2012 (12) TMI 769 - AT - Central Excise

Cenvat credit denied - ISD has availed cenvat credit of the invoices issued by the service provider - Waiver of the pre-deposit of Duty, Interest and Penalty - Held that - The provisions of Service Tax Rules cannot be invoked for denying the cenvat credit of the input services which were availed by the ISD and distributed. It is undisputed that the ISD has received the services and taken the credit and distributed services to various locations, including current appellant. Thus the appellants have made out a prima-facie case for the waiver of the pre-deposit of the amounts involved.

Summary

Issues:
1. Waiver of pre-deposit of duty, interest, and penalty amounts confirmed by the adjudicating authority.
2. Eligibility of appellant to avail cenvat credit of input services distributed by the head office as an input service distributor.

Analysis:

Issue 1: Waiver of Pre-deposit
The applications were filed seeking the waiver of pre-deposit of specific amounts confirmed by the adjudicating authority. The duty amount for M/s. Castrol India Ltd. was Rs.12,92,29,084/-, along with interest at the appropriate rate under Rule 14 of the Cenvat Credit Rules, 2004, and a penalty of Rs.12,92,29,084/-. Additionally, Shri Prasanna Paranjape and Shri Amitabh Sharma were also involved, with penalties of Rs.10,00,000/- each. The adjudicating authority's confirmation was based on the appellant's alleged ineligibility to avail cenvat credit of the input services distributed by the head office as an input service distributor.

Issue 2: Eligibility for Cenvat Credit
Upon reviewing the submissions from both sides, the Tribunal found the issue to be a prima facie non-starter. It was observed that the provisions of the Service Tax Rules could not be invoked to deny the cenvat credit of input services availed and distributed by the Input Service Distributor (ISD). The ISD had received the services, taken the credit, and distributed them to various locations, including the current appellant. The Tribunal concluded that the appellants had established a prima facie case for the waiver of the pre-deposit amounts. Consequently, the applications for the waiver of pre-deposit were allowed, and the recovery of the amounts stayed pending the disposal of appeals.

This judgment emphasizes the importance of correctly interpreting the rules governing the availing and distribution of cenvat credit by ISDs. It highlights the need for a thorough assessment of the factual and legal aspects to determine the eligibility of appellants in such cases.