2018 (7) TMI 1772 - AT - Central Excise

Imposition of equivalent penalty - proportionate credit belonging to the services relatable to their sister unit reversed - Held that - There cannot be any mala fide on the part of the assessee so as to invoke penal provision against them. Credit was admittedly admissible to them, either to the present unit or to their sister unit. Since there was only one common certificate given by the bank the appellant took the entire credit but on being pointed out by the Revenue, reversed the proportionate credit, which were availed by the sister unit - the entire situation was revenue-neutral and it cannot be said that appellants have gained anything by the said exercise, so as to make them liable to penalty - penalty set aside. CENVAT Credit - duty paying documents - certificate issued by the bank - denial of credit on the ground that such certificate issued by the bank does not give the proper details - Held that - There is no dispute as regards the duty paid character of the services and receipt of said services in the appellant unit or their utilization in the course of their activities, or the appellant entitlement to the same otherwise - It is well settled law that such technical objections, in the absence of any other dispute, the availment of the credit should not be adopted for denial - credit allowed. CENVAT Credit - service tax stands paid by the appellant s head office under reverse charge mechanism - denial on the ground that during the relevant period their head office was not registered as ISD - Held that - The head office was subsequently registered as ISD - As such the only procedural defect in taking the credit remains to be issuance of the invoices by Head Office which is rectifiable defect. Such procedural lapses cannot be made the basis for denial of the substantive rights of assessee to which he is otherwise entitled to - credit cannot be denied. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of Cenvat credit on bank and financial services.
2. Imposition of penalty on the appellant.
3. Denial of Cenvat credit based on the certificate issued by the bank.
4. Denial of credit due to service tax payment by the head office under reverse charge mechanism.

Analysis:
1. The appellant, engaged in manufacturing excisable products, availed Cenvat credit of service tax paid on various inputs services, including bank and financial services. An audit objection was raised as some services belonged to the appellant's sister unit. The appellant reversed the proportionate credit related to the sister unit's services. The Tribunal found no mala fide intent and reversed the penalty imposed, as the situation was revenue-neutral.

2. The second issue pertained to denial of Cenvat credit based on the bank's certificate lacking proper details. Despite technical objections, the Tribunal held that the appellant was entitled to the credit since there was no dispute regarding the duty paid character of the services or their utilization in the appellant's activities.

3. The third issue involved denial of credit due to service tax payment by the appellant's head office under reverse charge mechanism. The appellant was unable to obtain invoices from the head office as it was not registered as Input Service Distributor (ISD) during the relevant period. The Tribunal noted that subsequent registration as ISD rectified the procedural defect, allowing the appellant to avail the credit.

4. In conclusion, the Tribunal set aside the impugned decision, allowing both appeals and overturning the penalty imposed. The Tribunal emphasized that procedural lapses, such as the issuance of invoices by the head office, should not be the basis for denying the appellant's substantive rights to Cenvat credit.