Whether credit is deniable merely because the invoice was in the name of head office ?

PJ/CASE LAW/2015-16/2660

Case:- INOX AIR PRODUCTS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD

Citation:-2015 (38) S.T.R. 79 (Tri. - Mumbai)

Brief facts:-The appellants were in appeal against the impugned order-in-appeal which confirmed the demand of Service Tax of Rs. 3,86,656/- under Rule 14 of Cenvat Credit Rules read with Section 11A of the Central Excise Act, appropriate interest under Section 11AB and equivalent penalty under Section 11AC of the Act.
The appellant is engaged in the manufacture of natural gases. They have a unit in various places include units at Patalganga unit. The demand of duty was raised for the reason that the invoices under which the credit was availed were either in the name of their head office or in the name of their other unit at Thane. The demand was confirmed on the ground that the appellant should have been registered for ISD registration to enable distribution of credit to their respective units. Department held that mere payment was not enough to claim the credit but material evidence should be brought on record that the said services were utilized in the Patalganga unit for claiming credit in such manner. The extended time period under Section 11A was invoked.

Appellant’s contention:- Ld. Counsel showed as a sample, one invoice issued by the CHA agent in the name of their Head Office in respect of clearing charges for goods imported for their Patalganga Unit. For this invoice, he showed co-relation between the invoice and the Bill of Entry which was in the name of their Patalganga Unit, to prove that the service was indeed received at Patalganga Unit. Further, he stated that in the case of machine repairs, the work is centralized in the Thane Unit for all the units and, therefore, all such invoices are addressed to the Thane Unit. On being asked whether all the services were received in their unit he answered that the question of actual receipt of the services had not arisen either in the show cause notice or at the stage of adjudication order or in the appeal. He cited the judgments of the Tribunal in the case of Modern Petrofils v. Commissioner of C. Ex., Vadodara - 2010 (20)S.T.R.627 (Tri.-Ahmd.), Doshion Ltd. v. Commissioner of Central Excise, Ahmedabad - 2013 (288)E.L.T.291 (Tri.-Ahmd.)and Demosha Chemicals Pvt. Ltd. v. Commissioner of C. Ex. & S.T., Daman -2014 (34)S.T.R.758 (Tri.-Ahmd.). Availment of services at places different from the address mentioned in the invoices was only a procedural formality. And also that even if the appellant should have taken ISD registration, the same would not disentitle them from availing credit in different units before 2012 when a change was brought in Rule 7 of the Cenvat Credit Rules to the effect that the Cenvat credit should be distributed properly amongst all the units.

Respondent’s contention:-The ld. AR reiterated the findings of the authority. He further stated that it had not been verified whether the services had actually been received in the Patalganga Unit.

Reasoning of judgment:- After carefully considering the rival contentions it was held that the appellant in this case had nine units where the same product was manufactured. Therefore, the doubt of nexus of input and output products did not arise. Ld. Counsel had also shown a particular invoice issued by a CHA in the name of the Head Office. It was quite natural that the service provided by a CHA would be in the name of the Head Office where clearance of goods through Customs will be centralized. He agreed that a doubt had never been raised regarding the actual receipt of the services. The only basis for denying credit had been that invoices were either in the name of another unit of the appellant or in the name of their Head Office. The judgments cited above touched upon the issue at hand in support of the case of the appellant. There being no allegation of the services had not been received, the credit stands to be allowed.

In view of the above findings, the appeal was allowed.

Decision:- Appeal allowed.

Comment:- The crux of this case is that the credit of service tax cannot be denied to the assessee merely because on invoice, the name of head office was being mentioned. Name of service recipient on invoice is just a procedural formality and the substantial benefit of the credit could not be denied for this lapse. As there was no dispute as regards receipt of service and its utilisation, credit could not be denied.

Prepared by:- Prayushi Jain

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PJ/CASE LAW/2015-16/2660

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