2017 (9) TMI 1423 - AT - Central Excise

CENVAT credit - duty paying invoices - denial on the ground that the ISD issued the invoices in respect of GTA services and other input service during the period July, 2009 to March, 2010 which has not been received by the Kolkata unit of the appellant - Held that - There is no allegation of violation of Rule 7 of Cenvat Credit Rules, 2004. Rule 7 of CCR, 2004 provides manner of distribution of credit by ISD - Hon ble Karnataka High Court in the case of ECOF Industries Pvt. Ltd. 2011 (2) TMI 1130 - KARNATAKA HIGH COURT held that credit cannot be denied on the ground that the input services were not used or received in relation to manufacture of Kolkata Unit - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of Cenvat Credit based on ISD invoices not received at Kolkata office.
- Denial of Cenvat Credit by Adjudicating Authority and Commissioner (Appeals).
- Nexus of input services with the business activities of the appellant.
- Interpretation of Rule 7 of Cenvat Credit Rules, 2004.
- Precedents cited in support of the appellant's case.

Analysis:
1. The appellant availed Cenvat Credit based on ISD invoices issued by their Head Office at Bangalore, which were not received at their Kolkata office. The Adjudicating Authority confirmed the demand of Cenvat Credit and imposed penalties, a decision upheld by the Commissioner (Appeals).

2. The denial of Cenvat Credit was primarily due to the lack of receipt of ISD invoices for GTA services and other input services at the Kolkata unit. The appellant was found to have wrongly claimed credit based on these invoices.

3. The appellant argued that the input services, including advertisement, telephone, security service, courier service, and primary freight, were related to their business activities. The main contention was whether these services had a nexus with the manufacture of final products or output services at the Kolkata unit.

4. The Tribunal analyzed Rule 7 of the Cenvat Credit Rules, 2004, which governs the distribution of credit by ISD. Citing precedents such as the ECOF Industries Pvt. Ltd. case, the Tribunal held that credit cannot be denied solely on the grounds of services not being used or received in relation to the unit's manufacturing activities.

5. Ultimately, the Tribunal set aside the impugned order, allowing the appeal filed by the appellant. The decision was based on the finding that the appellant availed credit based on ISD invoices without violating Rule 7, as the ISD is entitled to distribute credit as per the prescribed conditions.

6. The judgment, delivered by Shri P.K. Choudhary, Member (Judicial), was pronounced in open court on 23.05.2017. The legal representative for the appellant was Ms. Satabdi Chatterjee, while Shri A.K. Biswas represented the respondent. Various case laws were referenced during the proceedings to support the appellant's case.