2010 (9) TMI 532 - AT - Service Tax

Cenvat credit on the inputs Assessee availed input service tax credit on the strength of the invoices addressed to appellant s offices/units situated at New Delhi Mumbai and Kolkata - An availment was in contravention of Rule 9(2) of CENVAT Credit Rules 2004 - The adjudicating authority confirmed the demand as proposed in the show-cause notice and also demanded interest and imposed penalty under Rule 15 Held that the ratio of the law as decided by the various benches of the Tribunal in the case of cenvat credit on the inputs more specifically Gujarat Heavy Chemicals Ltd. v. CCE 2005 -TMI - 54465 - CESTAT WEST ZONAL BENCH MUMBAI would squarely cover the issue in favour of the assessee - The appeal is allowed

Summary

Issues:
- Availment of input service tax credit in contravention of Rule 9(2) of CENVAT Credit Rules, 2004.
- Confirmation of demand, interest, and penalty by the adjudicating authority.
- Appeal filed by the assessee before the learned Commissioner (Appeals).
- Interpretation of Rule 9(2) and Rule 2(1)(ii) of CENVAT Credit Rules, 2004.
- Applicability of previous judgments on similar issues.
- Eligibility of the appellant to avail CENVAT credit on service tax paid by the service provider.

Analysis:
The case involved the appellant availing input service tax credit amounting to Rs. 60,164 based on invoices addressed to their branch offices in New Delhi, Mumbai, and Kolkata, which was deemed irregular under Rule 9(2) of CENVAT Credit Rules, 2004. The adjudicating authority confirmed the demand and imposed interest and penalty. The learned Commissioner (Appeals) upheld the decision, stating that services received at offices other than the manufacturing unit cannot be considered 'input service' as per Rule 2(1)(ii) of the Rules. The appellant argued that the credit was availed in accordance with the Rules, citing previous judgments in support.

The appellant's representative highlighted that the show-cause notice only alleged contravention of Rule 9(2) and that the learned Commissioner (Appeals) went beyond the notice's scope in rejecting the appeal. The Tribunal analyzed the provisions of Rule 9(2) and noted that the documents on which credit was availed fell within the category of invoices issued by a service provider. The Tribunal emphasized that Rule 9(2) allows denial of credit only if the document lacks prescribed particulars, which was not the case here.

The Tribunal found that the appellant had a valid case for availing the credit on service tax paid by the service provider to their branch offices. It referenced previous judgments to support its decision, emphasizing that the invoices met the requirements under the Service Tax Rules. The Tribunal concluded that the impugned order was unsustainable, set it aside, and allowed the appeal in favor of the appellant. The judgment highlighted the importance of following the specific provisions of the Rules and previous legal precedents in determining the eligibility of CENVAT credit.