2022 (11) TMI 453 - AT - Central Excise

Recovery of credit - credit has been denied on the ground that the appellant has not taken ISD Registration and that the credit availed on various other units were not distributed to the Ambattur Industrial Estate as required under Rule 7 of Cenvat Credit Rules, 2004 - credit also denied on banking charges on the ground that instead of availing credit on the vouchers issued by the bank, they have availed credit on debit advices in the nature of bank statements showing the bank charges. Whether credits availed on bank charges and Chartered Accountant services are eligible or not? - appellant has not taken Input Service Distributor registration - HELD THAT - The denial of credit on the ground that appellant has not taken Input Service Distributor registration in respect of Bank charges and Chartered Accountant services cannot sustain - The Hon ble High Court of Gujarat in THE COMMISSIONER OF CENTRAL EXCISE, O/O THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS SERVICE TAX VERSUS M/S. PRICOL LTD. 2021 (2) TMI 495 - MADRAS HIGH COURT has held that there is nothing in statutory rules to disentitle an unregistered input service distributor from availing cenvat credit and that non-taking registration is only a procedural error which is curable. The Department does not dispute the collection of bank charges by the bank for the services provided by them. Merely because the credit is availed on bank advice / bank statement the credit cannot be denied unless there is discrepancy in these documents - the disallowance of credit alleging that appellant has availed credit on debit advices / bank statements is not legal and proper. Credit in respect of Chartered Accountant services has been denied alleging that the bills are not issued in the of the appellant, but has been issued in the name of an individual and other units of the appellant - HELD THAT - The credit availed on Chartered Accountant services are based on bills dated 14.10.2008, 03.11.2009, and 07.10.2010. The appellant has furnished these bills before the Tribunal. On perusal, it is seen that these bills are addressed to the appellant-company and not in the name of an individual. After mentioning the name of the company, the name of the Kartha Mr.Ashok Ramchand Bulchandani has also been mentioned. This will not make the bills issued in the name of an individual. Denial of credit alleging that these bills are issued in the name of individual and in the name of other units of the appellant is factually incorrect - the denial of credit on Chartered Accountant cannot be sustained. The appeal is allowed.

Summary

Issues:
1. Eligibility of cenvat credit on bank charges and Chartered Accountant services.

Analysis:
The case involved a dispute regarding the eligibility of cenvat credit on bank charges and Chartered Accountant services availed by the appellant, a manufacturer of Bright Bars of various steel types. The appellant was registered with the Central Excise Department and had multiple units, with the specific issue concerning the unit in Ambattur Industrial Estate, Chennai. The Department alleged that the appellant had availed ineligible credit on Bank charges and Chartered Accountant services, leading to the issuance of a show cause notice proposing disallowance and recovery of credit amounting to Rs.16,86,697/- along with interest and penalties. The original authority confirmed the demand, which was upheld by the Commissioner (Appeals), prompting the appellant to file an appeal before the Tribunal.

Bank Charges:
Regarding the denial of credit on bank charges, the Department cited two main reasons. Firstly, it was alleged that the appellant had not obtained Input Service Distributor (ISD) Registration and had not distributed the credit availed on other units to the Ambattur Industrial Estate as required by Rule 7 of Cenvat Credit Rules, 2004. The appellant's counsel argued that the ISD registration requirement was procedural and could not be a basis for denying credit, citing a decision of the jurisdictional High Court of Madras. The Tribunal, following the precedent, held that the denial of credit based on the lack of ISD registration was unfounded and set it aside.

Chartered Accountant Services:
The credit availed on Chartered Accountant services was also challenged by the Department, claiming that the bills were addressed to an individual and other units, making the credit ineligible. The appellant's counsel presented invoices to establish that the bills were indeed issued to the appellant-company and not to an individual or other units. The Tribunal, after reviewing the bills, concluded that the denial of credit on Chartered Accountant services was not justified and needed to be set aside.

Conclusion:
After thorough deliberation, the Tribunal set aside the impugned order, allowing the appeal with consequential relief as per the law. The judgment clarified that the denial of credit based on the lack of ISD registration for bank charges and the alleged incorrect billing for Chartered Accountant services was not legally sustainable. The decision highlighted the importance of proper documentation and adherence to procedural requirements in availing cenvat credit, emphasizing that procedural errors should not lead to the disallowance of legitimate credits.