Case Law Details
Godrej & Boyce Mfg. Co. Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
The CESTAT, Chennai in M/s. Godrej & Boyce Mfg. Co. Ltd. v. Commissioner of GST & Central Excise [Excise Appeal No. 40047 of 2019 & 40072 of 2021 dated January 27, 2022] set aside the order of the Revenue Department rejecting the CENVAT credit of the assessee. Held that, CENVAT credit cannot be denied due to the reason that the invoices were issued in the name of head offices with centralised registration. The purpose of taking centralized registration is to help the manufacturer for availment of credit as well as distribution of credit.
Facts:
M/s. Godrej & Boyce Mfg. Co. Ltd. (“the Appellant”) is engaged in the manufacture of steel furniture who availed CENVAT credit on inputs, input services and capital goods.
Revenue Department (“the Respondent”) noticed that, the Appellant availed CENVAT credit on commissioning and installation services which appeared to be ineligible in terms of Rule 2(l) of CENVAT Credit Rules, 2004 (“the CENVAT Rules”) during the period from November 2015 to October 2016 and May 2017 to June 2017. Accordingly, Show Cause Notices (“SCNs”) and Statements of Demands (“SODs”) were issued to recover the ineligible credit and afterwards demand of recovery with the interest was confirmed with penalties imposed vide Order-in Original (“OIO”) dated June 29, 2018 passed by the Respondent.
Aggrieved by OIO, the Appellant filed before the Commissioner (Appeals), who upheld the decision of the Respondent. Hence, the Appellant has filed this appeal.
The Appellant contended that, the order was confirmed by stating that the invoice is issued in the name of their Head office at Bombay whereas the service of installation and commissioning has been rendered at Ambattur plant in Chennai. There is no such allegation in SCNs / SODs which confirms that credit has been availed on the invoices issued in the name of their Head office situated at Mumbai.
Issue:
Whether CENVAT credit can be rejected merely on the ground that invoices were issued in the name of Head office whereas the services were rendered at a different location?
Held:
The CESTAT, Chennai in Excise Appeal No. 40047 of 2019 & 40072 of 2021 dated January 27, 2022 held as under:
- Relied on its earlier judgment in Appellant’s own case in
- wherein, the Tribunal allowed the Appellant to avail CENVAT credit on input services, such as, commissioning and installation, housekeeping services, air travel services and rent-a-cab services.
- Observed that, the Respondent ought to have applied the earlier decision of the Tribunal and allowed the credit instead held that the invoice has been issued in the name of the Head office of the appellant company and that services are rendered at Ambattur plant (Chennai).
- Stated that, there is no law which restricts or prohibits the invoice being issued in the name of the Head office which has Centralized Registration. The purpose of taking centralized registration is to help the manufacturer for availment of credit as well as distribution of credit. Thus, disallowance of credit raising such an issue which is not alleged in SCNs cannot sustain.
- Set aside the OIO passed by the Respondent.
- Held that the disallowance of credit is without any legal or factual basis.
Relevant Provisions:
Rule 2(l) of CENVAT Credit Rules
“Definitions. – In these rules, unless the context otherwise requires, –
“input service” means,-
(i) services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India where service tax is paid by the manufacturer or the provider of output service being importer of goods as the person liable for paying service tax for the said taxable services and the said imported goods are his inputs or capital goods; or
(ii) any service used by a provider of output service for providing an output service; or
(iii) any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes,-
(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for –
(a) construction or execution of works contract of a building or a civil structure or a part thereof; or
(b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or
(B) services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods; or
(BA) service of general insurance business, servicing, repair and maintenance, in so far as they relate to a motor vehicle which is not a capital goods, except when used by –
(a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person; or
(b) an insurance company in respect of a motor vehicle insured or reinsured by such person; or
(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;”
Explanation.- For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis.”
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts of the case are that appellants are engaged in the manufacture of steel furniture and are availing cenvat credit on inputs, input services and capital goods. It was noticed that during the period from November 2015 to October 2016 and May 2017 to June 2017, the appellant availed cenvat credit on commissioning and installation services which appeared to be ineligible in terms of Rule 2(l) of CCR 2004. As a sequel to notices issued for the preceding period time to time, Statements of Demands (SODs) to recover ineligible credit were issued. After due process of law, the adjudicating authority confirmed demand of recovery of the ineligible credit with the interest and imposed penalties. Aggrieved by such orders, appellant filed appeals before Commissioner (Appeals) who upheld the same. Hence these appeals.
2. On behalf of the appellant, Ld. Counsel Shri M.N. Bharathi appeared and argued the matter. He adverted to para-8 of the OIO No.100/2018 dated 29.06.2018. It is argued by him that on the very same issue appellant had filed appeal before the Tribunal against such order and in the appellant’s own case reported in 2017 (48) STR 88 (Tri.-Chennai) the credit was held to be ineligible. Though the adjudicating authority in para-8 took notice of the said decision has proceeded to confirm the order by stating that the invoice is issued in the name of their Head office at Bombay whereas the service of installation and commissioning has been rendered at Ambattur plant in Chennai. There is no such allegation in the SCNs / SODs that the appellant has availed credit on the invoice issue in the name of their Head office situated at Mumbai. In the SCN, it is stated that the facts and circumstances leading to the Statements of Demand are identical to the show cause notice issued earlier. This being so, the authorities below ought to have applied the decision of the Tribunal and allowed the credit. In fact, in the earlier SCNs, the credit was disallowed alleging that activity of commissioning and installation of the furniture is a post-manufacturing activity. The Tribunal after examining the facts had held that the service is eligible for credit. He prayed that appeals may be allowed.
3. Ld. A.R Ms. Sridevi Taritla supported the findings in the impugned orders.
4. Heard both sides.
5. The Tribunal in the appellant’s own case supra had examined the very same issue and observed as under :
“6. On going through the records, it is seen from the Statement of Demand as well as the earlier show cause notices referred in para-2 of the Statement of Demand that the main allegation raised against the appellant is that the credit is not eligible for the reason that the assembling / installation activity sub-contracted by them is a post-manufacturing activity. This issue is settled in favour of the appellant in the earlier periods for vide the decision of the Tribunal as cited supra. Though Ld. A.R has argued that there is another issue with regard to non-registering as ISD etc., this allegation has not been raised in the Statement of Demand or the earlier SCNs. When there is no allegation against the appellant, mere findings recorded in the order is of no consequence to deny the credit.”
6. In para-2 of the statement of demand, it is clearly stated that facts and circumstances leading to the statements of demand are identical to the earlier SCNs. This being so, the authorities below ought to have applied the decision of the Tribunal and allowed the credit. Instead, the adjudicating authority has held that the invoice has been issued in the name of the Head office of the appellant company and that services are rendered at Ambattur plant (Chennai). There is no law which restricts or prohibits the invoice being issued in the name of the Head office which has Centralized Registration. The purpose of taking centralized registration is to help the manufacturer for availment of credit as well as distribution of credit. The disallowance of credit raising such an issue which is not alleged in SCN cannot sustain.
7. From the above discussion, we hold that the disallowance of credit is without any legal or factual basis. The impugned orders are set aside. Appeals are allowed with consequential relief, if any, as per law.
(Pronounced in court on 27.01.2022)
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