2024 (7) TMI 1599 - AT - Central Excise

CENVAT Credit - input services - outward freight distributed through input service distributor (ISD) invoices - jurisdiction to adjudicate the admissibility of such CENVAT credit lies with the authorities having jurisdiction over the ISD or the recipient unit? - HELD THAT - The Appellant have availed Cenvat credit on the basis of the invoices distributed the credit by their ISD Registered unit. That being so the admissibility of credit could not have been questioned in respect of individual services which might be referred in any annexure as an end of recipient unit. If any investigation/enquiry was required need to be made at the end of ISD. The present proceedings have arisen out of a statement of demand issued in continuation to the various show cause notice and statement of demands issued to the appellant on the same issue. The show cause notice and some of the statements of demands have been finally adjudged in the favour of appellant without appeal being preferred by the revenue. This being a statement of demand no new ground has been stated in the statement of demand. Thus when revenue accepts the earlier decisions dropping the show cause notice and statement of demands for the past period on the same issue judicial precedent needs to be followed. Conclusion - i) The appellant s availing of CENVAT credit was legitimate. ii) The jurisdiction to adjudicate the admissibility of CENVAT credit distributed by an ISD lies with the ISD s jurisdictional authority. Impugned order has no merits and needs to be set aside - Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

(i) Whether the CENVAT credit availed by the appellant on service tax paid on outward freight, distributed through input service distributor (ISD) invoices, is admissible under the CENVAT Credit Rules, 2004.

(ii) Whether the jurisdiction to adjudicate the admissibility of such CENVAT credit lies with the authorities having jurisdiction over the ISD or the recipient unit.

(iii) The implications of previous adjudications in favor of the appellant on similar issues and whether the current statement of demand should follow those precedents.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Admissibility of CENVAT Credit on Outward Freight

- Relevant Legal Framework and Precedents: The CENVAT Credit Rules, 2004, particularly Rule 2(l)(ii), define what constitutes input services eligible for credit. The Tribunal referred to previous decisions such as Castrol India Ltd. and Godfrey Philips India Ltd., which addressed similar issues regarding the distribution and admissibility of CENVAT credit through ISD invoices.

- Court's Interpretation and Reasoning: The Tribunal noted that the appellant availed CENVAT credit based on ISD invoices, which is not disputed. The admissibility of such credit should be examined at the ISD's end, not the recipient unit. The Tribunal emphasized that the ISD's role is to distribute credit, and any dispute regarding the nature of services should be resolved by the jurisdictional authority overseeing the ISD.

- Application of Law to Facts: The Tribunal found that the appellant correctly availed CENVAT credit based on ISD invoices. The challenge to the credit's admissibility should have been directed at the ISD, not the appellant, as per established precedents.

- Treatment of Competing Arguments: The Tribunal dismissed the respondent's argument that the credit's admissibility should be adjudicated at the recipient unit. The Tribunal relied on the principle that jurisdiction lies with the ISD's authority.

- Conclusions: The Tribunal concluded that the appellant's availing of CENVAT credit was legitimate and should not have been questioned at the recipient unit level.

Issue (ii): Jurisdiction to Adjudicate CENVAT Credit Admissibility

- Relevant Legal Framework and Precedents: Rule 2(m) of the CENVAT Credit Rules, 2004, defines an ISD and outlines its role in distributing credit. The Tribunal referenced prior decisions, emphasizing that the ISD's jurisdiction is key in determining credit admissibility.

- Court's Interpretation and Reasoning: The Tribunal held that the proper jurisdiction for adjudicating the admissibility of CENVAT credit on services distributed by an ISD lies with the authorities overseeing the ISD, not the recipient unit.

- Key Evidence and Findings: The Tribunal noted that the appellant's ISD was registered and had distributed credit appropriately. The challenge to credit admissibility should have been directed at the ISD's jurisdiction.

- Conclusions: The Tribunal upheld that the jurisdiction to adjudicate the admissibility of CENVAT credit lies with the ISD's authority.

Issue (iii): Precedential Effect of Previous Adjudications

- Court's Interpretation and Reasoning: The Tribunal observed that previous adjudications on similar issues were decided in favor of the appellant, and no appeals were filed by the revenue against those decisions. The Tribunal emphasized the importance of judicial consistency and precedent.

- Conclusions: The Tribunal concluded that the current statement of demand should follow the precedent set by previous adjudications in favor of the appellant.

3. SIGNIFICANT HOLDINGS

- Preserve verbatim quotes of crucial legal reasoning: "The admissibility of credit could not have been questioned in respect of individual services which might be referred in any annexure as an end of recipient unit. If any investigation/enquiry was required need to be made at the end of ISD."

- Core principles established: The Tribunal reaffirmed that the jurisdiction to adjudicate the admissibility of CENVAT credit distributed by an ISD lies with the ISD's jurisdictional authority. It also emphasized the importance of adhering to judicial precedents to ensure consistency in legal determinations.

- Final determinations on each issue: The Tribunal set aside the impugned order, allowing the appeal. It held that the appellant's availing of CENVAT credit was legitimate, the jurisdiction to adjudicate such credit lies with the ISD's authority, and the current statement of demand should adhere to previous favorable adjudications.