Rakesh Kumar ORDER
Rakesh Kumar, Member (T)
1. The appellant are manufacturers of bathroom fittings chargeable to Central Excise duty. They are registered with the Central Excise authorities of the Central Excise Commissionerate, Delhi-1. Besides the Central Excise Registration, they also have taken Service Tax Registration for payment of Service Tax on the Goods Transport Agency Service received by them. The appellant availed Cenvat credit of the Central Excise duty paid on the inputs and capital goods and service tax paid on the input services, as per the provisions of Cenvat Credit Rules, 2004. During the period March, 2006 to March, 2007, the appellant took credit of Rs. 30,16,390/- in respect of the Business Auxiliary Service of procuring sales orders received from certain commission agents on the basis of the documents titled "debit notes" issued by the service providers. Another credit of Rs. 1,09,410/- was taken by the appellant during the same period on the basis of the invoices issued by one Shri Pradeep Chopra. These invoices were also issued in respect of providing the services of procuring of orders on commission. The department was of the view that the appellants are not eligible for Cenvat credit of Rs. 30,16,390/- taken by them on the basis of the debit notes issued by various service providers as the debit notes are not the valid documents for Cenvat credit in terms of Rule 9(1) of Cenvat Credit Rules, 2004 and even otherwise, the same do not contain the information which is required to be mentioned in the invoices issued by the service providers under Rule 4A of the Service Tax Rules, 1994. With regard to Cenvat credit of Rs. 1,09,410/- availed on the basis of the invoices issued by Shri Pradeep Chopra, the credit was denied on the ground that he is an employee of the appellant company and, therefore, the service provided by him is service to self and the appellant would not be eligible for Cenvat credit. Based on these two objections, the Joint Commissioner, Central Excise, issued a show cause notice dated 23-9-2010 for:-
(a) recovery of the allegedly wrongly availed service tax Cenvat credit of Rs. 31,05,810/- from the appellant during the period from March, 2006 to March, 2007 under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 73(1) of the Finance Act, 1994 along with interest thereon under Section 75 of the Finance Act, 1994;
(b) imposition of penalty on the appellant company under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 for contravention of the provisions of Rule 9(1)(f) of the Cenvat Credit Rules; and
(c) imposition of penalty on the appellant under Section 77 and Section 78 of the Finance Act, 1994.
The above show cause notice was adjudicated by the Addl. Commissioner vide order-in-original dated 10-2-2012 by which the above-mentioned Cenvat credit demand was confirmed under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 73(1) of the Finance Act, 1994 along with interest thereon under Section 75 ibid and besides this, while penalty of equal amount was imposed on the appellant under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994, another penalty of Rs. 1,000/- was imposed on the appellant under Section 77 of the Finance Act, 1994. On appeal being filed to the Commissioner (Appeals) against this order of the Addl. Commissioner, the Commissioner (Appeals) vide order-in-appeal dated 24-1-2013 upheld the Addl. Commissioner's order in toto. Against this order of the Addl. Commissioner, this appeal has been filed.
2. Heard both the sides.
3. Shri S.K. Pahwa, Advocate, ld. Counsel for the appellant pleaded that as regards Cenvat credit of Rs. 30,16,390/- taken on the basis of the debit notes, this credit is in respect of the service of procuring sales orders from the commission agents, that the service provided by the commission agents is Business Auxiliary Service on which they have paid the Service Tax and Service Tax is reflected in the debit notes issued by the service providers, that the debit notes mentioned the Service Tax registration number of the service providers and also their full name and address, the name of the service recipient, the nature of the service, the value of the service as well as Service Tax paid, that as such, all the information which is required to be mentioned in the debit notes in terms of the Rule 4A of the Service Tax Rules, 1994 is mentioned in the debit notes, that all the debit notes had been shown to the investigating officers and two sample copies of the debit notes have been produced before the lower authorities, that in view of this, disallowing of Cenvat credit, availed on the debit notes is not correct, that in this regard, he relies upon the judgment of the Tribunal in the cases-Pharmalab Process Equipments Pvt. Ltd. v. CCE, Ahmedabad - MANU/CS/0183/2009 : 2009 (242) E.L.T. 467 (Tri.-Ahmd.) : 2009 (16) S.T.R. 94 (Tri.-Ahmd.), CCE, Indore v. Gwalior Chemicals Industries Ltd. - MANU/CE/0329/2011 : 2011 (274) E.L.T. 97 (Tri.-Delhi) and CCE, Grasim Industries Ltd. - MANU/CE/0406/2011 : 2011 (24) S.T.R. 691, wherein it has been held that when the debit notes issued by the service provider contain all the information which is required to be mentioned in the invoices, the same have to be treated as valid documents under Rule 9(1) of the Cenvat Credit Rules for the purpose of availing the Cenvat credit, that as regards the denial of Cenvat credit of Rs. 1,09,410/- taken on the basis of the invoices issued by Shri Pradeep Chopra, Shri Pradeep Chopra is an independent service provider, who has provided the Business Auxiliary Service of procuring sale orders on commission basis, that the P. Chopra was never an employee of the appellant company and the department's allegation that Shri Pradeep Chopra is an employee of the appellant company is absolutely wrong and without any basis, that Shri Pradeep Chopra has been issued Service Tax registration and that in view of this, denial of Cenvat credit on the basis of the invoices issued by Shri Pradeep Chopra is totally incorrect. He also pleaded that the department's plea that no Service Tax was required to be paid by Shri Pradeep Chopra as service provided was the service provided to self, is totally incorrect when the department itself has accepted the Service Tax payment from Shri Pradeep Chopra by treating him as provider of Business Auxiliary Service and, therefore, the purpose of permitting Cenvat credit to the appellant on the basis of the invoices issued by him, the department cannot challenge the assessment of tax at the end of the service provider. He also pleaded that the appellant is a manufacturer having Central Excise registration and the matters relating to availment of Cenvat credit are within the jurisdiction of Central Excise authorities and therefore, just because the appellant has taken Service Tax registration for the purpose of payment of Service Tax on the GTA service received by him, the Commissioner, Service Tax, Delhi cannot go into the issue of eligibility of the appellant for Cenvat credit and issue the show cause notice for recovery of the allegedly wrongly taken Cenvat credit and, therefore, the show cause notice has been issued without any jurisdiction. He emphasized that with regard to the eligibility of the appellant for Cenvat credit, the show cause notice could have been issued only by the Central Excise officers of the Central Excise, Delhi-I and not by the officers of the Commissionerate, Service Tax, Delhi.
3.1 Shri Pahwa, also pleaded that Cenvat credit demand for the period from March, 2006 to March, 2007 has been raised by the show cause notice dated 23-9-2010 by invoking the extended period which is not inviolable in this case, as the appellants were under bona fide belief that they are eligible for the Cenvat credit on the basis of the debit notes issued by the service provider and the invoices issued by Shri Pradeep Chopra and as such, there is no evidence that they had suppressed any relevant evidence from the department and had deliberately taken wrong Cenvat credit. He, therefore, pleaded that the impugned order is not sustainable either on merits or on limitation.
4. Ms. Suchitra Sharma, ld. Joint CDR, defended the impugned order by reiterating the findings of the Commissioner and pleaded that so far as the issue of taking Cenvat credit on the basis of the debit notes is concerned, the debit notes do not contain complete information, which is required to be mentioned as per provisions of Rule 4A of the Service Tax Rules, 1994 in an invoice, that nature of the service mentioned in the debit notes is vague and as such, on the basis of the invoices it is not possible to determine as to which service has been provided by the person, who had issued the debit notes and whether the same are eligible for Cenvat credit, that the persons, who had issued the debit notes are dealers and the amount mentioned in the debit notes are the dealer's margin and not the commission charged for Business Auxiliary Service for procuring sales orders, that in view of this, the Cenvat credit on the basis of the debit notes has been correctly denied, that as regards the Cenvat credit on the basis of invoices issued by Shri Pradeep Chopra, the Commissioner (Appeals) had given a finding that Shri Pradeep Chopra is an employee of the appellant, as per their own statement, that if this is so, the service provided by Shri Pradeep Chopra is service to self, which would not be taxable, that the judgments of the Hon'ble Supreme Court in the case of Pharmalab Process Equipments Pvt. Ltd. v. CCE, Ahmedabad (supra) cited by the ld. counsel for the appellant is not applicable to the facts of this case, that the appellant had suppressed the relevant facts from the department and, therefore, longer limitation period has been correctly invoked inasmuch as there is no basis for the appellant's plea that they had bona fide belief.
4.1 With regard to issue of jurisdiction, she further pleaded that since the appellant had also taken Service Tax registration in respect of the GTA service received by them on which they are required to pay Service Tax, the Commissioner, Service Tax, had jurisdiction over them and as such, the show cause notice issued for denial of this Cenvat credit cannot be said to be without jurisdiction.
4.2 She, therefore, pleaded that there is no infirmity in the impugned order.
5. I have considered the submissions from both the sides and perused the records.
6. As regards the first issue, on the point of Cenvat credit of Rs. 1,09,410/- issued on the basis of invoices issued by Shri Pradeep Chopra, on going through the invoices issued by Shri Pradeep Chopra, it is seen that these invoices mention the Service Tax registration number of Shri Pradeep Chopra and the same are invoice for the sales commission for procuring orders. The invoices mention that the value of the sales orders, the quantum of commission and the Service Tax paid. There is nothing in the invoices and there is no other evidence placed on record by the department, to show that Shri Pradeep Chopra is an employee of the appellant company. If he had been an employee of the appellant company, he would not have issued a bill to the appellant company regarding the charges for his services. Therefore, the department's allegation that Shri Pradeep Chopra is an employee of the appellant company and the appellant company is not eligible for Cenvat credit on the basis of the invoices issued by Shri Pradeep Chopra is without any base, and as such the denial of credit of Rs. 1,09,410/- is not sustainable.
7. Coming to the Cenvat credit of Rs. 30,16,390/- based on the debit notes issued by the various persons, there is no dispute that these persons are dealers. On going through some of these debit notes placed on record, it is seen that all the debit notes mention the Service Tax registration number of the persons issuing the debit notes, which had been issued in respect of the Business Auxiliary Service. These debit notes also mention the full address of the service providers and have been issued to the appellant company. The debit notes mentioned the description of the service as "project commission" on various projects and the amount of the commission and also the Service Tax paid on the same. According to the ld. Counsel for the appellant, the "project commission" is the commission charged for procuring the sales orders for supply to various projects and as such, the commission is in respect of the Business Auxiliary Service provided by these dealers. The plea of the ld. Joint CDR is that the description of the service and its classification has not been mentioned and therefore, these debit notes cannot be treated as invoices issued by the service provider for the purpose of Cenvat credit. It is also pleaded that the amounts mentioned are merely dealers' margin and not the commission for procuring sales orders. After considering the rival submissions, on this point, I am of the view that on perusal of the sample debit notes, it is clear that these debit notes are in respect of the Business Auxiliary Service for procuring orders provided by the dealers. The nature of the service is also clear from the Service Tax registration number, which is clearly for Business Auxiliary Service. In any case, when the appellant were paying the Service Tax and filing S.T.-3 Returns, such points could always have been clarified by the assessing officers. Once the Service Tax paid by the service provider has been accepted by the jurisdictional Central Excise authorities, as Service Tax on "Business Auxiliary" service, the Central Excise authority at the end of recipient of the service could not seek review of that assessment of the service at the time of considering its Cenvat credit. In view of this, I hold that the debit notes mention all the 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.
8. Even as the issue of jurisdiction, there is merit in the appellant's plea that since the appellants are a manufacturer of bathroom fittings chargeable to Central Excise duty and are registered with Commissionerate of Central Excise, Delhi-I, the Commissioner of Service Tax, Delhi, could not go into the question of Cenvat credit. It is only the CCE, Delhi-I, who had jurisdiction to check the Central Excise duty self assessed by the appellant and Cenvat credit whether in respect of inputs or in respect of inputs service availed by them. The Commissioner, Service Tax, Delhi could go into the correctness of the Service Tax paid by the appellant on any taxable reverse charge service received by them or any other taxable service provided by them, but he could not go into the question of correctness of Cenvat credit availed by the assessee when the appellant in this case being a manufacturer of excisable goods is a Central Excise assessee and other than receiving the reverse charge GTA service, he is not providing any other taxable services. The show cause notice issued to the appellant and the adjudication order, in my view, are beyond jurisdiction. In view of the above discussion, the impugned order is not sustainable. The same is set aside. The appeal is allowed.
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