2013 (11) TMI 1261 - AT - Service Tax

Waiver of predeposit of cenvat credit - input service distributor (ISD) - Held that - for availing cenvat credit when invoices are raised in favour of the Head Office or Circle Office and payments for such services were made from the said Office and services are claimed to have been used in exchanges under the Head Office/Circle Office, it is required to get the Head Office/Circle Office registered as input service distributor and issue invoices in favour of its units/exchanges. Admittedly,the applicant s Circle Office has not been registered as input credit distributor under the said Rules and prima-facie, we find that the cenvat credit has not been availed correctly as per the procedure as laid down by the Cenvat Credit Rules, 2004. In these circumstances, the applicant failed to make out a prima-facie case for total waiver of predeposit of all dues adjudged against them - Stay granted partly.

Summary

Issues:
1. Application for waiver of predeposit of cenvat credit and penalty under Central Excise Rules.
2. Availment of cenvat credit on invoices related to Head Office/Circle Office.
3. Non-registration of Head Office/Circle Office as input service distributor.
4. Compliance with Cenvat Credit Rules for availing cenvat credit on input services.
5. Prima facie case for waiver of predeposit of dues adjudged.

Analysis:

1. The judgment involves an application for waiver of predeposit of cenvat credit and penalty under the Central Excise Rules, 2004. The appellant sought waiver of predeposit of Rs.19,63,069/- and an equal amount of penalty imposed under Rule 15(2) of the Central Excise Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.

2. The major contention raised was regarding the availment of cenvat credit on invoices related to the Head Office/Circle Office of the applicant. The appellant argued that although the invoices were in favor of the Head Office/Circle Office, the input services were used at different telephone exchanges falling under the Circle Office. However, it was highlighted that at the relevant time, the Head Office/Circle Office was not registered as an input service distributor under the Cenvat Credit Rules, 2004.

3. The Department's representative argued that the appellant did not follow the prescribed procedure under the Cenvat Credit Rules, 2004 for availing cenvat credit on various input services used in the telephone exchanges. It was emphasized that without following the prescribed procedures, it would be challenging to verify and examine the actual use of input services in relation to providing services at the telephone exchanges.

4. Upon hearing both sides and examining the records, the Tribunal found that for availing cenvat credit in cases where invoices are raised in favor of the Head Office or Circle Office, and services are claimed to have been used in exchanges under the same, it is essential to have the Head Office/Circle Office registered as an 'input service distributor'. Since the appellant's Circle Office was not registered as such, the cenvat credit was not availed correctly as per the procedure laid down by the Cenvat Credit Rules, 2004. Consequently, the Tribunal directed the appellant to deposit Rs.2.00 lakhs within a specified period, failing which the appeal would be dismissed.

5. The Tribunal acknowledged that the appellant failed to establish a prima facie case for a total waiver of predeposit of all dues adjudged against them. However, in the interest of justice, a partial waiver was granted subject to the specified deposit and compliance within the stipulated timeline. The judgment emphasized the importance of compliance with the procedural requirements under the Cenvat Credit Rules for availing cenvat credit on input services to ensure correctness and validity of such claims.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision based on the arguments presented by both parties regarding the waiver of predeposit of cenvat credit and penalty under the Central Excise Rules, 2004.