2024 (12) TMI 347 - AT - Central Excise

Disallowance of CENVAT credit - input services - service received at premises other than the registered premises - recovery with interest and penalty - HELD THAT - This issue is no longer res-integra. In the case of M/S. ORIENTAL INSURANCE COMPANY LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, LTU, NEW DELHI 2023 (6) TMI 646 - CESTAT NEW DELHI held that registration of premises with service tax department is not a condition precedent for claiming CENVAT credit of input services. Once the requirement of rule 4A of the 1994 Rules and rule 9 of the 2004 Rules are satisfied, the benefit of CENVAT credit could not have been denied. Thus, the impugned holding to contrary cannot be justified. Appeal is allowed.

Issues:
1. Disallowance of CENVAT credit and recovery of amount
2. Recovery of interest and imposition of penalty
3. Availment of inadmissible CENVAT credit on services received at unregistered premises
4. Applicability of extended period, interest, and penalty

Analysis:

Issue 1: Disallowance of CENVAT credit and recovery of amount
The appellant, engaged in manufacturing activities, availed CENVAT credit under the CENVAT Credit Rules, 2004. However, during an audit, it was found that certain inadmissible credits were availed on services received at unregistered premises. A Show Cause Notice was issued, disallowing the credit amount and ordering recovery. The impugned order upheld the disallowance, leading to the appeal.

Issue 2: Recovery of interest and imposition of penalty
Apart from disallowing the credit, the impugned order also directed the recovery of interest and imposed a penalty on the appellant. The penalty was imposed under the relevant sections of the Central Excise Act, 1944, and The Finance Act, 1994. The appellant challenged these aspects in the appeal.

Issue 3: Availment of inadmissible CENVAT credit on services received at unregistered premises
The main contention revolved around the appellant availing CENVAT credit on services received at unregistered premises. The department alleged irregularities in availing credit for services not related to the registered premises. The appellant argued that the services were essential for their operations and should be allowed as input credit. The impugned order disallowed the credit, citing lack of nexus with the manufacturing process at the registered premises.

Issue 4: Applicability of extended period, interest, and penalty
The impugned order also addressed the applicability of the extended period, interest, and penalty. It was noted that these aspects were discussed in detail by the adjudicating authority. The appellant challenged the correctness of these discussions in the appeal.

The judgment referred to various precedents, including decisions by different benches and high courts, to establish that registration of premises with the service tax department is not a mandatory condition for claiming CENVAT credit on input services. The appellant's argument that the services were essential for their operations and should be considered as input credit was supported by these precedents. Ultimately, the appeal was allowed, overturning the impugned order and allowing the appellant's claim for CENVAT credit on the services received at unregistered premises.

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