2016 (12) TMI 1216 - AT - Central Excise

CENVAT credit - denial on the ground that cenvat credit taking documents were in the name of headquarter of the appellant - whether services for which credit is taken are used in Hooghly unit? - Held that - Ld. Consultant has countered to the submissions made by the Ld. AR and argued that reconciliation of services being used in the appellant s Hooghly unit can be even done now. It was his case that it should be possible to demonstrate before the Adjudicating Authority that service credit taken is only with respect to services utilized in appellant s Hooghly unit. In the interest of justice the matter is required to be remanded back to the Adjudicating Authority - appeal allowed by way of remand.

Summary

Issues:
Appeal against Order-in-Appeal denying cenvat credit for various services availed by the appellant's headquarters, dispute over whether services were utilized in the Hooghly unit, argument on the necessity of being registered as an Input Service Distributer (ISD) for credit distribution.

Analysis:
The appellant filed appeals against the Order-in-Appeal denying cenvat credit for services like telephone, logistic, import freight, insurance, and more availed by their headquarters. The appellant argued that all services were for the Hooghly unit, despite documents being in the headquarters' name. The appellant contended that distributing credit without ISD registration is permissible, citing relevant case laws. On the other hand, the Revenue argued that the appellant failed to prove service utilization in the Hooghly unit, referencing case laws supporting the rejection of cenvat credit. The Tribunal noted that the dispute centered on whether the services were used in the Hooghly unit. While procedural ISD registration is not a basis for credit denial if services are unused, in this case, service utilization was in question. The Tribunal allowed the appeals for remand to the Adjudicating Authority for verification. The Adjudicating Authority was tasked with reconciling whether the services for which credit was taken were indeed utilized in the Hooghly unit, emphasizing the need for a personal hearing to explain service utilization.

This judgment highlights the importance of demonstrating service utilization for claiming cenvat credit, especially when services are availed by a central entity but purportedly used in specific units. The Tribunal's decision to remand the case for further verification underscores the significance of proving actual utilization to claim credit legitimately. The case laws cited by both parties emphasize the need for concrete evidence of service usage to support credit claims. The Tribunal's direction for a detailed reconciliation by the Adjudicating Authority signifies the meticulous approach required in resolving disputes over credit eligibility based on service utilization. Overall, the judgment emphasizes the necessity of substantiating service utilization to validate cenvat credit claims and the procedural requirements involved in such cases.