2022 (8) TMI 469 - AT - Central Excise

CENVAT Credit - GTA Services - place of removal - requirement of ISD registration - case of department is that the GTA credit could be availed only upto the place of removal and not from place of removal, the Head Office could not distribute credit without having ISD registration, the credit was to be proportionately distributed to all the units - extended period of limitation - Admissibility of credit on GTA services upto 1.4.2008 - HELD THAT - The issue is no more res integra on merits itself in the light of judgment of Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. 2018 (2) TMI 117 - SUPREME COURT where it was held that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer s premises was not admissible to the respondent - Therefore, following the same, it is held that the credit on GTA services from the place of removal upto 1.4.2008 was rightly admissible to the Appellant. Issue of distribution of credit prior to 1.4.2016 - HELD THAT - Rule 7 of CCR provided mechanism to distribute the credit and it was only after amendment made in 2016, the condition for proportionate distribution was inserted. This issue has also been settled by the Tribunal in the case of PIRAMAL GLASS PVT LTD VERSUS C.C.E. S.T. -SURAT-I 2021 (9) TMI 1198 - CESTAT AHMEDABAD ) that prior to 1.4.2016 there was no need to proportionately distribute credit to all the units. Therefore, the credit was rightly distributed to the appellant by its Head Office during the period in dispute. Distribution of credit by the Head Office without obtaining ISD registration - HELD THAT - The issue involved being of general in nature, the law 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 where it was held that credit cannot be denied on the basis of non-registration of Head Office as ISD - the impugned order denying credit on the basis of non- registration of Head Office as ISD is not sustainable. Extended period of limitation - HELD THAT - Since the appeals are allowed on merits itself, there otherwise remains no need to look into the issue of limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of credit on GTA services pre-1.4.2008
Distribution of credit prior to 1.4.2016
Distribution of credit without ISD registration
Invocation of extended period

Admissibility of credit on GTA services pre-1.4.2008:
The Appellant received services of Goods Transport Agency (GTA) at the head office for removal of goods from factories to depots. The Department contended that GTA credit could only be availed up to the place of removal. The Appellant argued that the credit was admissible based on precedents like the case of CCE vs. Ultratech Cement Ltd. The Tribunal held that the credit on GTA services up to 1.4.2008 was rightly admissible to the Appellant based on established legal principles.

Distribution of credit prior to 1.4.2016:
The Department argued that credit should have been proportionately distributed to all units, but the Appellant distributed the credit without ISD registration. The Appellant cited the case of Piramal Glass P. Ltd. to support their stance that prior to 1.4.2016, there was no mandatory condition to proportionately distribute credit. The Tribunal agreed with the Appellant, stating that the credit was rightly distributed by the Head Office during the disputed period.

Distribution of credit without ISD registration:
The Department raised concerns about the distribution of credit without ISD registration by the Head Office. The Appellant referred to legal precedents, including the case of Doshin Ltd. vs. CCE, to support their argument. The Tribunal found that the law had been settled on this issue, as per the judgments of various High Courts and Tribunals, and concluded that the denial of credit based on the non-registration of the Head Office as an ISD was not sustainable.

Invocation of extended period:
The Department invoked the extended period for issuing show cause notices, alleging denial of credit. The Appellant argued that since the credit was admissible on merits, there was no need to consider the issue of limitation. The Tribunal noted that the Appellant had claimed credit on GTA services, was registered with the Service Tax Department, and that the Department had initiated inquiries but delayed issuing show cause notices. Citing the case of Nizam Sugars Ltd., the Tribunal held that once the decision favored the Appellant on merits, there was no basis for denying credit by invoking the extended period.

In conclusion, the Tribunal found that the impugned orders were not sustainable on merits or limitation. The appeals were allowed in favor of the Appellants, providing consequential relief in accordance with the law.