TMI Blog2014 (2) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... uments needs to be reversed. Service Tax credit can be distributed only if the services were received at the manufacturing premises and if it is received elsewhere, it is not permissible to avail of the Service Tax credit. Input Service Distribution scheme is a special scheme and if anyone wants to avail the benefit thereof, the terms and condition should be complied with completely. From the statements of the officials of the appellant firm, it clearly emerges that the credit was distributed by the Head Office without any registration and without ascertaining the receipt of the services at the Alibag factory. Services received at the depots were also distributed to the Alibag factory and also services received at the other factories of the appellant. Thus, as regards the denial of CENVAT Credit of ₹ 2.92 Crore, the appellant is not prima facie eligible for the benefit of the same - Following decision of SQL Star International Ltd. Vs. Commissioner of Customs, Hyderabad [2011 (7) TMI 868 - Andhra Pradesh High Court] - Conditional stay granted. - E/87674/13 - Stay Order No. S/1187/2013-WZB/C-II(EB) - Dated:- 13-11-2013 - P R Chandrasekharan And Anil Choudhary, JJ. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has availed ineligible CENVAT Credit amounting to Rs.8,80,80,062/-. Similarly, for the subsequent period, the appellant had availed ineligible CENVAT Credit amounting to Rs.96,63,002/- during October, 2010 to December, 2011. On conclusion of the investigation, show-cause notices were issued proposing to recover the above ineligible CENVAT Credit taken by the appellant. The appellant contested the demands and submitted that ineligible credit taken by them would be only Rs.3,23,60,407/- which they had reversed during the course of investigation. However, the adjudicating authority did not accept this plea and confirmed the CENVAT Credit demands of RS.8,80,80,062/- and Rs.96,63,002/- under the provisions of Rule 14 of the Cenvat Credit Rules read with Section 11A of the Central Excise Act along with interest thereon under Section 11AB. He also imposed a penalty of Rs.8,80,80,062/- on the appellant under the provisions of Section 11AC and a penalty of Rs.19,62,600/- under Rule 15 of the Central Excise Rules, 2002. Aggrieved of the same, the appellant is before us. 3. The learned Counsel for the appellant made the following submissions:- (i) As regards the denial of CE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in respect of the Alibag factory. Thereafter the Head Office of the appellant issued inter office memorandum/letters to the Alibag factory along with copies of relevant original invoices and the Alibag factory of the appellant availed CENVAT Credit on the basis of original invoices which were available to the department for verification. The department has sought to deny the credit on the ground that the Head Office was not registered as n Input Service Distributor and hence, the Alibag factory of the appellant could not have taken any credit. It is their contention that in a case where the Alibag factory wants to avail the credit, it can do so on the basis of the invoices issued by the service provider and the credit cannot be denied on the ground that the invoices were issued to the name of the Head office. (vi) The learned Counsel placed reliance on the decision of the Tribunal in the case of SGS India Pvt. Ltd. Vs. CCE - 2011 (270) ELT 115, Everyday Industries India Ltd. - 2007 (219) ELT 333 (T), Chemplast Sanmar Ltd. - 2011 (267) ELT 392 (T) and Marmagoa Steel Ltd. Vs. UOI - 2005 (192) ELT 82 (Bom) in support of the above contention. (vii) It is also submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the above, the learned Counsel pleads for grant of stay. 4. The learned Commissioner (AR) appearing for the Revenue, on the other hand, strongly refutes the contentions raised by the appellant. 4.1 As regards the CENVAT Credit taken on the Insurance Policy, he submits that Shri Newton Misquitta, Senior Manger (Accounts) had confirmed that the Insurance Policy taken pertained to insurance of empty containers in respect of imported vitrified tiles. Similarly, marine cargo policies pertained to mainly imports of vitrified tiles, which were traded by the appellant. Again some of the policies pertained to insurance of their showrooms located all over India, which was used for sale of the imported goods as well as domestically manufactured goods. Thus, it is clear that the appellant took ineligible CENVAT Credit on the insurance services received by them. 4.2 Similarly, in the case of CENVAT Credit taken and the basis for the same Shri Sandeep Patil, Officer (Excise and Despatch) had admitted that the credits were taken on the instructions of Shri Bhanuprakash Sharma, Manager Excise) without receipt of any documents and after taking the credit, the same were sent to Head Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as observed that the documents on the strength of which credit was taken are not proper documents and these facts were also admitted by the employees and, therefore, the credit taken on ineligible documents needs to be reversed. 4.6 He further submits that the appellant had taken CENVAT Credit amounting to Rs. 20,04,910/- as specified in Annexure-D in respect of various services such as Club membership fees of Directors, Pest Control Services done at the residence of Directors, Annual Maintenance Contract of the equipments at the bungalows of Directors, Printing of Invitations, Public relation services such as Hostess supply, Credit card services by the Directors, services relating to Tea parties and so on and these services had no nexus with the manufacturing activity undertaken by the appellant at their Alibag factory. 4.7 The ld. AR submits that the appellant has committed a fraud on the exchequer by availing ineligible credit by resorting to mis-declaration and blatant violation of statutory procedures and therefore, imposition of mandatory penalty is justified and relies on the decision of the Apex Court in the case of Essar Oil Ltd. [2004(172) ELT 433 (SC)] in support of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, as regards the denial of CENVAT Credit of Rs. 2.92 Crore, the appellant is not prima facie eligible for the benefit of the same. 5.3 As regards the denial of service Tax credit amounting to Rs. 2,88,89,713/- the appellant's claim is that the department has not clearly shown how the documents on strength of which the credit was taken was improper and what particulars were missing in the documents, so as to deny benefit of the CENVAT Credit. There is some merit in this contention but these needs to be verified with the actual documents which can be done only at the stage of final hearing. 5.4 As regards the demands of Rs. 20,04,910/- raised in Annexure-D to the show-cause notice and the amounts of Rs. 8,19,902/- specified in Annexure - E towards availment of CENVAT Credit twice and the amount of Rs. 28,84,078/- specified in Annexure - F towards excess availment of CENVAT Credit , the appellant has not made out any case at all. 5.5 Thus, barring the demand of service Tax raised in Annexure- C amounting to Rs. 2,88,89,713/- out of total demand of Rs. 9.7 crore, the appellant has not made out a prima facie case for grant of stay. The very fact that the appellant has made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crore by the appellant prima facie appears to be not in accordance with the provisions of Cenvat Credit Rules, 2004. 5.6 From the records of the case, it appears to be a case of fraudulent availment of ineligible cenvat credit by resorting to manipulation of records/documents, deliberate mis-declaration and blatant violation of statutory procedures. It is a well-settled position in law that fraud' vitiates every solemn act and fraud and justice never dwell together. 5.7 The appellant has not pleaded any financial hardship. Therefore, as held by the Hon'ble High Court of Andhra Pradesh in the case of SQL Star International Ltd. Vs. Commissioner of Customs, Hyderabad - 2012 (25) STR 113 (AP), the balance of convenience lies in favour of Revenue and the interests of revenue need to be protected and the appellant needs to be put to terms. 6. Accordingly, we direct the appellant to make a pre-deposit of another Rs. 3 crore (Rs. Three Crore only), in addition to the amount of Rs. 3.23 Crore already paid by them by reversal of credit, within a period of eight weeks and report compliance on 15/1/2014. On such compliance, pre-deposit of balance of dues adjudged against the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X
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