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Ichibaan Automobiles P. Ltd V/S CST, Hyderabad - Service Tax

    Appeal No. ST/31027/2017 (Arising out of Order-in-Appeal No. HYD-SVTAX-000-APP-0057-17-18-ST, dated 17.05.2017 passed by Commissioner (Appeals-ST), HYDERABAD) and Final Order No. A/30639/2018

    Decided On, 19 June 2018

    At, Customs Excise Service Tax Appellate Tribunal Regional Bench Hyderabad

    By, MEMBER

    For Respondents: P.S. Reddy, Assistant Commissioner/AR

Judgment Text

1. This appeal was filed against the Order-in-Appeal No. HYD-SVTAX-000-APP-0057-17-18-ST dated 17.05.2017 passed by the Commissioner of Central Excise (Appeals), Hyderabad rejecting the appellant's appeal against the Order-in-Original passed by the Additional Commissioner of Service Tax, Hyderabad. When this matter was called, nobody appeared on behalf of the appellant. I find from the records that the matter was listed on 16.02.2018, 18.04.2018, 16.05.2018 and this is the fourth hearing. As substantial opportunity has been given to the appellant to present their case and they have not availed the opportunity and have not appeared despite notice being sent to them in advance, I proceed to decide the matter on merits even without their representation.

2. Heard the Learned Departmental Representative and perused the records. The appellant is an assessee providing 'rent a cab' services in Hyderabad and was registered for payment of service tax. During the audit it was pointed out that they had availed CENVAT credit on the basis of invoices issued by the dealers who were not registered either as first stage or second stage dealers during the relevant period. They were registered subsequently i.e., after issuing of invoices. Show cause notices were issued and the lower authority has confirmed the demands. Upon appeal by the assessee the Learned Commissioner (Appeals) has vide Order-in-Appeal No. 34/2010 (H-II) (ST) dated 27.04.2010 rejected their appeal. The appellant approached the Hon'ble CESTAT (Bangalore Bench) who remanded the matter back for de novo proceedings. The de novo Order-in-Original No. 54/2015 Adjn-ST (ADC) dated 31.12.2015 was passed by the Learned Adjudicating Authority confirming the demand. Thereafter the assessee filed an appeal before the Commissioner of Service Tax (Appeals) who rejected the appeal. The present appeal is against this Order-in-Appeal of the Learned Commissioner (Appeals). The appellant argued on the following grounds in his appeal:

(a) The Order passed by the Commissioner of Appeals was unjust, illegal and contrary to the facts and circumstances of the case.

(b) The Order-in-Original shows non application of mind by the Commissioner (Appeals) and he failed to consider the submissions made by them and the binding citations made by them.

(c) He has not extended the benefits of abatement provided for under Statute;

(d) He has not entertained the ground of limitation;

(e) He has not examined or passed his Orders on the issue of penalty.

(f) Learned Commissioner (Appeals) was not justified in holding that provisions of Rule 9(2) of CENVAT Credit Rules were not available to them as the dealers were not registered during the relevant period as they have subsequently met with the requirement by getting themselves registered after the issuing of invoices and before the issue of the SCN itself.

(g) The Commissioner (Appeals) is not justified in denying them the benefit of abatement under notification No. 1/2006/ST.

3. The learned Departmental Representative reiterated the arguments made in Order-in-Original and Order-in-Appeal and asserted that no CENVAT Credit can be taken except on the basis of document which is admissible in terms of CENVAT Credit Rules and the invoices issued by the non-registered dealer cannot be admissible document even if the dealer gets himself registered on a subsequent date. It is his submission that the dealer can issue cenvatable invoices only from the date on which he got himself registered. Therefore, the dealer not getting registered is a substantive defect and it is not a procedural requirement which cannot be cured by the dealer getting himself registered subsequent to the issuing of the invoices. He relied on the Orders of the Tribunal in the case of Hindustan Unilever Ltd., M/s. Chemical sales v. CCE, Chandigarh and vice versa [2018 (2) TMI (131) (CESTAT- Chandigarh)], Gujarat Polycoat Chemical Pvt. Ltd. [2008 (221) ELT (452) (Tri-Ahmedabad)] and Mystroniks Ltd. [2007 (220) ELT (216) (Tri-Mumbai)] and Atma tube Products Ltd : 2005 (192) ELT (560) (Tri-Delhi)]. He argued that in view of the above orders of the Tribunal the issue is no longer res integra and no CENVAT is admissible on invoices which are issued by dealers who are not registered and such documents are not admissible for CENVAT Credit under the CENVAT Credit Rules.

4. Considered both sides of the issue and perused the orders relied upon by them. I find the issue in brief as whether the assessee can claim CENVAT on the basis of invoices issued by dealers who are not registered at the time of issuing the invoices. Consequently, if such credit is taken, is it recoverable from the assessee? Related to this issue is the question of imposition of penalty. The second issue to be decided is if the assessee is not entitled to the CENVAT Credit whether he can claim the benefit of abatement of value under notification No. 1/2006/ST by virtue of the fact that they have not availed CENVAT Credit. As far as the issue of Credit of CENVAT on the basis of invoices issued by the unregistered dealers is concerned, I find that such documents are not valid documents for taking CENVAT Credit under Rule 9 of the CENVAT Credit Rules. These rules were framed by the Government under the Act and all the officers of the Department as well as the Tribunal are creatures of the law cannot modify them. It is impossible for any officer or the Tribunal to stretch, modify, amend or restrict the scope of the rules which are subordinate legislation. This issue is also no longer res integra as in the aforesaid cases of Hindustan Unilever Ltd., Gujarat Polycoat Chemical Pvt. Ltd., Mystroniks, Atma Tube Products Ltd., the Tribunal has consistently held that no CENVAT Credit is admissible on invoices issued by the unregistered dealers. Respectfully, I agree with these decisions and follow the same.

5. Therefore I hold that the appellant is not entitled to CENVAT Credit on the basis of invoices issued by the unregistered dealers in view of the restrictions under Rule 9 of the CENVAT Credit Rules. Therefore, the appellant has violated CENVAT Credit Rules, 2004 by availing credit on the basis of an ineligible documents and the same is recoverable from them. By taking credit of ineligible document the appellant have rendered themselves liable to penalty. I therefore find no reason to deviate from the decision of Order-in-Original and Order-in-Appeal with regard to

(a) CENVAT Credit on disputed invoices


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The liability of interest and penalty and (c) Invoking extended period of time. 6. As far as the abatement under notification No. 1/2006-ST in terms of value is concerned, the Learned Commissioner (Appeals) has held that there is no provision in the notification to allow retrospectively the abatement of value and he cannot modify the provisions of this notification. I do not find anything in the appeal in which the appellant has countered this argument and explained how they were eligible for benefit of abatement under notification No. 1/2006/ST retrospectively. In view of the above, I find no force in the arguments and I find appeal is liable to be rejected and I do so. 7. The appeal is rejected.