Eligibility of Credit taken on the basis of debit note issued by service provider in the name of head office.

PJ-Case law-2013/14-1594

Case:-M/s UNITED PHOSPHORUS LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, SURAT-II

Citation:- 2013-TIOL-793-CESTAT-AHM

Brief Facts:-The relevant facts arising for this consideration in this case is that the appellant has availed the cenvat credit to the tune of Rs. 13,26,001/- on service tax paid as per invoice issue by Head office. Their head office is registered as input service distributor. The lower authority felt that the amount of credit availed by the appellant is ineligible as head office has availed and service tax paid based upon photo copies of debit notes dated 12/10/2004 which did not contain name and address of the factory to whom the services have been provided and rate of Education Cess and also did not contain service tax Registration No. Coming to such conclusion, show-cause notice was issued to the appellant for denying credit of such an amount as ineligible cenvat credit and interest thereof and also for imposition of penalties. The adjudicating authority after following due procedure of law confirmed the demand for cenvat credit, demanded interest and imposed equivalent amount of penalty. The appellant preferred appeal before the First Appellate Authority, who also concurred with the view of the adjudicating authority.

Appellant Contentions:-The Appellant submits that the issue in this case is already decided by the judicial pronouncement of this Bench in the case of Godfrey Philips India Ltd. [2009 (239) ELT 323 (Tri.-Ahmd.)] = (2009-TIOL-269-CESTAT-AHM). It is his submission that the input service distributor i.e. their head office has subsequently produced the original debit note of service provider and those debit notes issued by the service provider clearly indicates that all the requirements of mentioning of service tax Registration No., rate of service tax and also to whom it was provided.

Respondent Contentions:-The ld. Departmental representative reiterated the decisions of the lower authorities.

Reasoning of Judgment:-We have considered the submission from both parties and perused the record, we find that the issue involved in this case is regarding denial of cenvat credit on the invoices for transfer of cenvat credit to the appellant on the basis of debit note which did not contain any detail as required under the statute. We have perused the debit notes which are annexed at page 22, 23, 24 & 25 of the appeal memo. The said debit notes have been issued by M/s.SSKI Corporate Finance Pvt. Ltd. We find that the said M/s.SSKI has specifically indicated the rate of service tax paid by them, and service tax Registration No. in their invoice. It is also seen that M/s.SSKI has issued the invoices addressed to Head Office at Bombay of appellant. There is no dispute as to services rendered by SSKI to the appellant at Head Office. Appellant's head office has transferred the cenvat credit of service tax paid by M/s.SSKI, as an input service distributor is also not disputed.

In Tribunal’s view, the head office of the appellant, being a registered ISD is eligible to distribute service tax credit to any of their units/factory. On a specific query from the Bench, learned departmental representative informed that there was no proposal or proposition to issue show-cause notice to the input service distributor for wrong availment of Cenvat Credit.

We find that the view or conclusion arrived at by the lower authority in denying the cenvat credit is incorrect as there is no dispute of receipt of services. Our views also fortified by the decision of this Bench (supra) [2009 (239) ELT (Tri.-Ahmd.)] = (2009-TIOL-269-CESTAT-AHM)wherein this bench had recorded the following findings:

"When we look at the functions of the input service distributor and the documents to be issued by him for passing on the credit, it becomes quite clear that the document issued by him for passing on the credit does not contain the nature of service provided and the details of services. It contains the service provider's details, distributor's details and the amount. Obviously the eligibility or otherwise of the service tax credit has to be examined at the end of input service distributor only. This is further supported by the fact that both Central Excise assessees and Service Tax assessees are under the regime of self-assessment and therefore it is the assessee himself who has to specify that the credit availed by him is admissible. Therefore the input service distributor cannot say that he is not required to prove the eligibility or otherwise of the service tax credit once at the receiver's end which could be a branch or a factory of the distributor, no details would be available regarding the nature of service. Therefore the preliminary objection raised by the ld. Advocate has to be rejected and it has to be held that it is the responsibility of the jurisdictional officer with whom input service distributor has registered to decide the dispute regarding eligibility or otherwise of the service tax credit that the input service distributor has taken and proposes to pass on to others"

In view of the foregoing and also on the factual matrix on the merits of the case, we find that the impugned order is unsustainable and is liable to be set-aside and we do so.

Accordingly, the impugned order is set-aside and the appeal is allowed.

Decision:-Appeal allowed.

Comment:- The substance of this case is that cenvat credit is admissible even on the basis of debit notes issued by the service provider when the same contains all the details like service tax registration number of the service provider, service tax rate, amount etc. that are prescribed under the statue.

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PJ-Case law-2013/14-1594

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