2016 (12) TMI 1473 - AT - Service Tax

CENVAT credit - denial on the ground that before availing credit of capital goods installed in other unit, the appellant, must get centralized registration, which is taken afterwards in the case - Held that - there is no dispute as to the facts that the capital goods are received and used by the appellant for providing taxable output services and the same are covered under the definition of capital goods - similar issue decided in the case of mPortal India Wireless Solutions Pvt Ltd v. Commissioner of Service Tax, Bangalore 2011 (9) TMI 450 - KARNATAKA HIGH COURT , where it was held that Registration not compulsory for refund - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availing CENVAT credit on capital goods prior to inclusion in centralized registration.
2. Disallowance of CENVAT credit and imposition of penalties.
3. Interpretation of CENVAT Credit Rules and Service Tax Rules.
4. Applicability of previous legal judgments on the case.

Analysis:
1. The appeal challenged the Order-in-Original passed by the Commissioner regarding the appellant's availing of CENVAT credit on capital goods installed in branches before their inclusion in centralized registration. The Revenue contended that inclusion of branches in registration should precede availing CENVAT credit. The adjudicating authority found the appellant at fault for contravening CENVAT Credit Rules and Service Tax Rules.

2. The appellant's counsel argued that the capital goods were used for taxable output services after the branches were included in centralized registration. The Tribunal noted the common registration for the head office since 2004, centralized billing, and the factual use of capital goods for taxable services. The adjudicating authority's conclusion of incorrect CENVAT credit was deemed erroneous.

3. The Tribunal referenced legal precedents to support the appellant's case. The High Court decision in mPortal India Wireless Solutions Pvt Ltd v. Commissioner of Service Tax emphasized the absence of a statutory requirement for registration before claiming CENVAT credit. Additionally, the Tribunal decision in Manipal Advertising Services Pvt Ltd v. Commissioner of Central Excise highlighted the permissibility of centralized billing systems for registration under Service Tax Rules.

4. Considering the legal precedents and factual circumstances, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief. The judgment emphasized the appellant's compliance with the rules and the utilization of capital goods for taxable output services after branch registration, ultimately overturning the penalties imposed.

This detailed analysis of the judgment outlines the issues involved, the arguments presented, and the legal reasoning leading to the Tribunal's decision in favor of the appellant.