenvat credit. In absence of any statutory time limit prescribed in law,
denial of Cenvat credit on this ground is not sustainable and liable to be set
aside. He placed reliance on the following Judgments.
Coromandel Fertilizers 2009(239)ELT 99 (Tri.- Bang)
Steel Authority of India Ltd. – 2013(287)ELT 321(Tri. Del)
Essel Propack Ltd. 2022(379)ELT 123(Tri.-Ahmd)
Central Bank of India 2013(32)STR 525 (Tri. Chennai)
2.3 He also submits that appellant have availed the Cenvat credit of input
services on the basis of invoices raised by the service provider. There is no
violation of Rule 9 of Cenvat Credit Rules, 2004. The Appellant have duly
maintained all the original copies of the invoices at their respective locations.
As and when it was asked, the appellant provided the photocopies of
invoices of different locations. The photocopies of the invoices submitted by
the Appellants were verified during the course of audit. The audit team of
the service tax department has not objected on the ground that the
appellant has availed cenvat credit of input services without any invoices.
2.4 He further submits that the para 5 of show cause notice alleged that
there is discrepancy in the records maintained by the Appellants. Such
observation emanated from the observation of service tax authorities that
Sr. No. in the Cenvat Credit register submitted by the appellant in hard copy
and soft copy were different. However the soft copy of the Cenvat credit
register was maintained by the Appellant in MS-Excel and same was
submitted to the service tax authorities during the course of audit in year
wise separate sheet. However, the appellant do not know how the same
was printed by the service tax authorities so as to create discrepancy in the
Sr. Nos. of the entries in the Cenvat Credit Register. This is also significant
to note that the show cause notice does not allege discrepancy in amount of
entries mentioned in the Cenvat Credit Register be it soft copy or the hard
copy. It is also not the allegation that the appellants have availed the cenvat
credit more than once.
2.5 He argued that the invocation of extended period of limitation is not
sustainable in the present case for the reason that the entire case of the
revenue was made out on the basis of information submitted by the
appellant.
Shri. Prabhat K Rameshwaram, Additional Commissioner (AR)
appearing on behalf of the Revenue reiterates the findings of the impugned
order.
We have considered the submissions made by both the sides and
perused the records. The allegation against the appellant in the present case
as per the show cause notice is that they have failed to produce any of the
original input service invoices for verification by audit officers and has
chosen to submit randomly selected photocopies of input services invoices
on which they have availed Cenvat credit. Therefore appellant has violated
provisions of Rule 5A (2) of the Service tax Rules, 1994. Further they had
availed Cenvat credit amounting to Rs. 7,10,60,401/- by making some
consolidated entries in their Cenvat credit register during the period June
2014 to March 2015, which involves hundreds of input service invoices of
2007-2008 to 2013-14. The Cenvat credit has been availed without any
proof of having valid documents as prescribed under Rule 9 of the Cenvat
Credit Rules, 2004. They have not fulfilled the conditions of Rule 6(3A) of
Cenvat Credit Rules 2004. The Ld. Commissioner in the impugned order also
upheld the said allegations. On the contrary the appellant submitted here
that the impugned order has been passed by Ld. Commissioner without
appreciating the facts and submission of appellant. There is no manipulation
in Cenvat credit register and all the documents and information has been
provided to the department. All the original invoices are always available at
their respective regional office where the input service is received. In this
circumstance we are of the view that the matter should go back to the
adjudicating Authority for verification of the invoices /documents and Cenvat
credit register maintained by the appellant. We remand this matter to the
adjudicating authority to give another opportunity to the appellant to
establish its entitlement.
The dispute relating to admissibility of Cenvat credit in the absence of
exercise of option to avail proportionate Cenvat credit under the provisions
of Rule 6 of Cenvat Credit Rules 2004 is also remanded to the adjudicating
authority for a fresh decision. We are of the prima facie view that the
condition in Rule 6(3A) to intimate the department is only a procedural one
and such procedural lapse is condonable and denial of substantive right for
such procedural failure is unjustified.
Accordingly we set aside the impugned order and remand the matter
to the adjudicating authority to decide the matter a fresh after verifying the
Cenvat records of the assessee. Needless to mention a reasonable
opportunity of hearing be granted to the appellant. All issues are kept open.
Both sides are at liberty to produce evidences in their favour. Appeal is
allowed by way of remand to the adjudicating authority.
With the above observations, we set aside the impugned order and
allow the appeal by way of remand to the adjudicating authority.
(Pronounced in the open court on 20.01.2023)
(RAMESH NAIR)
MEMBER (JUDICIAL)
(RAJU)
MEMBER (TECHNICAL)
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