2016 (12) TMI 836 - AT - Central Excise

CENVAT credit - denial of credit on the ground that it belongs to the period prior to the period of amalgamation of Ghari Industries with assessee - Held that - Commissioner (Appeals) in the impugned order has allowed the credit with detailed finding. It was held that the activities carried out by the transferor company (M/s Ghari Industries) after effective date of amalgamation i.e. 01.04.06, is deemed to have been carried on for the transferee company (M/s RSPL). In the present case as discussed earlier the transferor company (M/s Ghari Industries) had exhausted its total input service as on 31.03.07 and there was no balance available for distribution. Therefore, credit subsequently distributed vide invoice No. 114 dated 07.11.2009 was in respect of services deemed to have been availed by the appellants themselves. In the circumstances availment of credit by the appellant on the strength of invoice issued by its head office, who is holding registration for inputs service distribution cannot be defaulted. Appeal dismissed - decided against Revenue-appellant.

Summary

Issues:
Dispute over cenvat credit availed by assessee of service tax distributed by head office pre-amalgamation period.

Analysis:
The Revenue appealed against the order-in-appeal regarding cenvat credit availed by the assessee pre-amalgamation of Ghari Industries. The dispute arose as the service tax credit was distributed by the head office, registered as an input service distributor, pertaining to services paid by Ghari Industries before amalgamation. The Commissioner (Appeals) allowed the credit, leading to the Revenue's appeal.

The Commissioner (Appeals) detailed that the credit distribution was in compliance with regulations. The show cause notice's allegation lacked evidence, and the appellant clarified that all credit was distributed by Ghari Industries before amalgamation. The High Court's order permitted amalgamation from 01.04.06, deeming activities post-amalgamation as carried out by the transferee company. The credit distributed post-amalgamation was for services deemed availed by the appellants, justifying the credit availed based on the head office's invoice.

The Tribunal upheld the Commissioner (Appeals) decision, stating no reason to interfere with the detailed findings. The order-in-appeal was maintained, dismissing the Revenue's appeal. The legal position post-amalgamation supported the credit availed by the appellant, leading to the allowance of the credit and setting aside the penalty imposed by the original adjudicating authority.