2024 (8) TMI 715 - AT - Central Excise

CENVAT Credit based on invoices addressed to the units Head Office - invoices were raised in the name of the Head Office which was not registered as an Input Service Distributor (ISD) - Rule 9(2) of the CENVAT Credit Rules, 2004 - HELD THAT - It is found that the Adjudicating Authority vide Order in Original dated 30.09.2013 after relying on the decisions of Tribunals in the case of COMMISSIONER OF CENTRAL EXCISE, VAPI VERSUS JINDAL PHOTO LTD. 2009 (1) TMI 187 - CESTAT, AHMEDABAD and PRECISION WIRES INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE VAPI 2014 (3) TMI 630 - CESTAT AHMEDABAD , held that since there is no allegation that the services had not suffered service tax or that the services were not received at the Kattur plant, the only issue was that the invoice was raised in the name of the Head Office, which cannot be the sole ground to deny credit. The appellant has also pointed out that while the disputed invoices are for the period August 2010 to August 2011, their HQ had applied for an ISD registration on 07.01.2010 and the registration certificate was also issued and has also been accepted at para 4.2 of the Order in Original. The Adjudicating Authority had dropped the demand on the above grounds. The issues raised in the impugned order that the Order in Original does not throw light on how the credit was verified that the service was fully received in the premises of the Kattur unit and further that the order does not condone the shortcomings in the invoice under Rule 9(2) of the CENVAT Credit Rules, 2004 after satisfaction of receipt of service in the Kattur Unit, does not appear correct. The very fact that the OIO accepts the assessee s claim and had dropped further proceedings indicates that the Original Authority had condoned short comings if any. The appellant cannot be denied the credit just because the Order in Original does not throw light on how the credit was verified and how the service was fully received in the premises of the Kattur unit - There is nothing to show that the credits were not reflected in the monthly returns filed by the assessee or that there was a deliberate attempt to evade payment of duty. It is thus held that substantial benefit should not be denied on purely technical grounds especially when there is no allegation with regard to the payment of service tax on the services, receipt of the services and utilization of services by the appellant, merely on the ground that invoices were in the name of head office. The appeal merits to be accepted - the impugned order is set aside - appeal allowed.

Summary

Issues:
Appellant availed CENVAT credit based on invoices addressed to the Head Office, which was not registered as an Input Service Distributor (ISD). The dispute involves the eligibility of the appellant to avail credit on services received at the Kattur plant even though the invoices were in the name of the Head Office.

Analysis:
The appellant, a manufacturing unit, availed CENVAT credit on insurance and sales commission services for the Kattur plant based on invoices raised in the name of the Head Office in Chennai. The appellant argued that the invoices contained all necessary particulars for credit eligibility under Rule 9(2) of the CENVAT Credit Rules, 2004. The appellant also contended that the Head Office had applied for ISD registration, which was accepted, and the SCN was time-barred as there was no suppression of facts.

The Authorized Representative argued that the credit was ineligible as the invoices were not transferred to the concerned unit as required by Rule 7 of CENVAT Credit Rules, 2004. The AR highlighted that the order did not verify how the service was fully received at the Kattur unit and did not address the shortcomings in the invoices under Rule 9(2) after service receipt satisfaction.

The Tribunal noted that the Adjudicating Authority had dropped the demand based on the appellant's ISD registration and acceptance of the invoices. The Tribunal found that the Original Authority had examined all issues and correctly decided the case. It emphasized that denying legal credits solely on technical grounds would be harsh, especially considering the low tax amount involved. The Tribunal also agreed with the appellant that the SCN was time-barred and there was no deliberate evasion of duty payment.

Referring to a previous Tribunal decision, the Tribunal held that substantial benefits should not be denied on technical grounds when there is no dispute regarding service tax payment, service receipt, and utilization. The Tribunal allowed the appeal, set aside the impugned order, and granted the appellant consequential relief as per law.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the importance of not denying legitimate credits on technicalities and considering the overall compliance and substance of the transactions.