Invoices in name of employees , No denial of Cenvat Credit :ITAT

S.A. Gudecha, Adv. for the Appellant. H.M. Dixit, Asstt. Commissioner (A.R.) for the Respondent.

ORDER

1. This appeal is directed against Order-in- Appeal No. P-I/RKS/165/2010 dated 29/9/2010 passed by the Commissioner (Appeals), Central Excise, Pune I, whereby Ld. Commissioner (Appeals) partially allowed the appeal of the appellant, accordingly Order-in-Original was modified.

2. The issue involved in the present case is that as per the impugned order Cenvat credit was denied on the following grounds:—

3. Shri. S.A. Gudecha, Ld. Counsel for the appellant submits that most of the bills which were not traceable have been traced out and available with the appellant. He submits that Cenvat credit was denied only on the technical infraction, however there is no dispute that Cenvatable bills were accounted for in the books of the appellant and services were received by the appellant, therefore merely on the technical error, substantial benefit of Cenvat credit should not have been denied.

3.1 As regard the invoice not in the name of the appellant, he submits that the expenditure is related to subscription/credit cards payments/air ticket/courier etc., which is in the name of the individual, Director of the Company, however these expenditures are on behalf of the company and the same has been booked in the profit and loss account of the appellant company therefore credit could not be denied.

3.2 Regarding certain invoices which were not traced and available at the time of the adjudication and also before the Commissioner (Appeals), he submits that most of the invoices have been traced out and available with the appellant, which can be produced as and when asked for. Regarding untraced invoices, he submits that certificates from the service provider have been obtained therefore the certificate is as good as service tax invoice and credit on such certificate should be allowed.

3.3 As regard the services, which are not considered as input services, he submits that the services are of construction of foundation in the factory, construction of security cabin, construction of scrap yard, shifting of machines, civil work at Mohannagar quarters, air fair of the directors, Misc. civil work in HDFC colony. All these services are received and used in or in relation to the business activity of the appellant company therefore these services are input services and credit is admissible.

3.4 Cenvat credit was disallowed on the ground that on certain service bills, service tax registration number was not mentioned. He submits that merely because registration number is not mentioned in the bill but all other details are available on the bills, credit should be allowed.

3.5 Regarding the denial of Cenvat credit on the banking charges, the reason given is bills are not available, he submits that in respect of bank charges relaxation is provided in the Rules itself that in respect of bank charges, no invoices are required, even bank statement showing service tax amount collected is sufficient proof for allowing Cenvat credit, therefore credit for the reason that bills for banking charges was not available is not sustainable. In support of his above submission he placed reliance on the following judgments:—

4. Shri. H.M. Dixit, Ld. Asstt. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.

5. I have carefully considered the submissions made by both sides and perused the record.

6. I find that even though the invoices are not in the name of the appellant but it is in the name of the directors and the employees of the company, credit should be allowed for the reason that all these expenditure were incurred by the appellant company and the same is not under dispute, therefore even though the invoices are not in the name of the company but in the name of the directors/employees and the same has been booked as expenditure in the books of appellant, credit is admissible.

6.1 As regard the reason for denying the credit that cenvatable bills/invoices were not available, appellant submitted that now they are in possession of most of the invoices which can be produced before the authority for verification. I am of the view that in such cases the matter needs to be remanded so that appellant can produce invoices before the adjudicating authority and the adjudicating authority after verifying the same can allow the credit to the appellant.

6.2 As regard the services which were not considered as input services, I find that services involved are of construction of foundation in the factory, construction of security cabin, construction of scrap yard, shifting of machines, in my view these services are directly related to activity of the manufacturing unit and the same are clearly included in the inclusion part of the definition of the input services therefore credit is admissible on these services. As regard the services of civil work at Mohannagar quarters, Misc. civil work in HDFC colony, these services are not related to the factory but it is related to the staff quarters, therefore I am of the view that civil work of staff quarters and civil work in HDFC colony cannot be treated as input service. As regard the air fair and cleaning services, it is related to the business activity of the appellant company hence the credit is admissible.

6.3 In certain invoices Cenvat credit was denied only for want of service tax registration number on the bills/invoices. In this regard, I am of the view that merely non mention of the registration number on the invoice Cenvat credit cannot be denied particularly when there is no dispute that the invoices was raised to the appellant, services were received by the appellant, therefore only on the reason that service tax registration number not mentioned, in my view, service tax cannot be disallowed.

6.4 Regarding denial of Cenvat credit on the bank charges, in the Cenvat Credit Rules, relaxation is specifically provided that for banking services, even if there are no invoices but from any documents of the bank if it is established the payment of service tax, credit must be allowed therefore only because bills are not available Cenvat credit on banking charges cannot be disallowed.

7. As per of my above discussion, I am of the considered view that the appellant is prima facie entitle for the Cenvat credit which was disallowed for various reasons, subject to verification of the invoices which will be produced by the appellant as mentioned by Ld. Counsel. I therefore set aside the impugned order and remand the matter to the Original Adjudicating authority to pass denovo adjudication order, keeping in view, my above observations. Appeal is disposed of by way of remand in the above terms.