The Bank Of Tokyo-Mitsubishi Ufj Ltd vs Commissioner Of Central Excise

[Arising out of Order-In-Appeal No. 87/ST/DLH/2011 dated 30.3.2011 passed by Commissioner of Central Excise (Appeals), New Delhi]

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

1 Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

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

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

The Bank of Tokyo-Mitsubishi UFJ Ltd. Appellants

Vs.

Commissioner of Central Excise Respondent

New Delhi

Appearance:

Ms.Shyari, Advocates for the Appellants

Ms. Ranjana Jha, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing /decision: 18. 6.2015

ORDER NO. FO/ 52058/2015 SM

Per Ashok Jindal :

The appellant is in appeal against the impugned order wherein input service credit has been denied to the appellant on security guards, telephone connections installed at the residence of bank employees and professional charges for professional work. It has been alleged that they have taken cenvat credit wrongly on these services. Consequently, the demand of duty was raised along with interest and penalty was also imposed by invoking extended period of limitation.

2. The facts of the case are that appellant is a banking company having their office in Japan Tokyo. They are having back up office in India for collecting data etc. and providing the same to head office. Therefore, they have their back up office in Parliament Street Jeevan Vihar Building. In their back up office they are receiving the services of security guard, telephone and professional and for providing professional work. It is also a fact that in the premises of their back up office, the General Manager of the Bank is also residing. It is alleged in the show cause notice during the course of audit, it has been revealed that the appellant has availed Cenvat Credit services of security guards, telephone connections installed at the residences of the employees of the Bank, professional charges paid to the different professional representing cases before Income tax, ROC, provident fund, arranging accommodation for employees, VRS etc. It is further alleged that the appellant has taken cenvat credit wrongly. As per the notification No. 23/04 CE(NT) dated 10.9.04, credit of service tax paid on input services used in or in relation to provide output services are allowed to be availed and utilized subject to compliance of other conditions stipulated in the said notification. Both the adjudicating authorities adjudicated the same and denied the cenvat credit to the appellant. Aggrieved from the said order, appellant is before me.

3. Learned Counsel for the appellant submits that during the course of audit, certain clarifications were sought by them and same have been replied to the audit team by their letter dated 23.5.08. Thereafter, they replied to the show cause notice also that they have taken the credit and they have informed about their intention to avail cenvat credit. Both the lower authorities have not given any credence to their contention raised before them for availing cenvat credit. Infact, when their office premises and residential premises of the General Manager in the same premises and they are required to post security guard to their back up office as per RBI guidelines, they are entitled to take cenvat credit. And service fees paid to the professionals, both the lower authorities have denied the cenvat credit on the premises that appellant has not paid the service tax nor invoices were produced before the authorities below but audit team has examined the analysis and thereafter they came to know that appellant has availed cenvat credit on services of professional fee charges like income tax ROC, Provident Fund, arranging accommodation of various employees, for VRS etc. If the invoices were asked for by both the lower authorities, the appellant could have provided to them. It was not asked from the appellant to provide such invoices. In these circumstances, observation made by both the lower authorities are beyond the scope of show cause notice. In these circumstances, she prayed that impugned order be set aside and appeal be allowed.

4. On the other hand, learned AR opposed the contention of learned Counsel and submits that it is a clear finding by both the lower authorities that appellant has not produced copies of invoices for professional services charges for services supplied to them. Therefore, they could not examine the nature of services utilized by them. In these set of circumstances, they have rightly denied the Cenvat credit to them as the appellant has failed to provide copy of the invoice to the authorities below. She further submits that as per Rule 3 of CCR, 2004. The appellant is entitled to take cenvat credit. The Cenvat Credit Rules, are to be followed by the appellant, as in this case, appellant has not entered their back up office under Registration certificate, therefore, the appellant is not entitled to take Cenvat credit as they failed to follow the procedure laid down for availment of cenvat credit. She further submits that specific argument that they have not taken ISD registration, therefore they are not entitled to take cenvat credit. To support her contention she relied on the decision of High Court of Gujarat in the case of CCE vs. Gujarat Heavy Chemicals Ltd. [2011 (22) STR 610 (Guj)]

5. Heard the parties. Considered the submissions. .

6. In this case, the show cause notice has been issued on the basis of Audit conducted at the premises of the appellant. In the show cause notice, the only allegation against the appellant is that they have taken the cenvat credit on the services of security guards, telephone connections installed at the residences of the employees of the Bank, professional charges paid to the different professional representing cases before Income tax, ROC, provident fund, arranging accommodation for employees, VRS etc. The amount of service tax on these services is wrongly availed as cenvat credit as per notification No. 23/04 as they have not used in or in relation to output services. On plain reading of the show cause notice, it is clear that fees paid to the consultant representative by the appellant has availed services of different consultants for each purpose. These observations in the Show cause notice can not be made without examining the invoice. Therefore, it is observed that before issuing the show cause notice, invoices for the fees paid to the consultant were with the department. Therefore, the findings of both lower authorities below that the appellant has not provided the copy of invoices which has not been demanded during the course of adjudication or at the appellate stage, are totally incorrect. Moreover, if the authorities below could have asked the appellant to provide the copy of the invoices, the appellant could have provided when the appellant has enclosed all the copies of enclosed invoices along with their appeal papers. In these circumstances, as appellant had provided all the copies of invoices for the service provided by the consultants are on record, the appellant is entitled to take cenvat credit if same is in order as per the conditions of notification No. 23/04. Further, the security guard service and telephone connections services has been availed by their back up office where General Manager is also residing and the services availed for the security guards at residence of General Manager and back up office cannot be segregated, therefore, the appellant is entitled to take cenvat credit on these service also.

7. With regard to the arguments raised by learned AR, that appellant has not got registered themselves or not taken the registration as ISD, the argument of the learned AR is not acceptable as these are not the charges in the show cause notice and nobody can go beyond the scope of show cause notice at appellate stage. Further, the case law relied upon by learned AR have no relevance to the facts of this case as in that case the security services were admittedly provided at the residence of employee. But in this case, security service has been provided mainly to the back up office of the appellant. Therefore, said case law does not have any relevance to the said facts of this case.

8. As discussed above, appellant has availed input service disputed in this case has been availed for providing output service. Therefore, appellant is entitled to take cenvat credit.

9. With these terms, I do not find any merits in the impugned order. The same is set aside. Appeal is allowed with consequential relief, if any.

( Dictated and pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

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