2015 (6) TMI 581 - AT - Central Excise

Waiver of pre deposit - Denial of CENVAT Credit - Held that - There was a manufacturing unit of the appellant company in Bangalore and there is also a manufacturing unit of the appellant company in Gurgaon since February, 2009. However, according to the appellant company, Bangalore unit had stopped manufacturing operations in 2007 and since February, 2009 it is only the Gurgaon Unit which is in operation. There is also no dispute that the 10 invoices on the basis of which the CENVAT Credit of ₹ 2,63,03,909/- has been taken by the Appellant had been issued by the parent company during period from March, 2011 to February, 2012 and against these invoices, the appellant company had made the payment to the parent company and the appellant company being the service recipient, has paid the service tax on the amount paid to the FSA, France under section 66A of Finance Act, 1994 read with section 2 (1) (d) (iv) of the service tax Rules, 1994. In case of the assessee who have paid service tax under reverse charge mechanism of Section 66 A of Finance Act, 1994 as service recipient in terms of the Rule 2 (1) (d) (iv) of service tax Rules, 1994, the challan under which the service tax had been paid is also a valid document for taking CENVAT Credit in terms of Rule 9 (1) (e) of CENVAT Credit Rules, 2004. Since the, challans under which the service tax, in question, has been paid and on the basis of which CENVAT Credit has been taken mention the Gurgaon Unit as the assessee, in terms of Rule 9 (i) (e), the CENVAT Credit cannot be denied to the appellant even though the invoices mention the address of Bangalore Unit of the Appellant Company. - Stay granted.

Summary

Issues:
Admissibility of CENVAT Credit on service tax paid for business support services received by the appellant company from its parent company.

Analysis:
The appellant company, engaged in manufacturing 'Automotive Seating Parts,' availed CENVAT Credit on service tax paid for business support services provided by its parent company in France. The dispute arose when the department found that the invoices were in the name of another entity, leading to a show cause notice for recovery of wrongly taken CENVAT Credit. The Commissioner upheld the demand, imposing a penalty as well. The appellant challenged this decision through an appeal.

The appellant argued that the services were received at their Gurgaon Unit, which paid the service tax as the recipient, despite the invoices mentioning the Bangalore address. They contended that since the Gurgaon Unit paid the tax and the challans indicated the Gurgaon address, CENVAT Credit should not be denied. The appellant emphasized the operational shift from Bangalore to Gurgaon and the applicability of Rule 9(1)(e) of the CENVAT Credit Rules, 2004.

The JCDR opposed the stay application, citing the Commissioner's findings that the appellant failed to prove the use of input services in manufacturing at the Gurgaon Unit. However, upon reviewing the submissions and records, the Tribunal noted the clear payment of service tax by the Gurgaon Unit for the services received from the parent company in France. The absence of discussion on the Bangalore Unit's closure in the impugned order was highlighted, emphasizing that the challans specifying the Gurgaon Unit as the assessee validated the CENVAT Credit claim under Rule 9(1)(e).

Conclusively, the Tribunal found the impugned order to be incorrect and granted the appellant's stay application, waiving the pre-deposit requirement for the appeal hearing and staying the recovery process. The decision was based on the prima facie view that the CENVAT Credit should not be denied to the appellant given the payment details and relevant rules' application.