2018 (11) TMI 83 - AT - Service Tax

CENVAT Credit - duty paying invoices - challans issued by Input Credit Distributor situated in Delhi and that the said challans were not serially numbered and were not having information as required - Rule 4A(2) of Service Tax Rules, 1997 - Held that - It is very clear that show cause notice did not elaborate on any deficiency in the said challans as compared to the requirement under the said Rule 4A(2), it only pointed out that the challans were not serially numbered. There were no allegations in the show cause notice that the services were not received by the appellant nor the services were not eligible to avail Cenvat credit nor the service tax was not paid by service providers - the only objection was that the challans were not serially numbered. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Challenge against Order-in-Original denying Cenvat credit based on challans.
2. Procedural deficiencies in the challans issued by Input Credit Distributor.
3. Appellant's submission of rectified challans and compliance with Rule 4A(2).
4. Applicability of substantive benefit over procedural lapses.
5. Interpretation of show cause notice and ruling by Hon'ble Gujarat High Court.
6. CBEC Circular No.1063/2/2018-CX acceptance of Gujarat High Court ruling.

Analysis:
The appeal was filed against Order-in-Original denying Cenvat credit amounting to ?18.01 crores due to alleged procedural deficiencies in the challans issued by the Input Credit Distributor. The appellant argued that the only deficiency mentioned was the lack of serial numbers on the challans, which they rectified by submitting revised ISD challans. The Original Authority confirmed the demand and penalty, leading the appellant to approach the Tribunal.

During the hearing, the appellant's counsel highlighted that the rectified challans were submitted to address the procedural deficiency, emphasizing that there were no allegations of non-receipt of input services or ineligibility for Cenvat credit. Reference was made to the ruling by the Hon'ble Gujarat High Court in Commissioner of Central Excise Vs Dashion Ltd., which held that substantive benefit cannot be denied for procedural lapses. The counsel also pointed out the CBEC Circular No.1063/2/2018-CX, which indicated acceptance of the Gujarat High Court ruling.

The Tribunal examined the case records and noted that the show cause notice did not specify any deficiency in the challans apart from the lack of serial numbers. It was observed that the appellant had rectified the challans as per the requirements. The Tribunal, relying on the Gujarat High Court ruling, concluded that the denial of Cenvat credit solely based on procedural lapses was not legally sustainable. Therefore, the impugned order was set aside, and the appeal filed by the appellant was allowed.

In conclusion, the Tribunal's decision emphasized the importance of substantive benefit prevailing over procedural deficiencies in matters concerning Cenvat credit eligibility. The judgment highlighted the significance of rectifying procedural lapses and complying with the rules to uphold the rights of the appellant in availing the entitled credit.