No CENVAT Credit without Production of Evidence under Rule 9: CESTAT [Read Order]

Cenvat Credit provisional assessment - Service Tax - Cenvat Credit - Taxscan

In Artefact Projects Ltd vs Commissioner of Central Excise, Nagpur, the Mumbai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that Cenvat Credit can only be availed if the claim is supported by proper evidence under Rule 9 of the Cenvat Credit Rules (CCR), 2004.

The appellant, M/s. Artefact Projects Ltd., engage in the business of providing Management Consultancy Services. The appellant was denied credit of Service Tax paid on services like insurance, vehicle repair & maintenance, taxi hire charges, telephone charges, construction services & work contract.

The Counsel for the appellant argued that all the expenses incurred from the services were wholly exclusive for the purpose of business and the credit on those services were wrongly denied. The counsel further contended that the service tax paid on insurance, maintenance and repairs of vehicles is in respect of their own motor vehicles, which are used by its management personnel. He pointed out that invoices of Taxi Charges were in the name of the joint venture. “Zaidun Leeng Sdn Bhd – Artefact Projects (JV)” and that the bills issued by the input service providers are both in the name of the joint venture or in the name of any one of the partners.  As there is no difference between them, the counsel submitted that the Cenvat Credit was wrongly denied.

Regarding the denial of credit, the Court held that as no documents were produced by the appellants in evidencing the payments for the policy, repair and maintenance of motor vehicle or the documents supporting the ownership of the appellant, the credit cannot be allowed. The court remanded the matter to the Commissioner for fresh adjudication. The appellants were directed to produce evidence at such adjudication to avail credit, in terms of rule 9 of the Cenvat Credit Rules,2004.

Regarding the denial of credit with respect to workmen compensation the court said that credit could be allowed only in the circumstances where the cost of the service has been borne by the claimant as only in those circumstances it will form part of the taxable value. It affirmed that credit in respect of insurance expenses cannot be allowed in absence of evidence that the cost of such insurance was borne by the appellant.

Regarding the availment of Cenvat Credit is concerned, the bench comprising of Judicial Member Ramesh Nair and Technical Member Raju observed “we find that the denial of Cenvat Credit is mostly on the ground of failure to produce evidence in terms of Rule 9 of Cenvat Credit Rules. It is seen that the impugned order seeks evidence in terms of Rule 9 and the same has not been provided leading to confirmation of demand of reversal of credit. It is seen that even in their appeal memorandum they have not given any evidence to support their claim to Cenvat Credit, in terms of Rule 9. In these circumstances, it is apparent that the credit has wrongly been availed and the appellant do not have any evidence of the eligibility in terms of Rule 9 of the Cenvat Credit Rules. This by itself is sufficient to sustain the charge of suppression/misdeclaration. The exact quantification of demand of reversal of credit, interest and consequent penalty under Rule 15 (3) of the Cenvat Credit Rules, if any, needs to be done by the Commissioner.”

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