2012 (8) TMI 379 - AT - Central Excise

Cenvat credit on input services - invoices issued in favour of the Head Office - denial under Rule 9(1)(g) of Cenvat Credit Rules, 2004 on ground that Head Office of the assessee was not registered during relevant time as Input Service Distributor in terms of Rule 3(1) of Service Tax Rules, 2005 - Held that - It is found that neither the adjudicating authority nor the Appellate authority have undertaken the exercise to scrutinize the invoices relating to Input services availed in order to find out as to whether or not the Input service corresponding to the invoices were availed by the appellant unit or the Head Office or any other unit. We remand the matter back to the adjudicating authority for de novo decision

Summary

Issues:
1. Availment of cenvat credit on input services by the appellant.
2. Denial of cenvat credit by the Department due to invoices issued in the name of the Head Office.
3. Disallowance of cenvat credit leading to duty demand, interest, and penalty.
4. Appeal against the order in original dismissed by Commissioner (Appeals).
5. Tribunal's consideration of the appeal and stay application.

Analysis:

1. The appellant, engaged in manufacturing various products subject to excise duty, availed cenvat credit on duty paid inputs, capital goods, and input services. The Department raised concerns regarding the availed cenvat credit of input services amounting to Rs.23,47,826/- during a specific period. The issue arose as the invoices for these services were issued in favor of the Head Office of the appellant, which was not registered as an Input Service Distributor as per relevant rules.

2. The Commissioner (Appeals) upheld the disallowance of cenvat credit, resulting in the confirmation of the duty demand, interest, and penalty. The appellant then approached the Tribunal, seeking a waiver of the pre-deposit condition for the duty demand, interest, and penalty. The Tribunal decided to hear the appeal itself without the need for pre-deposit, with the consent of both parties.

3. During the proceedings, the appellant's representative cited a previous Tribunal judgment to support their argument that denial of credit solely based on invoices issued in the name of the Head Office was unjustified. On the contrary, the Revenue's representative emphasized the necessity for the appellant to demonstrate the actual utilization of the input services to avail cenvat credit.

4. The Tribunal noted that neither the adjudicating authority nor the Appellate authority had scrutinized the invoices related to the input services to determine if the services were actually utilized by the appellant unit, the Head Office, or any other unit. As this crucial aspect was overlooked, the Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority for a fresh decision after providing both parties with a hearing opportunity.

5. Consequently, the Tribunal disposed of the appeal and stay application by directing a reevaluation of the issue concerning the availed cenvat credit on input services, emphasizing the necessity for a thorough examination of the factual aspects to ensure a just adjudication.