Case Law Details
Commissioner of CGST & CX Vs Berger Paints India Ltd. (CESTAT Kolkata)
CESTAT Kolkata Dismisses Revenue Appeal and Allows CENVAT Credit Despite Procedural Defects in ISD Challans Where Parent Invoices Were Genuine
The Revenue appealed against the Commissioner (Appeals)’ order setting aside a demand of CENVAT credit of Rs.1,25,83,047, along with interest and penalty, arising from a Show Cause Notice dated 24.04.2017 relating to credit availed during 2012-13.
The Revenue contended that the Commissioner (Appeals) had wrongly set aside the adjudication order and relied on the findings of the Adjudicating Authority. The respondent submitted that it had produced ISD challans/invoices along with detailed Excel workings showing the distribution of service tax credit. It also contended that the Show Cause Notice was time-barred since the CENVAT credit had been properly disclosed in monthly ER-1 returns, and therefore suppression with intent to evade duty could not be sustained.
The Tribunal noted that the dispute related to service tax CENVAT credit availed on the basis of ISD challans/invoices issued by the respondent’s Head Office. The Commissioner (Appeals) had found that although the department objected to credit being distributed through letters rather than documents specifically titled as invoices or challans, the Head Office had enclosed the original input service provider invoices with the challans. These documents contained complete details of the service providers, services received and service tax paid, enabling departmental verification.
The Commissioner (Appeals) had further observed that the department had not disputed the existence or genuineness of the original or parent invoices on which the Head Office had availed credit before distributing it through ISD documents. Any deficiency in the documentation was therefore treated as a procedural lapse that could not justify denial of CENVAT credit. Reliance was placed on the decision in Bharat Sanchar Nigam Ltd. vs. Commissioner of C.Ex., Salem, where procedural non-compliance was held not to justify denial of credit when the original invoices were genuine.
The Tribunal found no reason to interfere with the detailed findings of the Commissioner (Appeals), observing that the Revenue had produced no evidence to rebut those findings. It therefore held that the Revenue’s appeal failed on merits.
The Tribunal also held that the Show Cause Notice issued on 24.04.2017 for credit taken during 2012-13 was barred by limitation. Since all CENVAT credit details had been properly recorded in the ER-1 returns and those returns formed the basis for issuance of the Show Cause Notice, the Revenue could not invoke the extended period of limitation. Consequently, the demand confirmed for the extended period could not survive.
Accordingly, the Tribunal dismissed the Revenue’s appeal.
Five Alternative SEO Titles
Dismisses Revenue Appeal Against CENVAT Credit Allowed on Genuine ISD Documents: CESTAT Kolkata
Allows CENVAT Credit Despite Procedural Defects in ISD Challans and Holds Demand Time-Barred: CESTAT Kolkata
Cannot Deny CENVAT Credit for Procedural Lapse in ISD Documentation Where Parent Invoices Are Genuine: CESTAT Kolkata
Rejects Revenue’s Challenge to CENVAT Credit Distributed Through ISD Challans and Letters: CESTAT Kolkata
Holds Extended Limitation Not Invocable Where CENVAT Credit Was Disclosed in ER-1 Returns: CESTAT Kolkata
FULL TEXT OF THE CESTAT KOLKATA ORDER
The Respondent were issued a Show Cause Notice on 24.04.2017 alleging that they have taken irregular Cenvat Credit of Rs.1,25,83,047/- during the period 2012-13. After due process the Adjudicating Authority confirmed the demand along with interest and penalty. On appeal the Commissioner (Appeals) has set aside the confirmed demand. Being aggrieved, the Revenue is before the Tribunal.
2. The Ld. Authorized Representative appeared on behalf of the Revenue reiterated the detailed grounds taken by the Revenue in their appeal. He submits that the Commissioner (Appeal) has erred in setting aside the confirmed demand. He relied on the detailed findings of the Adjudicating Authority. Accordingly, he prays that the appeal may be allowed.
3. The Ld. Counsel appearing on behalf of the Respondent submits that the appellant had provided all the documentary evidence in the form of ISD challans/invoices enclosing therewith the detailed excel working sheet to show as to how the Service Tax has been distributed. This factual details and documentary evidence was properly examined by the Commissioner (Appeals) and accordingly the confirmed demand was set aside. She relies on the delayed findings of the Commissioner (Appeals) in this regard.
4. She also submits that the Show Cause Notice issued on 24.04.2017 for the Cenvat Credit taken in 2012-13 is time barred. It is on record that the Cenvat Credit taken were properly shown in the monthly Returns. Therefore, allegation of suppression with an intent to evade Excise Duty cannot be legally sustained.
5. In view of the above submissions she prays that the appeal filed by the Revenue may be dismissed.
6. Heard both sides.
7. I find that the issue pertains to the credit of the Service Tax Cenvat Credit taken by the appellant based on the ISD challans/invoices issued by their Head Office. The Commissioner (Appeals) on examined the documentary evidence and as giving the following detailed findings in the OIA:
“5. We have carefully considered the submissions from both the sides and perused the records. In this case the bulk of the service tax credit, in questions, has been denied on the ground that the same was availed on the basis of the letters issued by the head office distributing the credit, which are not valid documents for availing cenvat credit. However, the appellant‘s plea is that during the period of dispute, the head office had issued challans for passing of the credit and in every case alongwith those challans, the invoices of the input service providers, which are in the name of the head office, had been enclosed and the challans alongwith the invoices contain all the details of the service providers as well as the details of the services provided and service tax paid, which could be verified by the department. In our view when certain input services have been received by a manufacturer under the invoices of the service providers issued in the name of the head office, the head office had taken cenvat credit and therefore, passed on the same to its manufacturing units, the cenvat credit to a manufacturing unit cannot be denied even if the same has been passed on by letters and not the document bearing the name „invoices‘ or „challans‘ provided and letters or documents issued by the head office contain all the details which are required to be mentioned in the invoices/challans issued by the input service distributor. When the Appellant as service recipient had discharged the service tax liability in respect of the services received under Rule 2(1)(d) of the Service Tax Rules, 1994, they would be eligible for the credit on the basis of the challans under which the service tax had been paid on the service received if the services received are covered by the definition of “input service”. Further I find that neither the department not the lower authority has disputed the existence and genuineness of original/parent invoices against which H.O. of the Appellant had availed credit and subsequently issued the ISD invoice. I, therefore, hold that the short comings, if there is any, has to be treated as procedural lapse which cannot be considered as a reason to deny CENVAT credit involved. In this connection I intent to rely upon the judgement of Hon‟ble CESTAT, South Zonal Bench, Chennai in the case of BHARAT SANCHAR NIGAM LTD. vs. COMMISSIONER of C.EX., SALEM[2014(34) S.T.R. 378 (Tri-Chennai)] wherein it was held as follows:
6.Considered submissions on both sides. It is true that assessee has not complied with provisions of CCR, 2004 read with Central Excise, Rules, 2002 strictly. However, I find that existence of original invoice and its genuineness is not disputed by Revenue. In fact, such documents were produced before lower authorities. Therefore, the duty involved has been paid and there is no dispute that the equipment in question has been used at the sites where credits were taken. In such circumstances, considering the commercial practice which was necessary for efficient procuring the equipment in question, this procedural lapse cannot be considered procuring the equipment in question, this procedural lapse cannot be considered as a reason todeny Cenvat Credit involved. Therefore, following the precedent decisions of the Tribunal I allow Cenvat credit and consequently there is no question of imposing any penalty. Therefore, the appeal filed by the assessee is allowed and the appeals filed by Revenue are rejected. All the appeals are disposed of accordingly.”
8. We do not find any reason to interfere the detailed findings given by the Commissioner (Appeals) based on the documentary evidence produced before him. The Revenue has not brought in any evidence countering the above findings. Therefore, on merits the Revenue appeals fails.
9. We also find that the Show Cause Notice has been issued on 24.4.2017 for Cenvat Credit taken during the period 2012-13. All the Cenvat Credit details have been properly recorded by the appellant in the ER-1 Returns. Once all the details are recorded and ER-1 returns are relied on for issuing the Show Cause Notice, the Revenue is precluded from invoking the extended period of limitation. Accordingly even on account of time bar the demand for the extended period confirmed by the Adjudicating Authority would not survive.
10. As a result, we dismiss the appeal filed by the Revenue.
(operative part is pronounced in open court)
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