2017 (10) TMI 753 - AT - Service Tax

CENVAT credit - ISD - appellant-assessees Whitefield unit took cenvat credit of various locations without distribution of such credit by becoming an ISD - Held that - the entire issue can be decided on the basis of revenue-neutral point itself. It is undisputed that the Head Office of the appellant had availed cenvat credit of the service tax paid on various services rendered at different units of the appellant, as also at the Head Office. It is also undisputed that the service tax liability has been discharged by service recipients and these services are utilized by the appellantsHead Office as well as the other unit in manufacturing of final products on which duty liability is discharged and also for providing taxable output services. This undisputed fact would, go to show that appellant could/can distribute the entire service tax credit as per the provisions of Rule 7 to one unit or of the other units - the issue being of revenue-neutrality, appellant-assessee could have availed the cenvat credit of the service tax paid on various input services without registering the Head Office as ISD - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of cenvat credit by the appellant for service tax paid by service providers.
2. Dispute regarding distribution of cenvat credit by the appellant's Whitefield unit.
3. Adjudication of show-cause notice contesting cenvat credit denial.
4. Appeal against Order-in-Original and Order-in-Appeal.
5. Commissioner's show-cause notice for denial of entire cenvat credit.
6. Preliminary objection in Appeal No. ST/988/2011.
7. Interpretation of Section 84 of the Finance Act 1994.
8. Applicability of ISD route for cenvat credit availing.
9. Revenue's appeal against Order-in-Appeal.

Analysis:
The judgment involves three appeals disposed of by a common order due to interlinking issues. The appellant was denied cenvat credit for service tax paid by service providers, leading to a dispute over distribution of credit by the Whitefield unit. The Order-in-Original denying credit was contested, with the First Appellate Authority allowing the credit but not upholding the direction to follow the ISD route. Another appeal was filed against an Order-in-Revision seeking to review the denial of cenvat credit, which was contested on the grounds of jurisdictional limitations. The Commissioner's powers under Section 84 of the Finance Act 1994 were scrutinized, highlighting restrictions on passing orders when an appeal is pending. The Tribunal found the Order-in-Revision to be legally sound. On the issue of ISD route, the appellant argued against being forced to take that route, citing relevant case laws. The Tribunal concluded that the appellant could have availed cenvat credit without registering as an ISD, rendering the demand raised by lower authorities baseless. Consequently, the impugned Order-in-Appeal was set aside, leading to the disposal of the Revenue's appeal as well. The appeals were ultimately disposed of in favor of the appellant based on the revenue-neutral nature of the issue.