Cenvat Credit cannot be denied on mere Presumptions

Nayara Energy Limited Vs C.C.E. & S.T. Rajkot (CESTAT Ahmedabad)

We find that the adjudication authority in respect of most of the services denied the credit on the ground that no evidence was produced by the appellant to prove that the services was availed by the appellant and also on the ground that there is no nexus between the services with the manufacture and clearance of the goods or for their business activity. We find that all the services per se are prima facie input services held in various judgments, however, the admissibility of Cenvat credit on these services can be decided on the basis that whether the services were used for the purpose specified in the definition of input service. The appellant along with this appeal submitted various documents such invoices, CA certificates etc, but since the said documents were not considered by the lower authority, the denial of credit is not correct as the same is on presumption basis. Therefore, we are of the view that the entire matter needs to be re-considered in the light of the various documents submitted by the appellant. We therefore set aside the impugned order and allow the appeal by way of remand to the adjudicating authority to pass a de novo order after considering all the documents to be submitted by the appellant before him. Needless to say that the appellant should be given sufficient opportunity to make their submission and documents, if any required, and also granting the personal hearing before de novo adjudication.

FULL TEXT OF THE CESTAT JUDGEMENT

The issue involved is that whether the appellant entitled for Cenvat Credit on the following various input services.

2. Shri Karan Sarwagi, Learned Chartered Accountant appearing on behalf of the appellant submits that the adjudicating authority denied the Cenvat credit on the aforesaid services on the ground that there is no nexus of the services in or in relation to manufacture and clearance of the goods. The Adjudicating Authority also denied the credit on the ground that the appellant has not adduced any evidence as regard use of the services. He submits that all the services were used in or in relation to either manufacture or clearance of the goods or in relation to the overall business of the appellant company. He referred to various document such as invoices and CA certificate etc. to establish the use of the services by the appellant. On the query from the bench whether the said documents were placed before the Adjudicating Authority, he fairly concede that though they have submitted before the Adjudicating Authority but stated during hearing that if required the documents will be submitted to the Adjudicating Authority. However, without asking for the document, the Adjudicating Authority passed the order. In support of the submission, he placed reliance on the following decision.

• M/s ESSAR OIL LTD Vs. COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, RAJKOT -2016-TIOL-648- CESTAT- AHM
• PRINCIPAL COMMISSIONER Vs. ESSAR OIL LTD – 2016 (41) S.T.R 389 (Guj.)
• COCA COLA INDIA PVT. LTD VS. COMMISIONER OF C.EX., PUNE-III – 2009(242) E.L.T 168 (Bom.)

3. Shri Dharmendra Kanjani, Learned Superintendent (Authorized Representative) appearing on behalf of the revenue reiterates the finding of the impugned order.

4. We have heard both sides and perused the records. We find that the adjudication authority in respect of most of the services denied the credit on the ground that no evidence was produced by the appellant to prove that the services was availed by the appellant and also on the ground that there is no nexus between the services with the manufacture and clearance of the goods or for their business activity. We find that all the services per se are prima facie input services held in various judgments, however, the admissibility of Cenvat credit on these services can be decided on the basis that whether the services were used for the purpose specified in the definition of input service. The appellant along with this appeal submitted various documents such invoices, CA certificates etc, but since the said documents were not considered by the lower authority, the denial of credit is not correct as the same is on presumption basis. Therefore, we are of the view that the entire matter needs to be re-considered in the light of the various documents submitted by the appellant. We therefore set aside the impugned order and allow the appeal by way of remand to the adjudicating authority to pass a de novo order after considering all the documents to be submitted by the appellant before him. Needless to say that the appellant should be given sufficient opportunity to make their submission and documents, if any required, and also granting the personal hearing before de novo adjudication.

5. The appeal is allowed by way of remand to the adjudicating authority.

(Pronounced in the open court on 17.03.2021)