2008 (10) TMI 572 - AT - Central Excise

CENVAT credit - tax paid on the services received even prior to the registration - Held that - the credit will not be available even before the date of registration to enable the input service distributor to take credit.

Summary

Issues:
1. Eligibility of Cenvat credit on services received prior to registration as an input service distributor.

Analysis:
The case involved the question of whether an applicant company, having a manufacturing unit and availing Cenvat credit on inputs/input services, could claim credit for services received prior to registration as an input service distributor. The applicant company's head office in Delhi obtained registration after receiving services like security agencies, telephones, chartered accountant services, and C&F agents. The disputed amount pertained to the period before the registration. The advocate for the applicant argued that registration was a mere formality and that credit should be available immediately post-registration, without any financial hardship being pleaded.

The Joint Commissioner of Central Excise submitted that registration was a prerequisite for claiming credit as an input service distributor. Without registration, the applicant could not be eligible for credit, making the distribution of credit for the earlier period untenable. After considering the arguments from both sides, the Tribunal was not inclined to agree that credit could be available before the registration date for the input service distributor. Consequently, the Tribunal directed the applicant to deposit a specified sum within a stipulated timeframe, with the pre-deposit of the balance amount of service tax and penalty being waived and recovery stayed pending the appeal's disposal.

In conclusion, the Tribunal's decision focused on the importance of registration as a condition precedent for claiming Cenvat credit as an input service distributor. The ruling clarified that credit for services received before registration was not permissible, emphasizing the significance of compliance with registration requirements in availing such credits.