2014 (9) TMI 804 - AT - Central Excise

Stay application - Denial of CENVAT Credit - Jurisdiction in respect of input services distributor (ISD) - Held that - Tribunal in a number of cases have held that the Commissioner having jurisdiction of the units receiving the input services credit does not have jurisdiction and it is the Commissioner having jurisdiction over the ISD with whom the ISD is registered has jurisdiction to decide the matter. It is also noted that the Chief Commissioner of Central Excise, Mumbai has also referred this matter to the Central Board of Excise & Customs vide letter dated 24-10-2013 seeking clarification in the matter. In view of the decisions of this Tribunal in this regard, since the jurisdiction itself is in dispute, the applicant has made out a strong case for grant of stay. The other issue relating to the eligibility to the credit can be gone into only once the jurisdiction issue is resolved, which can be done at the time of hearing of the appeal. - Stay granted.

Summary

Issues:
Jurisdiction of the adjudicating authority, eligibility for credit distribution.

Jurisdiction Issue:
The Tribunal analyzed whether the adjudicating authority had the jurisdiction to decide the matter. It was highlighted that the Commissioner overseeing the units receiving input services credit might not have jurisdiction, and the Commissioner in charge of the Input Service Distributor (ISD) registration should handle such matters. The Tribunal referred to previous cases and noted a dispute over jurisdiction, supported by a letter from the Chief Commissioner of Central Excise to seek clarification from the Central Board of Excise & Customs. Due to the jurisdictional uncertainty, the Tribunal found a strong case for granting a stay. It was determined that the eligibility for credit distribution could only be assessed once the jurisdiction matter was resolved, which could be addressed during the appeal hearing.

Eligibility for Credit Distribution:
The appellant, a pharmaceutical manufacturer, distributed credit to units eligible for excise duty exemption under an area-based scheme. The dispute arose when the Revenue contended that only proportionate credit should be distributed for services consumed by units in specific locations. The appellant argued that as per Rule 6(5) of the Cenvat Credit Rules, 2004, they could avail and distribute credit for specified services, even if part of those services was used in manufacturing exempted goods. The appellant challenged the adjudicating authority's jurisdiction and emphasized that only the Commissioner overseeing the ISD's head office, not the recipient units, could determine credit distribution. Various tribunal decisions were cited in support of this argument. The Revenue, on the other hand, highlighted that the turnover of goods manufactured by the appellant from loan licensee units should also be considered for credit distribution, potentially increasing the disallowed credit amount. Ultimately, the Tribunal granted an unconditional waiver from pre-deposit of dues and stayed the recovery during the appeal, scheduling an expedited final hearing due to the significant revenue involved.

This detailed analysis of the judgment provides insights into the jurisdictional complexities and credit distribution disputes faced by the appellant, culminating in the Tribunal's decision to grant a stay and expedite the appeal hearing.