2015 (12) TMI 1006 - AT - Central Excise

CENVAT Credit - credit on invoices issued by their head office as Input Service Distributor - Held that - Cenvat Credit Rules, 2004 do not prescribe any time limit for taking the credit. If the credit is admissible and the documents for availing the credit are available, credit can be taken at any time. The Cenvat Credit Rules do not prohibit availment of cenvat credit in respect of inputs/input services which have been received prior to registration. The Cenvat Credit Rules contain no express restriction on distribution of credit earned prior to taking the registration by the ISD also. Hence the ISD can avail credit of service tax paid on input services received prior to registration and moreover, in this case there is only one manufacturing unit of the appellant and the Revenue was well aware of this fact from the very beginning - Decided in favour of assessee.

Summary

Issues:
- Availment of cenvat credit for duty paid inputs and input services under Cenvat Credit Rules, 2004.
- Claiming credit of service tax paid on eligible input services prior to registration as Input Service Distributor (ISD).
- Interpretation of Rule 2(m), Rule 3(1), and Rule 9(1) of the Cenvat Credit Rules, 2004.
- Applicability of precedents regarding registration of ISD for credit admissibility.
- Nexus between input service and output services for credit availment.
- Time limit for availing cenvat credit under the Cenvat Credit Rules, 2004.

Analysis:
The case involved the appellant, engaged in manufacturing S.O. dyes and pigments, challenging the denial of cenvat credit for input services by the Commissioner (Appeals). The appellant availed credit on input services distributed by their head office as ISD before ISD registration but used for their manufacturing unit. The appellant argued that Cenvat Credit Rules do not impose a time limit for credit availment and referenced Rule 2(m), Rule 3(1), and Rule 9(1) to support their claim. They relied on legal precedents like the Karnataka High Court and Tribunal decisions to assert that registration is not a prerequisite for credit. Conversely, the AR cited cases emphasizing the necessity of ISD registration for credit admissibility.

The Tribunal analyzed the contentions and found that the Cenvat Credit Rules do not specify a time limit for credit availment, allowing credit if admissible and supported by proper documentation. It was noted that the Rules do not prohibit credit on inputs/services received before registration, and there is no explicit restriction on ISDs distributing pre-registration credit. The Tribunal distinguished the cited cases requiring ISD registration for credit, stating they were not applicable to the present scenario. Ultimately, the Tribunal ruled in favor of the appellant, allowing the appeal and granting consequential relief.

In summary, the judgment addressed the intricacies of cenvat credit availment under the Cenvat Credit Rules, emphasizing the absence of a time limit for credit claims and the permissibility of distributing pre-registration credit by an ISD. Legal interpretations of relevant rules and precedents played a crucial role in determining the appellant's entitlement to credit, leading to a favorable outcome in the appeal.