2017 (1) TMI 1358 - AT - Central Excise

Denial of CENVAT credit - Rule 3 of the CCR, 2004 - Held that - It is a fact that SCN does not cover the issue of ineligibility on account of non-registration of ISD but only for the reason that services are ineligible by virtue of Rule 2 (l) (ii) read with Rule 3 of the Rules. However, following the decision taken in the identical issue in the appellant s own case, for an earlier period, these appeals are also being sent back to original authority with the same directions - Decided in favor of the assessee.

Summary

Issues:
Denial of cenvat credit for services rendered at other units, alleged contravention of Cenvat Credit Rules, 2004.

Analysis:
The dispute in this case revolves around the denial of cenvat credit totaling to specific amounts for different periods due to services being rendered at premises not directly related to the manufacture of the final product. The department contended that this violated Rule 3 of the Cenvat Credit Rules, 2004, which allows credit for service tax paid on input services used in the manufacture of the final product. The show cause notices accused the appellant of contravening Rule 2(l)(ii) along with Rule 3 of the Rules by availing cenvat credit on services rendered at unrelated premises.

During the hearing, the appellant's counsel argued that a previous tribunal order in a similar case allowed input service tax credit, subject to invoice verification, even if the services were not used within the factory premises. The counsel highlighted that the only allegation in the show cause notices was regarding availing credit on ineligible services under Rule 2(l)(ii). The adjudicating authority's observation in a related appeal was also cited, emphasizing that the issue of transferring credit through ISD was beyond the scope of the notice.

On the other hand, the Revenue's representative reiterated that the cenvat credit availed on services not received or used within the appellant's unit was against Rule 2(l)(ii) and Rule 3 of the Rules. After hearing both sides and reviewing the records, the tribunal noted that a similar matter had been remanded to the original authority in a previous final order. Despite the show cause notice not covering the issue of ineligibility due to non-registration of ISD, the tribunal decided to send the appeals back to the original authority following the precedent set in the appellant's earlier case. The tribunal emphasized that the term "input services" under Rule 2(l) of CCR 2004 was broad and not limited to services directly related to the manufacture of final products. Citing judicial precedents, the tribunal concluded that the appellant was entitled to input service tax credit, subject to invoice verification, and remanded the matter for further adjudication.

In conclusion, the tribunal allowed all the appeals by remanding them to the original authority with directions consistent with the previous final order, emphasizing the broad interpretation of "input services" and the need for invoice verification for availing credit.