Whether the cenvat credit can be availed on the basis of invoices containing addresses of unregistered unit?

PJ/CASE LAW/2016-17/3069

Case-TOLL (I) LOGISTICS PVT. LTD. VersusCOMMISSIONER OF CENTRAL EXCISE, PUNE-I

Citation-2016 (41) S.T.R. 80 (Tri. - Mumbai)

Brief Facts-The present appeal is against Order-in-Appeal No. P-I/RKS/106/2011, dated 21-7-2011 passed by the Commissioner of Central Excise (Appeals), Pune-I. The brief facts of case are that the appellant, “M/s. Toll (I) Logistics Pvt. Ltd.”, Pune are holders of Service Tax Registration and are engaged in providing “Clearing and Forwarding” Services. During the course of audit of the records for 2006-07 to 2008-09, it was seen that the appellants had availed Cenvat credit of Service Tax paid on input services, on the basis of bills, wherein, the address mentioned on the Bill was not of their unit at Chakan, but was of “Lonikand and/or Bhiwandi units” which was not the registered premises of appellant. The issue arising in this case is that whether appellant is entitled to avail Cenvat credit of Service Tax on bills where the address mentioned is not of registered premises, but other premises/units.
Show cause notice dated 6-8-2010 (invoking extended period) was issued to the appellant demanding an amount of Rs. 3,04,203/-, for disallowing credit which is wrongly availed by appellant on basis of invalid documents along with interest under Section 75 and penalty under Section 78 read with Rule 15(3) of the Finance Act, 1994. The proposed demand was upheld by the adjudicating authority stating that appellant had contravened the provisions of Rule 9(2) of Cenvat Credit Rules, 2004, read with Rule 4A(1)(ii) of Service Tax Rules.
Appellant had accepted the fact that it was a procedural lapse, as they had not availed facility of Centralized Registration. Being aggrieved by impugned Order-in-Original appellant preferred appeal before the Commissioner (Appeals) who also agreed with order passed by the adjudicating authority, denying Cenvat credit on such invoices and upheld the Order-in-Original.
Aggrieved by the Order-in-Appeal, appellant is before this Tribunal.

Appelants Contention-The learned Counsel of appellant during arguments have contended that the demand raised by the department is barred by limitation of time, as there was no fraud, collusion, wilful misstatement or suppression from the appellant side to evade tax payment. This is proved by fact; that appellant had regularly filed the ST-3 returns further, as there is no such requirement to enclose the invoices along with the Service Tax Return, as per Cenvat Credit Rules, 2004, the extended period of limitation is not attracted. It cannot be alleged that appellant had suppressed the fact for evasion of tax payment. Further to this, the fact of availment of Cenvat credit, on basis of invoices containing address of other units, was known to the department in May, 2009 during the course of Audit, event then too, the show cause notice was issued in August, 2010 i.e. beyond one year.
Further, learned Counsel states that Cenvat Credit Rules, 2004 lays more thrust on substantive provision and less on the procedural provisions. Once the substantive provisions are complied with for a mere technical lapse the right to Cenvat credit cannot be denied to the appellant. As appellant had satisfied all requirements except relating to address on invoice, which being a mere technical lapse should be considered as per Circular No. 441/7/99-CX, dated 23-12-1999. The circular provides that the Assistant Commissioner of Central Excise having jurisdiction over factory of manufacturer shall allow credit of duty on inputs/capital goods ignoring minor procedural lapses in filing the declaration or in the invoice/document based on which credit is taken, emphasis was placed on this circular in case of Commissioner of Customs, Meerut v. Triveny Engineering & Industries Ltd. - 2004 (177)E.L.T.211 (Tri.-Del.), wherein, it was held, credit is not deniable on ground of procedural defects.
Learned Counsel further states that levy of penalty requires the existence of “mens rea”, while in this case, there was no such intention to wrongly avail Cenvat credit. Hence penalty imposed on appellant, is fit to be set aside.

Respondents Contention-The learned AR appearing on behalf of the department reiterates the findings of the lower authorities.
Reasoning Of JudgementHaving considered the rival contentions, they find that as there was no lapse in payment of duty or tax and filing Service Tax return by the appellant the other premises/units also belong to the appellant from where the output services are rendered. The input services to which the invoices in dispute relate are utilized in rendering output taxable service. The appellant have made payment of input service along with the Service Tax charged by the service provider. The appellant have maintained proper records in normal course of business, and have disclosed the credit taken regularly in periodical returns. Thus they hold that the appellant is entitled to avail Cenvat credit, disputed by Revenue. And they further hold that show cause notice is time-barred, and extended period of limitation is not invocable. Hence, they allow the appeal and set aside the impugned order. The appellant will be entitled to the consequential relief, if any, as per law.

Decision-Appeal allowed

Comment-The essence of the case is that since there is no lapse in payment of duty and filing of service tax returns, other premises/units also belong to assessee from where output services rendered. Input services in respect of the invoices containing addresses of unregistered unit are utilized in rendering output taxable service and payment for input service utilized along with Service Tax charged by service provider, made by assessee and since the proper record maintained in normal course of business and credit taken disclosed regularly in periodical returns assessee is entitled to avail credit. Further, show cause notice is time-barred, and hence the extended period of limitation not invocable.

Prepared By-Neelam Jain

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PJ/CASE LAW/2016-17/3069

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