2017 (5) TMI 665 - AT - Service Tax

CENVAT credit - input services - denial on the ground that the invoices of input services are in the name of the head office and the appellant have not obtained input service distribution registration at the relevant time - Held that - even though the invoices are in the name of head office, services were received and used in or in relation to the manufacturing and the business activity of the appellant unit as they have only one manufacturing unit. As regard non obtaining registration, the ISD registration is only procedural requirement for the purpose of distributing the CENVAT credit to the various units of the assessee - This tribunal time and again has held that merely because ISD registration is not obtained CENVAT credit cannot be denied to the assessee s manufacturing unit or to the output service provider. Denial also on the ground that services used at different locations - Held that - even though the services were received at their different location, the CENVAT credit is allowable on the ground that all the locations are working in or in relation to storages and or sale of the goods manufactured by the appellant unit, therefore as per the definition of input service existed during the impugned period, the activities related to the business is also defined as input service therefore for this reason CENVAT credit can also not be denied. Denial also on the ground that appellant also carried out trading activity - Held that - Cenvat credit proportionate to the percentage of trading turnover, as per the satisfaction of the adjudicating authority is recoverable from the appellant - However, no penalty to be charged on the said proportionate credit. Denial also on the ground that the in certain cases the invoice of the service providers do not bear the registration number - Held that - there is no allegation that under the said invoice service tax was not discharged therefore merely because registration number of the service provider has not been mentioned, this alone cannot be reason for the denial of credit - Non mention of the registration is merely procedural lapse, for this reason substantial benefit of CENVAT credit cannot be denied. The appellant is entitle for the CENVAT credit except the CENVAT credit proportionate to trading turnover - appeal allowed - decided partly in favor of assessee.

Summary

Issues Involved:
1. Non-obtaining of Input Service Distribution (ISD) registration.
2. Usage of input services at head office and various depots.
3. Trading activity conducted by the appellant.
4. Invoices lacking service provider's registration number.

Detailed Analysis:

1. Non-obtaining of Input Service Distribution (ISD) registration:
The appellant contended that the denial of Cenvat credit due to the lack of ISD registration was erroneous. They argued that since they had only one manufacturing unit, the ISD registration was not necessary. The tribunal agreed, stating that ISD registration is a procedural requirement meant for distributing services across multiple units, which was not the case here. The tribunal cited several judgments, including Doshion Ltd Vs. CCE, Ahmedabad and Demosha Chemicals Pvt Ltd Vs. CCE & ST, Daman, which support the view that procedural lapses should not result in the denial of Cenvat credit. The tribunal concluded that the credit could not be denied on these grounds.

2. Usage of input services at head office and various depots:
The appellant argued that services used at the head office and other locations were related to their overall business activities, which are connected to the manufacture and sale of their goods. The tribunal upheld this argument, referencing the definition of input services at the relevant time, which included services related to business activities. Judgments such as Coca Cola India Ltd Vs. CCE, Pune-III and CCE, Nagpur Vs. Ultratech Cement Ltd supported this view. Therefore, the tribunal concluded that Cenvat credit should not be denied for services used at different locations.

3. Trading activity conducted by the appellant:
The appellant conceded that a portion of their turnover related to trading activities and agreed to reverse the proportionate Cenvat credit. The tribunal accepted this concession and ruled that the Cenvat credit proportionate to the trading turnover should be reversed. However, no penalty was imposed for this reversal.

4. Invoices lacking service provider's registration number:
The appellant argued that the absence of the service provider's registration number on some invoices was a procedural lapse and should not result in the denial of Cenvat credit. The tribunal agreed, noting that there was no allegation that the service tax was not paid. Citing judgments like Formika India Vs. Collector of Central Excise and Mangalore Chemicals and Fertilisers Ltd Vs. Deputy Commissioner, the tribunal concluded that substantial benefits should not be denied due to procedural infractions. Therefore, the credit should not be denied on this ground.

Conclusion:
The tribunal allowed the appeal partly, granting Cenvat credit except for the proportionate amount related to trading activities. The decision emphasized that procedural lapses should not result in the denial of substantive benefits, aligning with the precedents set by various judgments. The ruling was pronounced in court on 24/4/2017.