Invoices of GMIPL are Valid Documents for Taking CENVAT Credit: CESTAT [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Mumbai, has recently, in an appeal filed before it, held that invoices of GMIPL are valid documents for taking CENVAT credit.

The aforesaid observation was made by the Tribunal when an appeal was filed before it by M/s. Kellogg India Pvt. Ltd., a company engaged in the manufacture of breakfast cereals, as against the orders- in-original of the Commissioner of Central Excise, Belapur, Navi Mumbai.

The appellants, availing the CENVAT credit of excise duty paid on the inputs & capital goods and service tax paid on input services used in relation to the manufacture of their final products, had entered into an agreement with M/s. Group M Media India Private Limited (GMIPL) for the advertisement of their final products in various media such as TV channels.

The GMIPL, having a division by the name of MindShare in Mumbai, had in turn entered into an agreement with the TV channel (broadcaster) for broadcasting the advertisement of the appellants’ final products, according to which the said channels raised invoices on GMIPL/ MindShare for broadcasting charges along with service tax thereon.

The invoice raised by the GMIPL on the appellants for reimbursement of TV channel cost basically being a compilation of the invoices on GMIPL, the same was accompanied by the corresponding invoices raised by TV channels.

With the appellants having made their payment of the amounts/charges mentioned in the aforesaid two types of invoices raised by GMIPL, they took CENVAT credit of the service tax paid by them, while the Revenue was of the view that the invoices of GMIPL are not valid documents for taking credit as they do not pay the service tax after taking credit of the tax paid by the broadcaster.

Objecting the credit of Rs.18,54,966/- taken by the appellants  on the ground that the invoices against which the credit was taken were raised on godowns, offices & C&F agents, which wereplaces not having an ISD registration and that the invoices were bearing Head Office address, the claim of the Revenue was that the appellants suppressed the fact from the Department ,that they were availingthe aforesaid input service credit and that the same was done with the intent to avail inadmissible credit and utilize the same for payment of excise duty on their final product.

Hearing the contentions of both sides and perusing the materials on record, the Tribunal commented:

“We have gone through the copies of sample invoices produced by the applicant, issued by Times Global Broadcasting Co. Ltd. in the invoices it is specifically mentioned that the advertiser is Indian Oil Corporation Ltd. (applicant). Further, we find that the advertising agencies while discharging the service tax liability have not taken into consideration the expenses in respect of the advertisement in the electronic media as clarified by the Board in the circular dated 1.11.1996.We observe that there is no dispute in the present case that the broadcasting of advertisement has been done on behalf of the appellant and the bills have also been raised on the appellant and the appellant has borne the incidence of Service Tax on the broadcasting service”.

“Further, while passing the order dated 30.9.2013, the adjudicating authority has caused verification of the transactions undertaken by the appellant in respect of broadcasting services and advertising agency services. After verifying that the appellant had availed both the services and has also borne the incidence of Service Tax, he came to the conclusion that the appellant is rightly eligible for the benefit of the CENVAT Credit of the Service Tax paid on broadcasting service. The same ratio shall apply for the previous period also”, continuing its observation the bench added.

Thus, finally allowing the appeal in favour of the assessee and setting aside the impugned order, the Tribunal concluded:

“Therefore, we do not find any merit in the impugned order. Accordingly, we set aside the same and allow the appeal with consequential relief, if any, in accordance with law. And hence in our view this decision also decides the issue in hand in favour of the appellant and the distinction sought to be made in the impugned orders cannot be sustained”.

Support our journalism by subscribing to TaxscanPremium. Follow us on Telegram for quick updates.