2012 (11) TMI 377 - AT - Central Excise

Cenvat credit demand and recovery of wrongly taken cenvat credit alleged that credit has been taken by them on the basis of the documents which are just letters issued by their Head office as input service distributor Held that - When certain input services have been received by a manufacturer under the invoices of the service providers issued in the name of the head office, the head office had taken cenvat credit and thereafter passed on the same to its manufacturing units, the cenvat credit to a manufacturing unit cannot be denied even if the same has been passed on by letters and not the document bearing the name invoices or challans provided and letters or documents issued by the head office contain all the details which are required to be mentioned in the invoices/challans issued by the input service distributor - matter is remanded to the Commissioner for de novo adjudication

Issues:
1. Validity of availed cenvat credit on input services.
2. Interpretation of Rule 9 of the Cenvat Credit Rules, 2004.
3. Admissibility of cenvat credit based on documents issued by the head office.
4. Eligibility for cenvat credit on input services under reverse charge mechanism.

Analysis:

1. Validity of availed cenvat credit on input services:
The Appellant, a manufacturer of various products chargeable to central excise duty, availed cenvat credit under the Cenvat Credit Rules, 2004. A show cause notice was issued alleging wrongly taken credit based on documents issued by their Head Office as an input service distributor. The Commissioner confirmed the demand against the Appellant. The Appellant contended that the credit was passed on through challans issued by the head office, enclosing invoices of service providers, containing all necessary details. The Tribunal held that if services were received under invoices of service providers in the name of the head office, and the necessary details were provided, denial of cenvat credit solely based on letters distributing credit was incorrect.

2. Interpretation of Rule 9 of the Cenvat Credit Rules, 2004:
The dispute revolved around the interpretation of Rule 9 of the Cenvat Credit Rules, 2004, which dictates that manufacturing units can take cenvat credit based on invoices or challans issued by the head office as an input service distributor. The Appellant argued that even if the head office was not registered as an ISD, credit could be availed based on invoices issued in the head office's name. The Tribunal emphasized that if services were received under such invoices with all necessary details, the denial of credit solely due to the form of the document was unwarranted.

3. Admissibility of cenvat credit based on documents issued by the head office:
The Tribunal noted that the impugned order denying credit based on letters issued by the head office distributing credit was incorrect. The Appellant's argument that challans issued by the head office, along with invoices of service providers, contained all necessary details was considered valid. The Tribunal emphasized that as long as the required particulars were present in the documents issued by the head office, denial of cenvat credit solely based on the form of the document was unjustified.

4. Eligibility for cenvat credit on input services under reverse charge mechanism:
Regarding services where the Appellant, as a service recipient, paid service tax under the reverse charge mechanism, the Tribunal held that credit should be allowed based on the challans under which service tax was paid. The Tribunal directed the matter to be remanded to the Commissioner for verification of services received, the completeness of documents issued by the head office, and allowed credit based on challans where service tax was paid under the reverse charge mechanism. The appeal and stay application were disposed of accordingly.

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