TMI Blog2020 (6) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... provider who issued the invoices. It is not a case of the department that in said invoices, no service tax was paid and there is no dispute about receipt and use of the services, which are the main criteria for allowing Cenvat credit on input service. Therefore, the credit, only on the technical infraction should not be denied. Demand of ₹ 41,94,123/- Cenvat credit - allegation that the credit lying in the account of branches other than Nadiad, has been wrongly transferred under centralized registration without any documents - Period 2011 - HELD THAT:-The appellant undisputedly made necessary recording in the statutory books of transfree's branch. There is no document prescribed for such transfers. There is no case of the department that the transferor branches have transferred excess credit or wrong credit. It is also not a case of the department that the Cenvat credit transferred is not out of the credit availed by the branches - only on the ground that proper documents under centralised registration was not issued for transfer of credit cannot be denied. Demand of ₹ 5,59,851/- Cenvat credit - input services - Medi-claim - Vehicle Insurance - Canteen Exp. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t - the appellant have reversed Cenvat credit which is more than the proportionate credit attributed to exempted goods - The entire demand raised under Rule 6 will not sustain. Since the entire demand has been set-aside, consequently penalties and demand of interest are also set-aside. Appeal allowed - decided in favor of appellant. - Excise Appeal No. 12084 of 2014 - A/11029/2020 - Dated:- 1-6-2020 - Mr. Ramesh Nair, Member (Judicial) And Mr. Raju, Member (Technical) For the Appellant : Shri M. Pandya, Advocate For the Respondent : Shri T.G. Rathod, Joint Commissioner (AR) ORDER RAMESH NAIR : This appeal is directed against OIO passed by the Commissioner of Central Excise, Ahmedabad-III whereby demand of Cenvat Credit amounting to ₹ 15,07,27,999/- was confirmed and equivalent amount of penalties was imposed under Rule 15 of Cenvat Credit Rules read with section 11AC of Central Excise Act, 1944. It was also confirmed recovery of interest under section 11AB/AA of Central Excise Act. The details of demand of Cenvat Credit is as under :- (a) ₹ 3,30,189/- - Demand of cenvat credit on the ground that invoices issued in respect of Manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was reversed by the appellant on 08.04.2011 and communicated to the department vide letter dated 17.06.2011. As per the final audit report dated 01.08.2011, the department hadcalled upon the appellant to pay an amount equal to 10% of the value of exempted goods or to reverse entire Cenvat credit of Input service used in manufacture of exempted gods. The final audit report further stated that total Cenvat credit required to be reversed for the period April 2005 to March 2011 is ₹ 1,57,74,837/- and such figure did not include 17 Input services mentioned in Rule 6(5) which were excluded from the purview of application of rule 6(3) of the Rules. The appellant during the stage of audit objection, had already reversed a sum of ₹ 54,01,338/- on 08.04.2011. They had further paid a sum of ₹ 25,25,341/- on 06.08.2012. A show cause notice dated 07.09.2012 was issued to the appellant thereby called upon to show cause as to why an amount of ₹ 14,16,83,202/- should not be demanded and recovered from them which is at the rate of 10% of value of exempted goods cleared by the appellant, in terms of Rule 6 of the said Rules. In addition to the said demand, in terms of Rule 6, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest under protest. However, as per calculation, total Cenvat credit availed during the period August 2007 to September 2011 comes to ₹ 1,57,99,822/-. Out of the said credit availed by the appellant, Cenvat credit attributable to 17 excluded input services comes to ₹ 11,56,585/- therefore, the total Cenvat credit comes to ₹ 1,46,43,236/-. In respect of this calculation, he referred to copies of letters which were submitted as Annexure 'A' to their submission. He further submits that it is a settled legal position in the series of judgments that reversal of proportionate Cenvat credit to exempted goods along with interest which is paid even if belated, it results in a situation as if the assessee had not taken any Cenvat credit. It was also held by the Courts that it is on the assessee to decide which rule to follow under Rule 6 and said option can be exercised by the assessee even at the later stage. However, in the present case, the appellant has reversed Cenvat credit reversible under Rule 6 along with interest and therefore, there is no question of applicability of Rule 6 (relevant to 10/5% ) of Cenvat Credit Rules. In this regard, he relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d transfer to the Nadiad unit. In this regards, he submits that in the Tribunal decision in the case of Central Bank of India vs. CCE, Bhopal - 2019 (365) ELT 565 (Tri. Delhi.)which is on identical facts and circumstances, has set-aside the demand by holding that such objection is merely a technical error on the part of the appellant and there is no revenue loss to the department on account of such error. The Tribunal also held that there is no document specified under law for said transfers and therefore, the case can be established on the basis of statutory documents of the assessee and it cannot be said that there has been any violation on the part of the assessee. He submits that statutory documents maintained by the appellant s Nadiad branch as well as other branches clearly shows that there has been transfer of credit from appellant's one unit to another. Therefore, the demand is not sustainable. 6. Demand of ₹ 5,59,851/- is confirmed against Cenvat credit availed by the appellant on Input services such as Medi-claim, Canteen Services, Vehicle Insurance, Vehicle Hiring Service, CHA Bills, Guest House expenses, Residential Premise services and Membership services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly suggests that the said infractions have been unearthed during the course of audit. A perusal of the audit report would show that said issues were not raised by the audit party but were discovered fromperusal of record of the appellant while preparing the show cause notice in respect of the demand concerning Rule 6. He submits that in the present case, there is not even iota of evidence confirming any infraction was committed by the appellant with intention to evade any payment of duty. He relied upon the judgment of Hon'ble Gujarat High Court in the case of CCE vs. Chandresh C. Shah - 2014 (36) STR 972 (Guj.). Therefore, he submits that all the demands are not sustainable and the appellant to reverse only proportionate credit attributable to exempted goods and interest for the delay in reversal thereof. 9. On the other hand Shri T.G. Rathod, Learned Joint Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He placed reliance on the following judgments:- (a) Vishay Components India Pvt. Limited vs. CCE, Pune 2018 (8) GSTL 196 (Tri. Mumbai) (b) Tigrania Metal Steel Industries P. Limited vs. CCE 2015 (326) ELT 650 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services], except in the circumstances mentioned in sub-rule (2) : Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. Explanation 1. - For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of Rule 2 shall include non-excisable goods cleared for a consideration from the factory. Explanation 2. - Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise Act and the rules made thereunder. (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided also that in case of transportation of goods or passengers by rail the amount required to be paid under clause (i) shall be an amount equal to 2 per cent. of value of the exempted services. Explanation I. - If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Ld. Adjudicating Authority demanded 5% of the total sale of the trading turnover of goods on the ground that option provided under Rule 6(3)(i) is applicable on the ground that claim of the appellant on the option provided under Rule 6(3)(ii) is not available for the reason that appellant has not complied with condition provided under sub Rule (3A) of Rule 6 which provides that manufacturers of the goods shall follow certain procedure and conditions as provided under sub-rule (3A)(a)(i) to (iv) inasmuch as the appellant have not given said information in writing to the Jurisdictional Superintendent of Central Excise. Secondly the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is provisional basis, therefore it is not mandatory that whole amount or part of the amount was required to be paid on every month. The appellant though belatedly calculated the amount required to be paid in terms provided under sub-rule (3A) of Rule 6, therefore to fulfill the condition, assessee should pay the said amount, which has been complied by the appellant. 5.2 As regard the delay in payment, if any, the appellant have discharged the interest liability on such delay. Regarding the compliance as provided under Clause (a) of sub-rule (3A) of Rule 6 the appellant while exercising this option is required to intimate in writing to the Jurisdictional Superintendent, Central Excise, the following particulars namely : (i) Name, address and registration No. of the manufacturer of goods or provider of output service; (ii) Date from which the option under this clause is exercised or proposed to be exercised; (iii) Description of dutiable goods or taxable services; (iv) Description of exempted goods or exempted services; (v) Cenvat credit of inputs and input services lying in balance as on the date of exercising the option under this condition. As per the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew, the appellant have complied with the condition prescribed under Rule 6(3)(ii) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, therefore demand of huge amount of ₹ 24,71,93,529/- of the total value of the vehicle amounting to. ₹ 494,38,70,577/- sold in the market cannot be demanded. We are also of the view that Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credit attributed to the input or input services used in the exempted goods. It is also observed that in either of the three options given in sub-rule (3) of Rule 6, there is no provisions that if the assessee does not opt any of the option at a particular time, then option of payment of 5% will automatically be applied. Therefore we do not understand that when the appellant have categorically by way of their in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. Therefore, in view of this judgment, department has no say that which option the assessee should avail. In the present case, the appellant have reversed Cenvat credit which is more than the proportionate credit attributed to exempted goods. Therefore, the demand of ₹ 14,16,83,202/- raised invoking Rule 6 will not sustain. We further make it clear that as per the option available under Rule 6, the appellant is required to reverse Cenvat credit in respect of common input service along with interest and nothing more than that. As per submission of the appellant they have reversed excess credit. In this position, the adjudicating authority should recalculate the proportionate credit during the period of show cause notice and thereafter, if any amount of excess reversal and interest thereof arise, the same shall stand refundable to the appellant.With these observations, the demand of ₹ 14,16,83,202/- raised under Rule 6 is set-aside. 11. As regards the demand of ₹ 3,31,189/-, we find that Cenvat credit was denied only on the ground that in the invoices, certain services did not carry either Serial Number or Service Tax Registration. We find that this is a techni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... address of the service receiver, the nature of service provided, Registration No. of the service provider, amount of Service Tax paid for the service rendered and address of the issuer are available in the invoice. At least I could not make out any deficiency in the invoice. The Assistant Commissioner made a categorical observation that above mentioned particulars, meaning thereby, name and address of the person receiving taxable service, description and classification of taxable service are not forthcoming on the invoice. The only basis this objection can be upheld is that photocopy submitted by the appellant cannot be relied upon. Unfortunately, the Assistant Commissioner does not even say that he has verified the original or photocopy. The Commissioners (Appeals) observes : I find that adjudicating authority has convincingly established vide para 15 of the impugned order that the appellants have taken the credit of Service Tax on the basis bill which is not a prescribed document and does not contain details as required under sub-rule (2) of Rule 9 of Cenvat Credit Rules, 2004... . Apparently the Commissioner (Appeals) is too busy to verify the invoice in to deal with limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am not able to find any deficiency in the bill/invoice, I have to take a view that Cenvat credit has been taken correctly. Accordingly this demand of ₹ 3,30,189/- is set-aside. 12. The demand of ₹ 41,94,123/- has been confirmed on the basis that Cenvat credit could not have been transferred by the appellant's various branches to Nadiad unit under Centralised registration without issuance of proper documents by each unit. In this regard we find that the appellant undisputedly made necessary recording in the statutory books of transfree's branch. There is no document prescribed for such transfers. There is no case of the department that the transferor branches have transferred excess credit or wrong credit. It is also not a case of the department that the Cenvat credit transferred is not out of the credit availed by the branches. Therefore, only on the ground that proper documents under centralised registration was not issued for transfer of credit cannot be denied. This issue has been considered by this Tribunal in the case of Central Bank of India (supra) wherein this Tribunal has considered identical issue as under :- 6. After hearing both the side ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med on the ground that same was wrongly availed on ISD invoices issued by the appellant's Ahmedabad and Mumbai branch for services availed prior to the date of ISD registration was granted for the said unit. We find that Hon ble High Court of Karnataka in the case of mPortal (I) Wireless Solutions (P) Limited vs. CST, Bangalore 2012 (27) STR 134 (Kar.) has considered the issue of ISD invoices issued prior to registration and held that for this reason Cenvat credit cannot be denied. The relevant portion of the order is reproduced as under:- 7. Insofar as requirement of registration with the department as a condition precedent for claiming Cenvat credit is concerned, learned counsel appearing for both parties were unable to point out any provision in the Cenvat Credit Rules which impose such restriction. In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Therefore, said finding recorded by the Tribunal as well as by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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