Whether credit deniable on the ground that invoices are in the name of Head office not registered as ISD?

PJ/CASE LAW/2015-16/2594

Case:-M/s DCW LIMITED Vs COMMISSIONER OF CENTRAL EXCISE, BHAVNAGAR

Citation:- 2013-TIOL-961-CESTAT-AHM

Brief facts:- The facts of the case in brief are that during the course of audit, it was observed that the appellant wrongly availed the Service Tax Credit of Rs. 8,31,349/- + Cess Rs. 16,610/- total of Rs. 8,47,959/-, on the basis of bills which were in the name of their Head Office who could pass on the Service Tax Credit by registering itself as an input service distributor to its various branches. However in this case, the Heard office has not obtained registration as input service distributor. The appellant directly took the credit on the basis of Bills which were not permissible under CENVAT Credit Rules, 2004. Both the lower authorities did not agree with the contentions raised by the appellant and confirmed the demand along with the interest and imposed penalties which on appeal was also upheld by the first appellate authority.

Appellants Contention:-Ld. counsel appearing for the appellant would draw attention to the facts recorded by both the lower authorities and submit that there is no dispute that the services on which credit was availed were in fact received at factory but the invoices were raised by the service provider in the name of their head office. It is his submission that there is also no dispute as to discharge of service tax by the service provider. He would submit that the issue is now squarely covered by the decision of this bench in the case of Parekh Plast (India) Pvt. Ltd. -2012 (25) STR 46 (Tri. - Ahmd.)and produce the copy of the said order.

Respondents Contention:- Ld. Commissioner (A.R.) reiterates the findings of the lower authorities.

Reasoning of Judgement:- After hearing both the sides and perusal of the records, the tribunal find that the issue involved in this case is denial of cenvat credit to the appellant on the invoices only on the ground that the said invoices are in the name of their head office and head office has not registered themselves as input service distributor. Tribunal find there is no dispute regarding the receipt of the services in the factory and also that service tax charged by the service provider has been discharged by the appellant to them. In its view, this infraction if there is any, is a rectifiable error by endorsement of the invoices in name of the factory. Be that as it may, as correctly pointed out by the ld. Counsel, the issue seems to be covered by the judgment of this bench in the case of Parekh Plast (India) Pvt. Ltd. (supra) wherein it was concluded that:-

“After hearing both sides, tribunal find that the Show Cause Notice was issued to the appellant on the sole allegation that the invoices are in the name of head office, who was not registered as ISD and as such availment of credit on the basis of the same, was not justified. There is no allegation in the said Show Cause Notice thatthe input services do not stand utilized by the appellant for providing dutiable output services. The appellants, in their submissions before the adjudicating authority, have very clearly held that their manufactured final product is also dutiable as also the input services of erection and installation are covered by these services. The credit of input services is being utilized by them for payment of Service Tax on the output services. In such a scenario, Tribunal find that the Commissioner (Appeals) travelled beyond the Show Cause Notice and in the arena of assumptions and presumptions. The Tribunal's decision relied upon by the ld. Advocate are clearly to the effect that the invoices, even in the name of head office, are eligible documents for the purpose of credit. The said defects are omissions, which are totally curable defects and are condonable. As such, it find that the denial on the sole ground of invoices being in the name of head office, is not justified. It also find the demand to be barred by limitation. Admittedly, the Show Cause Notice stands issued beyond the normal period of limitation. Commissioner (Appeals) has himself observed that there is no column or provision in ER-1 return to show as to whether the invoices are in the name of appellant or in the name of head office. If that be so, tribunal had really fail to understand as to how the appellant can be held guilty of any suppression or mis-statement of facts with intent to evade duty. If law does not require them to disclose the above facts, failure to disclose the same, by itself, cannot be equated with any suppression or mis-statement."

In view of the foregoing reasons and the judicial pronouncements, that the impugned order is unsustainable. Accordingly the same is set aside and the appeal is allowed.

Decision:- Appeal party allowed.
Comment:- The crux of the case is that even if the invoices were in the name of Head Office which is not registered as ISD, the cenvat credit cannot be solely denied for procedural infraction of law if the substantial conditions for credit availment have been fulfilled.

Prepared by:- Neelam Jain

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PJ/CASE LAW/2015-16/2594

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