2017 (4) TMI 1220 - AT - Service Tax

CENVAT credit - input service distributor (ISD) - overriding commission/sales commission - Bangalore Unit had availed credit for combined sales turnover of Bangalore and Hubli plant without obtaining the registration as Input Service Distributor - Held that - this Tribunal vide its Final Order dated 10.7.2015 in the appellants own case 2016 (2) TMI 590 - CESTAT BANGALORE has allowed the appeal on merit. It was held in the case that both the units at Bangalore as well as at Hubli are the units of the same appellant and the credit availed by one unit could have been distributed to the other unit even though the services were not actually availed at that unit. This leads to the conclusion that either of the two units could have availed the entire credit. As such, it is of the view that denial of credit to the Bangalore unit is not justified - credit allowed - decided in favor of assessee.

Summary

Issues:
1. Denial of CENVAT credit for input services received at Hubli plant.
2. Disallowance of proportionate CENVAT credit for input services received at Hubli plant.
3. Demand for recovery under Rule 14 of CCR along with interest.
4. Interpretation of Input Service Distributor (ISD) registration requirement.
5. Transfer of credit between units under LTU.
6. Applicability of judicial precedents on similar cases.

Analysis:
Issue 1 & 2: The appeal challenged the denial and disallowance of CENVAT credit amounting to ?12,60,368 for input services received at the Hubli plant, while allowing credit for services received at the Bangalore Branch. The Commissioner's order was based on the failure to obtain ISD registration, leading to recovery under Rule 14 of CCR along with interest.

Issue 3: The demand for recovery under Rule 14 of CCR, along with interest, was made due to the alleged irregular availing of CENVAT credit without ISD registration, as observed during the audit of the appellant's records.

Issue 4: The contention revolved around the interpretation of ISD registration requirement and its impact on the availment of CENVAT credit for services received at different units of the same appellant.

Issue 5: The argument presented by the appellant focused on the ability of a LTU to transfer credit between units, asserting that the credit could have been transferred from Hubli plant to Bangalore plant or obtained through ISD registration.

Issue 6: The Tribunal referred to previous decisions where the denial of credit due to procedural irregularities, such as not obtaining ISD registration, was considered unjustified. Citing precedents, the Tribunal emphasized the permissibility of distributing credit between units of the same appellant, even if services were not directly availed at a particular unit.

Ultimately, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief to the appellant based on the interpretation of ISD registration requirements, the transfer of credit within LTUs, and the application of relevant judicial precedents on similar cases.