2018 (1) TMI 304 - AT - Central Excise

CENVAT credit - credit taken without ISD registration - invoice did not contain any registration number - labor charges - Held that - The appellants have produced an ISD registration in paper format and the same has been verified by the Superintendent (Registration), who has not denied the existence of such registration. In these circumstances, it cannot be said that the appellants were not registered as ISD - demand of credit set aside. Invoice did not contain any registration number - Held that - Registration number is given by which it is ensured that the duty indicated to have been paid in the invoice is actually remitted to the government; it cannot be taken lightly. The appellants were at liberty to produce the revised invoice with proper registration but they have not done so - appeal dismissed. Labor charges - Held that - in absence of sufficient evidence to relate the said service to the manufacturing activity credit cannot be allowed - credit denied. Penalty - Held that - in respect of service tax credit on labour charges the situation is ambiguous and the appellants could have been in doubt - penalty in so far as it relates to labour charges is set aside. Appeal allowed in part.

Summary

Issues:
Appeal against denial of cenvat credit and penalty.

Analysis:
1. The appellant challenged the denial of cenvat credit on specific grounds, including credit taken without ISD registration, invoices without registration number, and denial of credit on labour charges.

2. The appellant produced an ISD registration dated 03.12.2004, which was manually issued and verified by the Superintendent, confirming its authenticity. The Tribunal set aside the demand for credit due to lack of ISD registration.

3. Regarding invoices without registration numbers, the appellant argued it was a procedural lapse and should not lead to credit denial. However, the Tribunal disagreed, emphasizing the importance of registration numbers to ensure duty payment to the government. As the appellant did not provide revised invoices with proper registration, the appeal on this ground was dismissed.

4. The appellant claimed credit for service tax on labour charges, stating it was used for handling packing material for supply to ITC. However, the Commissioner found the service unrelated to manufacturing and only a cost-cutting measure. The Tribunal agreed, dismissing the appeal due to insufficient evidence linking the service to manufacturing activity.

5. The appellant contested the imposition of penalties, arguing they were issued due to interpretation issues. The Tribunal found ambiguity only regarding service tax credit on labour charges, setting aside the penalty for that specific issue. Penalties for other demands were upheld.

6. The Tribunal partially allowed the appeal, setting aside penalties related to labour charges but upholding penalties for other demands. The judgment was pronounced on 5/12/17.