2019 (11) TMI 490 - AT - Central Excise

CENVAT Credit - duty paying documents - Registration of units - whether the appellant is entitled to the Cenvat credit in the Visakhapatnam unit in respect of the services rendered in their Visakhapatnam unit on which the service tax was paid by their Hyderabad unit and the challan mentioned the name and details of Hyderabad unit only? - Goods Transport Agency (GTA) services - reverse charge mechanism. HELD THAT - During the relevant period, although the service recipient was their Visakhapatnam unit, the service tax was paid by their unit in Hyderabad and therefore, the challan also indicates the details of registration of Hyderabad unit. In this factual matrix, despite Hyderabad unit of appellant, instead of Visakhapatnam unit, paying service tax on the GTA services and the challan also giving details of Hyderabad unit, there is no dispute that both form part of the same corporate entity and the services were used in the Visakhapatnam unit and that Cenvat credit against the same challans was not availed by their Hyderabad unit. There is substantial compliance and agreement with Rule 9(1)(e) of CCR 2004 in the present case - the appellant is entitled to Cenvat credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to Cenvat credit in Visakhapatnam unit for services rendered.
2. Interpretation of Rule 9(1)(e) of Cenvat Credit Rules (CCR) 2004.

Analysis:

Issue 1: Entitlement to Cenvat credit in Visakhapatnam unit for services rendered:
The appellant, a manufacturer of Oxalic Acid with plants in Hyderabad and Visakhapatnam, paid service tax under reverse charge mechanism for GTA services in Hyderabad only, despite services being utilized in both plants. The appellant argued that they were under the impression that separate service tax registration for the Visakhapatnam unit was not required. The revenue contended that Cenvat credit cannot be claimed as the challans mentioned details of the Hyderabad unit only. The appellant clarified that no Cenvat credit was availed in the Hyderabad unit for services rendered in Visakhapatnam. The tribunal found that services were used in the Visakhapatnam unit, and since Cenvat credit was not claimed by the Hyderabad unit for these services, the appellant was entitled to Cenvat credit for the Visakhapatnam unit.

Issue 2: Interpretation of Rule 9(1)(e) of CCR 2004:
The departmental representative argued that Cenvat credit can only be availed based on documents specified in Rule 9 of CCR 2004, particularly citing Rule 9(1)(e) which requires a challan evidencing payment of service tax by the service recipient. In this case, the appellant's Visakhapatnam unit was the service recipient, but the service tax was paid by the Hyderabad unit. The tribunal acknowledged the irregularity but emphasized that both units were part of the same corporate entity. Despite the challans indicating details of the Hyderabad unit, the services were utilized in the Visakhapatnam unit, and no Cenvat credit was claimed by the Hyderabad unit for these services. Consequently, the tribunal concluded that there was substantial compliance with Rule 9(1)(e) and allowed the appellant's claim for Cenvat credit in the Visakhapatnam unit.

In conclusion, the tribunal allowed the appeal, setting aside the impugned order and granting consequential relief to the appellant, emphasizing the substantial compliance with Rule 9(1)(e) of CCR 2004 and the entitlement to Cenvat credit for services utilized in the Visakhapatnam unit.