2022 (2) TMI 1069 - AT - Central Excise

CENVAT Credit - denial of credit for want of registration as ISD during the relevant period - HELD THAT - The issue has already been settled by the Hon ble Gujarat High Court in COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD 2016 (2) TMI 183 - GUJARAT HIGH COURT wherein affirming the view taken by the Tribunal s Ahmedabad Bench, it has been held that merely for want of registration as ISD, the assessee should not be denied substantial benefit of Cenvat Credit. The Department in Circular no. 1063/2/2018-CX dated 16.02.2018 (Para 2.3) has accepted the above decision of the Hon ble Gujarat High Court by stating that Further nonregistration of ISD is only a procedural irregularity for which substantial benefit of CENVAT credit cannot be denied when all the necessary records have been maintained by the respondent. There are no reason to sustain the impugned demand order and hence, the same is set aside, except to the extent of ₹ 4,65,724/- which is not being contested by the Appellant assessee - penalty set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Denial of CENVAT credit due to lack of ISD registration.
2. Demand of Central Excise duty for the period April 2011 to August 2015.
3. Disallowance of input service credit by the Ld. Commissioner.
4. Contesting the demand on grounds of limitation and penalty imposition.
5. Levying interest on the demanded duty amount.

Issue 1: Denial of CENVAT credit due to lack of ISD registration

The case involved an appeal against an adjudication order where the appellant, engaged in manufacturing lubricants and greases, faced a demand of Central Excise duty due to the exclusion of their Input Service Distributor (ISD) registration in the service tax registration certificate for a specific period. The Ld. Commissioner disallowed the input service credit availed by the manufacturing plant based on ISD invoices. The appellant argued that substantial benefit of credit cannot be denied for procedural infirmity in ISD registration, citing a ruling by the Hon'ble Gujarat High Court and a circular by the CBIC. The Tribunal referred to the Gujarat High Court decision and the circular, concluding that the appellant should not be denied CENVAT credit solely for lack of ISD registration, setting aside the demand order except for a specific amount not contested by the appellant.

Issue 2: Demand of Central Excise duty for the period April 2011 to August 2015

The demand of Central Excise duty was based on the exclusion of ISD registration in the service tax registration certificate during the period in question. The Ld. Commissioner confirmed a substantial duty demand against the appellant, leading to the appeal. The appellant argued that the demand was primarily due to the absence of registration of the Head Office with the Service Tax Department. The Tribunal, after considering the arguments and legal precedents, set aside the demand order, except for a specific amount already reversed by the appellant.

Issue 3: Disallowance of input service credit by the Ld. Commissioner

The Ld. Commissioner disallowed the input service credit availed by the manufacturing plant based on ISD invoices due to the exclusion of ISD registration in the service tax registration certificate. The appellant contested this disallowance, citing legal precedents and circulars supporting their position. The Tribunal, after examining the relevant legal provisions and precedents, ruled in favor of the appellant, setting aside the disallowance of input service credit.

Issue 4: Contesting the demand on grounds of limitation and penalty imposition

The appellant contested the demand on the grounds of procedural issues related to ISD registration and argued against the imposition of penalty, citing lack of evidence of wilful fraud or suppression. The Ld. Commissioner had confirmed a significant demand along with a penalty, which the appellant challenged in the appeal. The Tribunal considered the arguments presented by both sides and ultimately set aside the penalty imposed in the impugned order.

Issue 5: Levying interest on the demanded duty amount

The Department, in its appeal, requested the Tribunal to levy interest on the demanded duty amount, which was not charged in the adjudication order. However, the Tribunal did not find merit in this request and did not impose interest on the demanded duty amount. The Tribunal's decision did not include levying interest, as requested by the Department, thereby concluding the matter without additional financial implications on the appellant.