M/S. Gupta Soaps vs Commissioner Of Central Excise, Mumbai ...

(Arising out Order-in-Appeal No. SB/3/M-IV/09 dated 14.07.2009 passed by the Commissioner of Central Excise (Appeals), Mumbai I)

For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial)

1. Whether Press Reporters may be allowed to see No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy Yes of the Order?

4. Whether Order is to be circulated to the Departmental Yes authorities?

M/s. Gupta Soaps Appellant

Vs.

Commissioner of Central Excise, Mumbai I Respondent

Appearance:

Shri Rajesh Ostwal, CA for the appellant Shri N.N. Prabhudesai, Supdt.(AR) for the respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial)

Date of hearing : 15-06-2015 Date of decision : 23.06.2015

O R D E R No:..

This appeal is directed against Order-in-Appeal No. SB/3/M-IV/09 dated 14.07.2009.

2. The relevant facts that arise for consideration is appellant herein is a job worker of Wipro Ltd.; availed the facility of Cenvat credit of the Central Excise duty paid on inputs, and input services received for manufacturing of final products for Wipro which is cleared on payment of appropriate excise duty. During the audit, it was noticed that appellant had availed Cenvat credit on invalid documents inasmuch as the Cenvat credit was availed on invoices raised by Wipro as input service distributor. The Adjudicating Authority after following the due process of law confirmed the demands raised with interest and also imposed penalties. On an appeal, the first appellate authority concurred of the views of the Adjudicating Authority and rejected the appeal.

3. Ld. CA appearing on behalf of the appellant would draw my attention to the facts of the case. He would submit that the appellant had availed Cenvat credit on input services which was received by Wipro, as an input service distributor as per the provisions of Rule 7 of CENVAT Credit Rules, 2004. He would submit that the appellant is not required to look into as to which Cenvat credit has been passed on by the input service distributor. It is his submission that having received the invoices which indicated receipt of service by Wipro and service tax being discharged, they should not be denied the benefit of Cenvat credit. It is his further submission that the entire demand is time barred inasmuch as Cenvat credit was availed during the period March 2005 to November 2005 and regular returns were filed with the department while the show-cause notice is issued to the appellant on 14.10.2007 by invoking the extended period of limitation, which is incorrect.

4. Ld. Departmental Representative, on the other hand, would submit that Wipro had issued the invoice as input service distributor without getting registered with the department and as a job worker appellant would not have availed the Cenvat credit as the credit which is availed by the appellant in respect of service tax paid on advertisement services of product not manufactured by the appellant. He would submit that division bench of the Tribunal in Sunbell Alloys Co.of India Ltd. 2014 (34) STR 597 has held that credit can be availed by job worker against invoice issue by input service distributor only if there is nexus. It was also submitted by him that extended period is invocable in this case, as has been held by the Tribunal in Sunbell Alloys Co.of India Ltd. (supra).

5. Considered the submissions made by both sides and perused the records.

6. On perusal of the record, I find that the issue as correctly put forth by both sides, is regarding the entitlement for availment of Cenvat credit on the invoice raised by Wipro as an input service distributor.

7. Undisputedly, Wipro has extended the Cenvat credit on the service tax paid on advertisement for the products not manufactured by the appellant herein even as a job worker. I find that the interpretation of provisions of Rule 7 of CENVAT Credit Rules as held by this bench in Sunbell Alloys Co.of India Ltd. (supra) will be applicable in this case and on merits the issue is against the appellant.

8. As regards the question of invoking the extended period, I find the Adjudicating Authority has come to a conclusion that extended period can be invoked by observing that the appellant had not informed the department of availment of Cenvat credit despite being in knowledge that they are not eligible for availment of such Cenvat credit. I find that the Adjudicating Authoritys findings are misdirected on the limitation issue, inasmuch the Cenvat credit was availed during the period March to November 2005, and show-cause notice is issued in October 2007, it is almost beyond two years.

9. On perusal of the record, I find that the appellant had been filing their returns regularly with the authorities and said returns indicated the Cenvat credit availed by them. It is also brought on record that earlier audit of the appellant was conducted by the authorities and audit report was forwarded to the appellant on 28.03.2006 wherein this point was raised and appellant vide their letter dated 28.05.2006 specifically explained the reasons of their availment of Cenvat credit. There was no further correspondence between the assessee and the department on this, and directly a show-cause notice was issued by invoking the extended period.

10. In my considered view, the invocation of the extended period in these circumstances, is incorrect as I find that covering letter vide which monthly returns were filed with the authorities indicated copies of RG23A part I and II as enclosures. In my view, in the facts of this case, the invocation of the extended period for demanding the Cenvat credit as being suppressed is incorrect.

11. In view of the foregoing, on limitation point the appeal succeeds and the impugned order is liable to be set aside and I do so.

12. The impugned order is set aside and the appeal is allowed.

(Pronounced in Court on ..)

(M.V. Ravindran) Member (Judicial)

//SR

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