The Customs, Excise, Service Tax Appellate Tribunal (CESTAT), Hyderabad bench has allowed cenvat credit on the service tax paid on lease rentals by the Hindustan Petroleum on the strength of debit notes.
The appellant, a Public Sector Undertaking engaged in the manufacture of various petroleum products, had taken some land on lease from M/s Coromandel International Limited who, in turn, have charged them service tax along with lease rentals through four debit notes, dated 23.02.2015. After paying the amount to M/s Coromandel International Limited, appellant availed CENVAT credit of the service tax paid on these debit notes.
Both the original authority and the first appellate authority has disallowed the credit to the assessee by holding that debit notes are not specifically included as valid duty paying document under Rule 9(1) of CCR 2004. The authorities also imposed the penalty on the appellants.
While allowing relief to the assessee, the Tribunal held that “It is true that Rule 9(1) of CCR 2004 does not specifically indicate debit notes as one of the documents on the strength of which CENVAT Credit can be availed. However, the Hon’ble High Court of Rajasthan in the case of Bharati Hexacom Limited (supra) held that CENVAT credit can be availed on the basis of debit notes. This is a binding legal precedent, ratio of which applies to the present case.”