9911796707
TMI Blog2023 (6) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... interalia, revealed that the appellants are having units located at Gumpam, Kathua and Kovai and that the expenses pertaining to two or more units have been incurred by their head office and entire service tax involved therein is completely passed on to the assessee located at Gumpam only. Further, on verification of such Debit Advice/Invoices issued in the name of Head Office at Hyderabad the actual usage of services involved therein could not be co-related with their unit located at Gumpam and hence the nexus between the invoices and utilisation of input service tax credit could not be established. 3. The Department relied on the provisions under Rule 9(1)(g) as also on Rule 7 of CENVAT Credit Rules, 2004 and came to conclusion that the expenses incurred by the "head office" can be distributed only by way of a bill or challan issued under Rule 4A of Service Tax Rules, 1994 and in accordance with the provisions for distribution as stipulated in Rule 7 of Cenvat Credit Rules, 2004. Thus, their head office has contravened Rule 4A of Service Tax Rules as well as Rule 7 of CCR 2004 in as much as they have passed on the credit to manufacturing unit on the basis of invoices issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yderabad and the Hyderabad office is merely having a central bank account, which makes the payments for all locations for ease of business. They have also submitted a copy of financial statement to substantiate the accounting methodology in support that it is not followed on the basis of head office-branch office basis, rather all the units have their separate accounting system and only the payments was done from the Hyderabad office having a common bank account for all branches/units. 7. It is observed that admittedly they are importing the raw materials in the name of their Gumpam plant and later on a part of that is also stock transferred to their other units as such, on payment of central excise duty apparently under Rule 3(5) of Central Excise Rules. Since all the imports are taking place in the name of the appellant's Gumpam unit, the bank charges paid are in relation to such imports of inputs, even though the debit advice/ invoice issued by the bank mentioning their Hyderabad office, have been taken by them. They have submitted some sample copies of Bill of Entries in respect of their claim. They have also relied on certain judgments in respect of their claim that they have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the appellants have taken the credit of "input services" in respect of import of raw materials correctly or otherwise. Also, whether they have taken the credit of ineligible service namely "construction service" or otherwise. While the Department's case is that the input credit in respect of bank charges are not admissible to the appellant on the grounds that their head office at Hyderabad has made the payments and incurred the bank charges but thereafter failed to distribute the credit in accordance with the provisions under relevant CCR applicable for distributing such credit and hence suo moto credit by Gumpam Unit is not admissible. On the other hand, the appellants are insisting that the Hyderabad office is not their "head office" and therefore it is not a case of distribution of credit as being made out by the Department. Their argument is that they have imported the raw material at their Gumpam Unit as is evident from the Bill of Entry in respect of which payments including bank charges have been incurred by their liasoning office at Hyderabad on their behalf. The service tax paid on such bank charges were also evident from the debit advice/invoices raised by the banks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter eligible to issue invoice, bill or as the case may be, challan for the purpose of distributing the said credit of service tax paid on the said service to such manufacturers or producers as the case may be. However, such invoices have to be towards the purchase of input services. 13. Therefore, what it means is that ISD can be any office, where the invoices issued under Rule 4A are received and distributed. The invoices under Rule 4A of STR provides for issuance of a specific invoice bill or challan giving certain details etc. In fact, in the case of a bank company an invoice, a bill or challan, as the case may be, also includes any document by whatever name called, whether or not serially numbered and whether or not containing address of the person receiving taxable services but it should contain other information in such documents as required under the said subrule. 14. Therefore, now what is to be considered is whether the debit advice/invoice issued by the banks to their office in Hyderabad, can be considered as an "eligible documents" issued under the provisions of Rule 4A or otherwise. On going through the challans it is obvious that all the relevant details require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that either the invoice is not in appellant's name but in the name of their Head office or that the Head office is not registered under the ISD. In the Sanghi Industries Ltd., case, the Ahmedabad Bench of Tribunal held that the denial of credit because credit availed on the basis of invoice and not ISD challan cannot be denied being procedural in nature. Similarly, in the case of DNH, Spinners, it was held the credit cannot be denied on technical grounds that documents were not in the name of assesse's factory but issued in the name of Head office situated elsewhere. It is no longer res integra that if there is any procedural mistake but there is substantive compliance, the substantive benefit cannot be denied. 16. As regards this case law cited by the appellants in support of their claim that the credit cannot be denied on the grounds of absence of ISD registration or its distribution in accordance with the prescribed Rules, since it has been observed that there was no need for the liason office at Hyderabad to act as an ISD and follow the required procedure, the case laws cited are not relevant. 17. There is, however, another aspect which also needs to be addressed. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early distinguishable in as much as the appellants have knowingly transferred the inputs as such and there has never been any dispute whether any manufacturing activity or otherwise has been carried out in relation to these inputs, either on the part of the appellant or on the part of the Department. Thus, this case law also does not support their contention that once they have paid the duty, the credit cannot be reversed even when they have not followed the prescribed procedure for removal of input as such by reversing the credit taken on such inputs. 18. Therefore, in the facts of the case, the Hyderabad office is not required to act as an input service distributor (ISD) if they so desired, since they are not the office required to act as ISD and therefore there was also no requirement on their part to follow any procedure like registration or distribution in accordance with the procedure prescribed under the respective rules. On the other hand, the unit Gumpam is eligible to take credit on the strength of the debit advice/invoices issued by the banks clearly showing the payment of service tax in respect of Bill of Entry, under which the inputs were received at their Gumpam unit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
