2017 (5) TMI 670 - AT - Central Excise

CENVAT credit - duty paying invoices - the appellants did not obtained ISD registration before distribution of the credit by the Head office - Held that - the Head office had Centralised Registration for payment of service tax. Later, from 11.03.2005 ISD registration was introduced. Therefore, it can be seen that the ISD registration is only to facilitate the distribution of credit. Failure to obtain ISD registration can be only a procedural lapse which has been rectified by the appellant on receiving the SCN - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Irregular availment of credit on service tax.
2. Failure to obtain Input Service Distributor (ISD) registration.
3. Lack of category of services mentioned in the documents for availing credit.

Analysis:
1. The appeal was against the Commissioner (Appeals) order setting aside the demand for interest and penalty related to the irregular availment of credit on service tax. The case involved the appellant, engaged in the manufacture of Rigid and Flexible PVC Film and sheets, allegedly availing credit on documents issued by their corporate office, not falling within the prescribed category. The original authority confirmed the demand, interest, and penalty, which was set aside by the Commissioner (Appeals), leading to the current appeal.

2. The Department argued that the appellant's failure to obtain ISD registration before distributing credit to sister concerns rendered the credit irregular. The Department contended that the credit distributed before ISD registration was improper. The appellant obtained ISD registration only after receiving the show cause notice, which the Department claimed as irregular. Additionally, the Department highlighted that the documents did not specify the category of services for which service tax was paid, thus not complying with Rule 9(1) of CENVAT Credit Rules.

3. In response, the appellant's counsel argued that the Commissioner (Appeals) correctly analyzed the situation and set aside the demand. The appellant's Head office had Centralized Registration before the introduction of ISD registration, and ISD registration was obtained promptly upon realizing the necessity post the show cause notice. The appellant's counsel emphasized that any irregularity was procedural and should not negate substantive benefit. The appellant provided a detailed list of services and credited amounts, indicating compliance with service tax payments. The appellant cited a relevant judgment to support their position.

4. After considering both sides, the Tribunal found that the failure to obtain ISD registration before credit distribution was a procedural lapse rectified upon receiving the show cause notice. The Tribunal viewed ISD registration as a facilitator for credit distribution and not a substantive requirement. The appellant's payment of service tax on input services was acknowledged. Regarding the lack of category of services in the documents, the Tribunal noted that the complete document presented during the proceedings included details of input services and credited amounts with specified service categories. Consequently, the Tribunal upheld the Commissioner (Appeals) decision, dismissing the appeal.