2013 (5) TMI 754 - AT - Service Tax

Cenvat Credit - input services received prior to the date of registration - belated availment of cenvat credit - scope of the show cause notice - held that - the issue is no more res-integra and the Division Bench of the Tribunal in the case of Well-known Polyesters Limited (2011 (1) TMI 664 - CESTAT AHMEDABAD) squarely settled the issue in favour of the assessee. - cenvat credit allowed - decided in favor of assessee.

Summary

Issues involved:
- Eligibility to avail Cenvat credit for services received before registration
- Allegations of belatedly availing Cenvat credit
- Interpretation of Rule 4 of Cenvat Credit Rules, 2004
- Nexus between input services and output services
- Judicial precedent on availing Cenvat credit post-registration

Issue 1: Eligibility to avail Cenvat credit for services received before registration

The case revolved around the question of whether the appellant was entitled to avail Cenvat credit for services received prior to their registration. The appellant had availed credit in 2008 for services received in 2004-2006, leading to a show cause notice. The lower authorities contended that the credit was taken belatedly and rejected the refund claim. The key argument was whether the appellant could avail credit post-registration, with the appellate authority emphasizing the need for immediate availment under Rule 4 of the Cenvat Credit Rules, 2004.

Issue 2: Allegations of belatedly availing Cenvat credit

The appellant contested the allegations of belatedly availing Cenvat credit, arguing that the first appellate authority had exceeded the scope of the show cause notice. The appellant's representative referenced a previous decision by the Bench and highlighted discrepancies in the authorities' interpretation of the law. The appellant maintained that the credit availed was in line with legal provisions and that the delay in availing the credit did not invalidate their eligibility.

Issue 3: Interpretation of Rule 4 of Cenvat Credit Rules, 2004

The crux of the matter lay in the interpretation of Rule 4 of the Cenvat Credit Rules, 2004, which mandates immediate availment of Cenvat credit. The authorities argued that the appellant's delayed credit claim did not adhere to this rule, leading to the rejection of the refund claim. The appellant, on the other hand, relied on judicial precedents and legal provisions to support their contention that the delay in availing the credit did not disqualify them from eligibility.

Issue 4: Nexus between input services and output services

Another aspect raised was the nexus between the input services for which credit was claimed and the output services provided by the appellant. The first appellate authority questioned the appellant's failure to establish this connection, suggesting a lack of clarity on the utilization of the availed credit. The appellant's representative sought to address this concern by referencing relevant case law and emphasizing the legitimacy of the credit claim in relation to their service offerings.

Issue 5: Judicial precedent on availing Cenvat credit post-registration

The judgment referred to past decisions by the Division Bench, notably in the case of Well-known Polyesters Limited, which supported the appellant's position on availing Cenvat credit post-registration. The Division Bench's ruling highlighted instances where credit could be taken subsequently, even after the period of service provision, as long as proper documentation and compliance with legal requirements were maintained. This precedent provided a strong basis for the appellant's argument and ultimately influenced the decision to set aside the impugned order and allow the appeal.

In conclusion, the judgment delved into various legal nuances surrounding the appellant's eligibility to avail Cenvat credit for services received before registration, emphasizing the importance of adherence to statutory rules and established judicial precedents. The detailed analysis of each issue showcased a thorough consideration of the facts, legal arguments, and precedents, culminating in the decision to set aside the lower authorities' order and allow the appeal in favor of the appellant.