Case Law Details
The coffee machine has been maintained by the appellant for vending of coffee to its employees. It is the nature of a catering service provided to the employees which is very essential, especially for the employees working round the clock as in the case of IT companies. Therefore, repair of the coffee vending machine is an input service in or in relation to the output service provided by the appellant and, therefore, they are rightly entitled to the service tax paid on the repair of the coffee vending machine as it is an eligible input service.
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO. I
Appeal No. ST/131, 132/2010
Arising out of Order-in-Appeal nos. PIII/VM/255/09 Dated: 27.11.2009, PIII/VM/268/09
Passed by Commissioner (Appeals) of Central Excise, Pune-III
Date of Decision: 7.4.2011
IMAGINATION TECHNOLOGIES INDIA PVT. LTD.
Vs
COMMISSIONER OF CENTRAL EXCISE, PUNE- III
ORDER NO. A/150-151/11/SMB/C-IV
Per: P R Chandrasekharan:
These appeals are directed against the order-in-appeal no. P-III/VM/255/09 dated 27.11.2009 and P-III/VM/268/09 dated 18.12.2009 passed by the Commissioner of Central Excise (Appeals) Pune-III Commissionerate.
2. The appellant M/s Imagination Technologies Pvt. Ltd. Are provider of software development and support services and the services provided by them came into the taxable net w.e.f 16 th May, 2008. The appellant got themselves registered with the excise department as an assessee on 24.07.2008. They claimed refund of input service tax credit paid by them on various input services used by them in the export of services for the period from May 2008 to June 2008 amounting to Rs.2,64,148/- and claim was made under the provisions of Rule 5 of the CENVAT Credit Rules, 2004. The claim was rejected only on the ground that it pertains to a period prior to obtaining registration of the appellant with the excise department and therefore they are not entitled for the CENVAT credit. They had also filed another refund claim for an amount of Rs. 4,24,951/- for the period from July 2008 to September 2008 out of which an amount of Rs.1,60,803/- was rejected on the following grounds namely, (1) the CENVAT credit was taken and utilized prior to the date of registration (on 24.07.2008), and therefore not eligible for the credit of CENVAT under the CENVAT Credit Rules; the amount of an amount of this was Rs.1,53,442/-; (ii) further an amount of Rs. 5637/- was denied to them on the ground that on the invoices of inputs services, no registration number of the service provider was indicated; (iii) besides another amount of Rs.658/- was denied on the ground that it pertains to repair of coffee machine which is not an eligible input services.
3. The appellant contends that there is no provision in the CENVAT Credit Rules which prohibits an assessee from claiming CENVAT credit on inputs/ input services prior to their registration with the Central Excise department. It is their contention that so long as they can lead evidence as to having borne the incidence of duty on the inputs/input services, and such inputs/input services have been utilized in the providing of output services they are entitled to the credit of the same. They are also relying on the judgment of the Tribunal dated 18.08.2000 vide Order no. A/430/10/SMB/C-IV in support of their contention. As regards the claim of Rs.5637/- which has been denied on the ground that in the concerned invoices, the registration number of the service provider was not indicated, they submitted that as per the proviso to sub-rule (2) of Rule 9 of the Cenvat Credit Rules, if the Dy. Commissioner of Central Excise is satisfied that the goods or services covered by the document have been received and accounted for in the books of accounts of the receiver, he can allow the CENVAT credit even if some particulars are missing in the documents on the basis of which CENVAT credit is being taken. It is their submission that they had produced the CENVAT credit register and all the invoices before the jurisdictional Assistant Commissioner of Service Tax, who had in its order recorded that: “The CENVAT register also mentions the dates on which payment has been made to the respective service provider. The ST-3 return for the period April 2008 to September 2008 shows no credit has been utilized and the entire amount is lying in balance”. Further, the said Assistant Commissioner has also recorded his findings as follows: “Also from the abstract of CENVAT credit register it is seen that the claimant has made payment to input service providers for the services given by them on which the claimant has availed CENVAT credit and used the input services for providing the output service finally exported. Thus the condition stipulated under CENVAT Credit Rule 4(7) that tax credit of input service shall be availed on or after the day on which payment is made to input service provider is satisfied by the claimant.”
Thus from the order of the Assistant Commissioner it is clear that they had in the CENVAT Credit Register made appropriate entries in respect of services received by them and availed the Credit after making payments to the input service providers. Thus the bonafide of their claim is clearly established and, therefore, the Assistant Commissioner should have allowed them the refund claim pertaining to invoices wherein the registration number of the input service provider was not indicated as per the provisions of Rule 9(2) of the CENVAT Credit Rules, 2004. They also rely on the judgment of Tribunal in the case of Secure Meters Ltd. Vs. Commissioner of C.Ex., Jaipur-II 2010(18)STR 490(Tri-Del) in support of the above contention. As regards the CENVAT credit of Rs.658/- towards the repair coffee machine they submitted that the coffee machine, installed in their premises is for supply of coffee to their employees. Therefore, it is a service in or in relation to the providing of an output service as the output service is provided through their employees and, therefore, the service tax paid on the repair of coffee machine is an eligible input service.
4. The learned DR on the other hand reiterates the findings given by the appellate authority in his order and submits that in the absence of registration by the service provider, it is not possible for the department to verify the veracity of the claim.
5. I have carefully considered the rival submissions. As regards the claim of CENVAT credit on the input service received prior to the registration by the appellant, as pointed out by the appellant there is no provision in the CENVAT Credit Rules specifically prohibiting availment of CENVAT credit in respect of input/input service which have been received prior to their registration as an output service provider. So long as they can establish that they have borne the incidence of duty on the inputs/input services and they have utilized the same in providing taxable output services, they are eligible for the tax credit on the inputs/input services. I also find that the very same issue was considered by this Tribunal in the order dated 18.8.2000 and relevant abstract from the said order is given below:-
“6.1 On careful examination of the records and submissions made by both sides, I find that there are two issues in this case-
1. Whether the appellant are entitled for CENVAT credit availed by them prior to registration or not?
2. Whether the penalties under various sections of the Finance Act, 1994 are leviable on the appellants in the face and circumstances of the case?
6.2 With regard to the issue no.1, it is clear from the Service Tax credit Rules, 2002 that the appellants are entitled for input service and further as per CENVAT Credit Rules, 2004 which took the part of the Cenvat Credit Rules, 2002 holding that the CENVAT credit is available on input and input service both with effect from 10.09.2009. In the provisions of law relating to service tax, nowhere it is mentioned that the CENVAT credit is not available prior to registration. In fact, CENVAT Credit Rules clarifies that the assessee is available for CENVAT credit which is applicable to them within the provisions of CENVAT Credit Rules, 2004 or Service Tax Credit Rules, 2002. Accordingly, the learned DR also agreed that CENVAT Credit is available to the appellant with effect from 10.09.2004 when the CENVAT Credit Rules, 2004 came into force but I find in this case the Service Tax Credit Rules, 2002 were also in force prior to 10.09.2004 and the appellant is entitled for service tax credit of Rs.34,113/- availed by them. Accordingly, the issue no. 1 is settled in favour of the appellants”. From the above order, it is clear that CENVAT Credit cannot be denied for the above period prior to registration by an assessee and I completely agree with the above decision.
6. As regards the second issue regarding denial of CENVAT credit on account of not indicating registration number of the input service provider on the invoices, this issue also has been settled by the decision of this Tribunal in the case of Secure Meters Ltd. (supra). In the said order, it was held that credit cannot be denied on the basis of invoices wherein registration numbers were not mentioned so long as the payment of tax was established and the said input service was utilized in the provisions of output service. In the instant case as can be seen from the order of the adjudicating authority the receipt of the service, its utilization and payment for the service are clearly established from the records maintained by the party and produced before the adjudicating authority. Therefore, in deference to the judgment cited above, I am of the view that the appellant is eligible for the amount of service tax credit and consequent refund in respect thereof.
7. The last issue for decision is regarding eligibility to CENVAT Credit of the service tax paid on repair of coffee machine. The coffee machine has been maintained by the appellant for vending of coffee to its employees. It is the nature of a catering service provided to the employees which is very essential, especially for the employees working round the clock as in the case of IT companies. Therefore, repair of the coffee vending machine is an input service in or in relation to the output service provided by the appellant and, therefore, they are rightly entitled to the service tax paid on the repair of the coffee vending machine as it is an eligible input service.
8. In sum, I allow the appeals filed by the appellant in this case with consequential relief, if any.
(Pronounced in Court)
