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TMI Blog2018 (6) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... communication Services. 3.1 During the course of audit of the records of the respondent, it was noticed that the respondent has availed and utilized Cenvat credit amounting to Rs. 30,83,728/- (including Education Cess) on the strength of Debit Notes issued by M/s. GAIL (I) Ltd., Jaipur on 24.4.2006, 19.7.2006, 16.10.2006 and 15.2.2007. Since debit note is not a specified document for taking Cenvat Credit rules, 2004, the Cenvat credit so availed by the respondent and subsequently utilized for payment of taxes which appeared to be irregular under provisions of law. Such irregular availment and utilization of Cenvat credit on the strength of improper document (Debit notes), the respondent appeared to have contravened the provisions of Rule 9(1) of the Cenvat Credit Rules, 2004 and Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules 1994 and therefore, they appeared liable for penalty under Rule 15(4) of the Cenvat Credit Rules, 2004 read with Section 76 & 78 of the Act. 4. Counsel for the appellant contended that the tribunal has committed serious error in accepting the document of debit note which is not permissible under Rule 9 of the CENVAT Credit Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er subclauses (iii), (iv), (v) and (vii) of clause (d) of sub-rule (1) of rule (2) of the Service Tax Rules, 1994; or (f) an invoice, a bill or challan issued by a provider of input service on or after the 10th day of, September, 2004; or (g) an invoice, bill or challan issued by an input service distributor under rule 4A of the Service Tax Rules, 1994.' 4.1 He further contended in view of the decision of Principal Seat at Jodhpur in Panwar Trading Corporation vs. State of Raj. reported in 2015 (1) WLN 14 (Raj.) wherein it has been held as under:- 27. The availment of ITC is creature of Statute. The concession of ITC is granted by the State Government so that the beneficiaries of the concession are not required to pay the tax or duty which they are otherwise liable to pay under Rajasthan VAT Act. In extending the concession, it is open to the Legislature to impose conditions. Section 18 is one such condition imposed making it mandatory for the registered dealer to claim ITC within 90 days under subsection (2), from the date of issuance of invoice, and no ITC will be allowed on certain purchases under sub-section (3). The entitlement to claim Input Tax Credit is created ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the registered dealer is not entitled to the concessional rate of tax. 32. The benefit of credit under the Act is in the nature of a concession given which could be availed only in the manner and in the circumstances mentioned in Section 18. 4.2 He also relied upon the decision of Supreme Court in Commissioner of Central Excise, New Delhi vs. Hari Chand Shri Gopal and ors. reported in (2011) 1 SCC 236 wherein Supreme Court held as under:- "29. The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the Statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is a failure to comply with some requirements which are directory in nature, the non-complian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground of adequate alternative remedy: To appreciate this contention, it is necessary to notice various stages through which this petition passed before it was listed for final hearing. The writ petition was presented on 17.5.2001. On 30.7.2001 show cause notices against admission were issued to respondents. On 28.9.2001, the petition was admitted for final hearing in presence of learned Counsel for the respondents. The bar of alternative remedy is self imposed bar because remedy available under Article 226/227 of the Constitution being in general is a discretionary relief. After having entertained and admitting the writ petition for final hearing, it will not be proper at this stage to throw it out on the ground of alternative remedy. In this view of the matter, it is difficult to accept the contention of the learned Counsel for the respondents to dismiss the writ petition on the ground of alternative remedy at this distant point of time." 8. Now coming to the merits of the case, it may be observed that MODVAT is basically a duty collecting procedure which provides relief to the manufacturer on the duty element borne by him in respect of the inputs used by him. The relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-section (3) of Section 3 is really a benefit given in respect of certain taxable transactions for which tax paid under sub-section (2) of Section 3 to the extent of tax paid on purchase of goods inside the State. Therefore, it cannot be contended that subsection (3) of Section 3 is an integral part of sub-section (2) of Section 3 conferring absolute and indefeasible right on the registered dealer. Input Tax Credit provided under sub-section (3) of Section 3 is really a benefit or indulgence. While so, it is open to the State Legislature to provide for conditions and restrictions while extending the concession. Primary obligation of the State is to tax. The concession by way of Input Tax Credit are to be construed very strictly. 38. Provision for availing concession is to be strictly construed and followed:- Input tax credit, which is in the nature of concession or indulgence, could be availed only in the manner prescribed under Section 19. Law is well settled that the person, who claims exemption or concessional rate, must obey and fulfill the mandatory requirements exactly. Unless there is strict compliance with the provisions of the statute, the registered dealer is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so when the provisions are clear and unambiguous. 72. Applying the principles of interpretation, the test to ascertain whether the word shall used in Section 19(11) has to be examined upon the TNVAT Act and we should not go by the phraseology of the provision, but should consider the nature, its design and consequence which would follow from it. Section 19(11) specifically uses the word 'shall' as regards compliance with the timeframe for claiming Input Tax Credit accumulated on purchases either before or end of the financial year or before ninety days after the purchase whichever is later. In our considered view in order to verify the entries and to prevent any tax avoidance or evasion, time frame is stipulated in Section 19(11) of TN VAT Act to claim Input Tax Credit. The use of the word 'shall' is ordinarily indicative of the mandatory nature of the provision. 4.6 He further contended that in view of the observations made by the tribunal, the tribunal has committed an error in allowing the appeal. 5. Counsel for the respondent has taken us to the judgment of Appellate Authority who while considering the argument observed as under:- "The appellant in the grounds of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd they cannot claim that what is the proper document for availment of Cenvat credit. The appellant has also not produced any confirmation from M/s. GAIL (I) Ltd. about issuing of debit note by them in all cases for recovery of any services provided by them as well as not issuing any other documents apart from debit note so issued by them. Be that as it may, debit note in reference cannot be attributed as proper duty paying document for availment of Cenvat credit. I thus hold that the adjudicating authority has rightly denied the cenvat credit on the basis of debit notes so received by the appellant. I also observe that the above view find support from the decision of Hon'ble CESTAT in the case of M/s Godrej Consumer Product Ltd. vs. CCE, Indore reported in 2010 (20) STR 609 (Tri- Del) wherein it was held by Hon'ble CESTAT that debit note is not a prescribed duty paying document in terms of Rule 9 of Cenvat Credit Rules, 2004 for availment of Cenvat credit." 5.1 He contended that only because debit note was not referred in Rule 9 of Cenvat Credit Rules, 2004 while interpreting law, the Appellate Authority has given contrary finding to the tribunal judgment. 5.2 He emphasised on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants submitted that the credit of service tax paid by them on the business auxiliary services (Commission Agent) received by them has been disallowed on the ground that the same was taken on the basis of debit notes. He submits that there was an omission on the part of the service provider in not issuing a proper invoice but issuing debit notes for the services provided. He submits that the service was provided by Pharmalab (I) Pvt. Ltd. He drew my attention to the fact that even though the documents have been called as debit note, they contain all the details which are required as per proviso to Rule 9(2) of CENVAT Credit Rules and therefore denial of the same by the Original Adjudicating Authority and the Appellate Authority is not correct. Learned DR, submits that credit has been taken on the basis of debit notes and it is not a prescribed document. 4. Commissioner (Appeals) also has taken the same view. However, from the copies of debit notes submitted during the hearing I find that the debit notes issued by the service provider contained the details of service tax payable, description of the taxable service (sales commission), value of the taxable service, registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at credit can be taken on the basis of carbon copy of the challan and the ratio of this judgment is not applicable to the facts of this case. In view of this, I do not find any infirmity in the impugned order. The Revenue's appeal is dismissed. 6.5 In Commissioner, Central Excise and Service Tax vs. Nav Bharat Metallic Oxide Industries P. Ltd., (CESTAT - Ahmedabad) it has been held as under :- 4.1 In view of the above case law and other case laws, relied upon by the Appellant, a Debit note could also belong to the category of Invoice where all the prescribed details are available. As per World Book Dictionary also, an invoice means a list of goods sent to a purchaser often showing such other information as price, amounts etc. Similarly, a Bill means a statement of money owned for work done or things supplied. Accordingly, a debit note having all the prescribed details could be an invoice or bill. It is not brought out by Revenue as to what are the standard elements of an Invoice or Bill or Challan which are lacking in the debit notes issued to Respondent's Head Office. On the basis of above observations and the reported case laws, Revenue's appeal does not survive. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars, which are required to be mentioned in the invoices and the Cenvat credit has been correctly taken by the appellant. The Tribunal in a series of judgments has held that when the debit notes issued by the service provider under Rule 4A of the Service Tax Rules, 1994, mention all the information's required to be mentioned in an invoice, the Cenvat credit on the basis of such debit notes has to be allowed by treating the same as invoices. In view of this, denial of Cenvat credit of Rs. 30,16,390/- is also not sustainable. 6.7 In Mahanagar Gas Limited vs. Commissioner of Central Excise (CESTAT - Mumbai), it has been held as under :- 5. On careful perusal of debit note, I observed that all the particulars as required under Rule 9(2) of Cenvat Credit Rules are undisputedly appearing on the debit note. Therefore the debit note is at par with the documents prescribed under Rule 9(1) of Cenvat Credit Rules 2004. On going through various judgments relied upon by the Ld. Counsel for the appellant, I find that the ratio of those judgments are squarely applicable in the present case. There is no dispute raised by the department that the service were received and same was accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the Board Circular came to be issued subsequent to the material period. The documents called debit notes had apparently contained all the particulars required to be provided in an invoice and were adequate to avail CENVAT credit. In the circumstances it is ordered that there shall be waiver of predeposit and stay of recovery of the adjudged dues pending decision in the appeal. 7. He also relied upon the decision of Gujarat High Court in CCE and C. vs. Eupec-Welspun Pipe Coatings India Ltd. reported in 2010 (260) ELT 381 (Guj.) wherein it has been held as under:- 2. Heard, Ms. Amee Yajnik, learned Standing Counsel, appearing for the Revenue and perused the order of the CESTAT (2009 (235) E.L.T. 347 (Tri.-Ahmd.).). The CESTAT, in its order, has clearly observed after referring to Rule 9(2) of the Central Excise Rules (sic) that, credit shall not be denied on the ground that the document does not contain all the particulars required to be contained under these Rules if the document gives details of payment of duty or Service Tax, Description of the Goods, Assessable Value, Name and Address of the factory of the receiver. 2.1 The Tribunal has further observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took note of the fact that no contention had been raised before the Tribunal that the appellants should be permitted to meet the requirements of Rule 56A of the Central Excise Rules and, therefore, they cannot be permitted to avail of that benefit in a Writ Petition brought under Article 226 of the Constitution. That indeed was a technical view to take because if the appellants were entitled to the benefit of the Notification No. 71/71-C.E., dated 29th May, 1971, to deny that benefit on the technical ground of noncompliance with Rule 56A would tantamount to permitting recovery of double duty on the intermediary product. The circumstances in which the appellants did not pay the duty on the intermediary product before putting the same to captive consumption for producing that stage, the appellants contested the correctness of the classification and had, therefore, not paid the duty on the intermediary product. When it was found that they were liable to pay duty on the intermediary product and had not paid the same, but had paid the duty on the end product, they could not ordinarily have complied with the requirements of Rule 56A. Once the Tribunal took the view that they were liable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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