2016 (7) TMI 1205 - AT - Central Excise

Cenvat Credit - rejection of CENVAT Credit based on non registration of input service distributor - receipt of input services at head office - Held that - No findings are given by the adjudicating authority on merits regarding non-admissibility of CENVAT Credit to input services under CENVAT Credit Rules 2004. Department has not filed any appeal against the said Order-in-Original dated 10/8/2010 passed by Adjudicating authority. Commissioner (Appeals) by bringing the admissibility of Cenvat credit on merits has gone beyond the scope of the appeal filed before him. To that extent appeal filed by the appellant is allowed by setting aside Order-in-Appeal dated 31/3/2014 with consequential relief if any. - Decided in favor of assessee.

Summary

Issues:
1. Admissibility of CENVAT Credit on input services under CENVAT Credit Rules, 2004.
2. Non-registration of head office as Input Service Distributor (ISD).
3. Imposition of penalty on CENVAT Credit.

Admissibility of CENVAT Credit on input services:
The appellant contested the rejection of CENVAT Credit based on non-registration of the head office as ISD. The first appellate authority discussed the admissibility of credit on input services under CENVAT Credit Rules, which was not appealed against by the Revenue. The Tribunal held that the Commissioner (Appeals) exceeded the scope of the appeal by addressing the admissibility of CENVAT credit on merits. As the department did not appeal the original order denying credit on merits, the appeal by the appellant was allowed, setting aside the Order-in-Appeal.

Non-registration of head office as ISD:
The appellant took credit based on invoices from the head office without registering it as ISD. The Tribunal referred to a judgment by the Gujarat High Court, stating that non-registration as ISD is a procedural lapse and should not disentitle the appellant from availing CENVAT Credit, especially when services were utilized in the only factory. Consequently, the Tribunal ruled in favor of the appellant on this issue.

Imposition of penalty on CENVAT Credit:
Regarding the imposition of a penalty on a specific amount of CENVAT Credit, the appellant did not contest the admissibility of the credit but argued that they believed it to be admissible in good faith. The Tribunal agreed with the appellant, setting aside the penalty imposed on that particular amount of credit. The appeal by the appellant was allowed on this issue as well.

In conclusion, the Appellate Tribunal CESTAT KOLKATA ruled in favor of the appellant on all the issues raised in the appeal, highlighting the importance of procedural compliance and the scope of appeals in determining the admissibility of CENVAT Credit under the relevant rules and regulations.