2013 (11) TMI 764 - AT - Service Tax

Denial of CENVAT Credit - Penalty under Rule 15 (4) of Cenvat Credit Rules, 2004 - Applicant has availed cenvat credit during the period from 15.9.2008 to 07.01.2009 on the basis of invoices issued by their Head Office, who has been registered as Input Service Distributor w.e.f. 2005 - Held that - Applicant was denied cenvat credit on the invoices issued by the Head Office as Input Service Distributor on the ground that such services were not attributable to the manufacturing unit. It is the plea of the Applicant before the ld. Commissioner (Appeals) was that since the credit has been availed by their Head Office and distributed in favour of the Applicant Unit and no question had been raised about the admissibility of credit on such input services by the Jurisdictional Commissionerate, therefore, eligibility/availability of credit on such services, cannot be questioned in the hands of the Applicant Unit. availability of credit by the Head Office had not been disputed and hence, when the same has been distributed after being registered as Input Service Distributor , the same cannot be questioned at the hands of the Applicant Unit, who availed credit on the basis of such invoices. Also, we find that the Applicants are registered as Input Service Distributor and the input services on which the cenvat credit has been availed for the purposes of distribution as Input Service Distributor , are held as eligible to cenvat credit by various pronouncement by this Tribunal. In these circumstances, the applicants are able to make out a prima-facie case for total waiver of duty and penalty, hence, predeposit of all dues adjudged is waived and its recovery stayed during pendency of the appeal - Stay granted.

Summary

Issues: Application for waiver of predeposit of cenvat credit and penalty under Rule 15 (4) of Cenvat Credit Rules, 2004.

In this judgment by the Appellate Tribunal CESTAT KOLKATA, the applicant sought a waiver of predeposit of cenvat credit amounting to Rs. 5,84,949/- and an equal penalty imposed under Rule 15 (4) of Cenvat Credit Rules, 2004. The applicant had availed cenvat credit during a specific period based on invoices issued by their registered Head Office, designated as an "Input Service Distributor" since 2005. The dispute arose when a show-cause notice alleged irregularity in the distribution of cenvat credit by the Head Office to the applicant. The Commissioner (Appeals) rejected the applicant's appeal, questioning the eligibility of the services claimed as 'input service' under Section 2 (l) of the Cenvat Credit Rules, 2004. The services in question included Security Agents Service, Share Registry Service, and Renting of Immovable Property Service, utilized in or related to the manufacturing of finished goods or business activities, deemed eligible for cenvat credit by the applicant.

Upon hearing both parties and examining the records, the Tribunal noted that the denial of cenvat credit was based on the belief that the services distributed by the Head Office were not relevant to the manufacturing unit of the applicant. The applicant argued that since the credit was availed and distributed by the Head Office without objection from the Jurisdictional Commissionerate, the eligibility of the credit on such services could not be disputed at the applicant's end. The Tribunal agreed with the applicant's stance, emphasizing that the availability of credit by the Head Office was undisputed, and as the applicant was registered as an "Input Service Distributor," the distributed input services were considered eligible for cenvat credit by previous Tribunal decisions. Consequently, the Tribunal found merit in the applicant's case for a total waiver of duty and penalty. Therefore, the predeposit of all dues was waived, and the recovery stayed during the appeal's pendency, granting the stay petition. The judgment was dictated and pronounced in open court by the Tribunal.