2017 (7) TMI 349 - AT - Service Tax

CENVAT credit - duty paying invoices - denial of credit on the ground that they availed input service credit on the strength of invoices/challans raised against Head Office at Shakespeare Sarani and not distributed by the Head Office to their unit - Held that - Revenue has not disputed on the facts that all the invoices on which credit has been taken, have been endorsed to the respondents factory. It is also not in dispute in the Revenues appeal that the services rendered have direct nexus with the factory of the respondent and the products manufactured therein - reliance placed in the case of MODERN PETROFILS Versus COMMISSIONER OF C. EX., VADODARA 2010 (7) TMI 319 - CESTAT, AHMEDABAD , where it was held that no allegation of non receipt of input service or the allegation of service not relatable to the factory and also in view of the fact that invoice was in the name of head office of the same factory and not in the name of some one else, credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Denial of Cenvat Credit and imposition of penalty for availing input service credit.
2. Compliance with endorsement requirements for availing credit.
3. Suppression of facts and evasion of service tax.
4. Mandatory registration of ISD for input credit distribution.

Analysis:
1. The case involved a dispute regarding the denial of Cenvat Credit and imposition of penalty on the respondent for availing input service credit without proper distribution by the Head Office. The Adjudicating Authority disallowed the credit and imposed penalties, which were set aside by the Commissioner(Appeals). The Revenue appealed against this decision.

2. The Commissioner(Appeals) found that all services were rendered at the factory site, directly related to the manufacturing process. The invoices, though addressed to the Head Office, were endorsed to the factory, indicating compliance with endorsement requirements. Citing precedents like Modern Petrofills and DNH Spinners, the Commissioner held that credit cannot be denied if services were rendered at the factory, even if invoices were addressed to the headquarters. The Commissioner also found no suppression of facts to evade service tax, barring the demand under extended period provisions and penalty under section 11AC of the Act.

3. The Revenue argued that the registration of Input Service Distributor (ISD) is mandatory for credit distribution, referencing various case laws. However, both parties agreed that all invoices were endorsed to the factory, with services directly linked to manufacturing. The respondent cited additional case laws to support their position.

4. In the case of Modern Petrofills vs. Commissioner of C.Ex. Vadodara, the Tribunal upheld the Commissioner's decision, emphasizing that the omission of issuing invoices in the factory's name was a curable defect, not warranting penalty. The Tribunal rejected the Revenue's appeal and allowed the respondent's appeal, concluding that the demand for credit denial was unsustainable.

In the final judgment, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner(Appeals) decision in favor of the respondent.