2014 (3) TMI 908 - AT - Central Excise

Availment of CENVAT Credit - Cenvat credit was availed on the basis of 27 TR-6 challans under which the appellant s head office at Mumbai had paid the service tax as service recipient on behalf of the Malanpur unit - Held that - GTA service in respect of which Cenvat credit had been taken, had been availed by the Malanpur unit of the appellant and since for the payment of service tax on GTA service, centralized registration had been taken by their head office at Mumbai, the service tax had been paid by the head office and on the basis of the TR-6 challans/taxpayer s counterfoils, the Malanpur unit had availed the Cenvat credit. Since, the head office of the appellant had opted for centralized registration for payment of service tax and had paid the service tax under TR-6 challans in respect of the GTA service received by Malanpur unit and the Malanpur unit had taken Cenvat credit only in respect of the service tax paid by the head office, on the GTA service received by the Malanpur plant, the issue of invoice by the head office as input service distributor allocating credit to the Malanpur unit would be only technical necessity. We are, therefore, of prima facie view that in absence of such invoices, it would not be correct to deny the Cenvat credit. The requirement of pre-deposit of Cenvat credit demand, interest and penalty is, therefore, waived for hearing of this appeal and the recovery thereof is stayed, till the disposal of the appeal - Stay granted.

Summary

Issues:
Central Excise duty on photographic chemicals, Cenvat credit availed on service tax, Input Service Distributor (ISD) registration, Denial of Cenvat credit, Penalty under Cenvat Credit Rules, Time-barred demand, Requirement of pre-deposit for appeal.

Analysis:
The appellant, a manufacturer of photographic chemicals, had a centralized service tax registration and Input Service Distributor (ISD) registration at their head office in Mumbai. The dispute arose regarding the Cenvat credit availed by their plant in Malanpur on service tax paid for GTA services for transportation of goods to the factory. The department contended that since no invoices were issued by the head office as an input service distributor, the Malanpur unit could not take the Cenvat credit. The Additional Commissioner confirmed the Cenvat credit demand along with interest and imposed a penalty under Rule 15(2) of Cenvat Credit Rules, 2004. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

During the hearing, the appellant argued that the GTA services were received by the Malanpur unit, and the only issue was the lack of invoices as an input service distributor by the head office. They contended that the credit should not be denied solely based on this technicality. Additionally, they claimed that a significant part of the demand was time-barred as there was no mala fide intention. The appellant requested a waiver of the pre-deposit requirement for the appeal.

After considering the submissions, the Tribunal found that the GTA services were indeed received by the Malanpur unit, and the service tax was paid by the head office under centralized registration. The Tribunal opined that the absence of invoices as an input service distributor should not be a reason to deny the Cenvat credit. Therefore, the requirement of pre-deposit for the appeal, including the demand, interest, and penalty, was waived, and the recovery was stayed until the appeal's disposal. The stay application was allowed, and the decision was pronounced in the open court.