2019 (3) TMI 33 - AT - Central Excise

CENVAT Credit - credit availed at the end of peripheral unit of the input service distributor - Held that - Reliance placed in the case of CST, AHMEDABAD VERSUS GODFREY PHILIPS INDIA LTD. 2008 (12) TMI 90 - CESTAT, AHMEDABAD , where it was held that Central Excise officer have jurisdiction over office of input service distributor to decide the dispute regarding eligibility of input service for credit. Thus, it is incumbent upon the ISD to prove the eligibility or otherwise the Service Tax credit, since at the receiver end no detail would be available regarding the nature of services. Also, it cannot be said that only because audit party had found some credit availed as inadmissible, suppression of fact is made out. Further it is not established that appellant had any malafide intention to suppress its duty liability from the department. The legality or admissibility of credit can only be question to the ISD by its jurisdictional authority - appeal allowed - decided in favor of appellant.

Summary

Issues:
Inadmissibility of CENVAT credit availed at the end of peripheral unit of the input service distributor.

Analysis:
The appeal challenges the inadmissibility of CENVAT credit availed at the end of the peripheral unit of the input service distributor. The appellant, with its corporate office in Mumbai, holds an Input Service Distributor (ISD) registration. The Central Excise department audited the appellant's records at Vasai and issued a show-cause notice alleging improper distribution of Service Tax credit, including credits for services like Estate Agent Services and Chamber Membership fees. The appellant disputed the allegations, leading to the matter being adjudicated, resulting in duty demand confirmation. The appellant argued that the ISD's responsibility is to provide service provider details to units, and the determination of credit eligibility lies at the ISD's end, not the manufacturing unit's end. Additionally, the appellant contended that part of the demand was time-barred, challenging the jurisdiction of the Dy. Commissioner of Central Excise to adjudicate on the show-cause notice issued by the Additional Commissioner (Audit).

The Authorized Representative for the respondent-department supported the Commissioner (Appeals) order, stating that the appellant had availed inadmissible credits, some of which were excluded by an amendment to the CENVAT Credit Rules in 2011. After hearing both sides and reviewing the case records and relevant judgments, the Tribunal emphasized the ISD's responsibility to prove the eligibility of Service Tax credit since details of services are not available at the receiver end. Citing the Swastik Tin Works judgment, the Tribunal concluded that the Additional Commissioner (Audit) lacked jurisdiction to issue show-cause notices invoking an extended period of limitation, leading to a successful appeal for the appellant.

The Tribunal further discussed the statutory audit procedure, highlighting the purpose of audit to ensure no duty evasion and the participative nature of the audit process. It was noted that the audit findings did not establish any malafide intention by the appellant to suppress duty liability. Considering the legal responsibility for credit admissibility lying with the ISD and the lack of jurisdiction of the Additional Commissioner (Audit), the Tribunal allowed the appeal, setting aside the Commissioner of CGST & Central Excise (Appeals) order.

In conclusion, the Tribunal allowed the appeal, setting aside the Commissioner of CGST & Central Excise (Appeals) order, emphasizing the ISD's responsibility to prove the eligibility of Service Tax credit and the lack of jurisdiction of the Additional Commissioner (Audit) in issuing show-cause notices invoking an extended period of limitation.