Jmc Projects India Ltd  VERSUS C.S.T.-Service Tax – Ahmedabad

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,

  1. 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)

Categories:

Leave a Reply

Your email address will not be published. Required fields are marked *