2018 (11) TMI 1197 - AT - Central Excise

CENVAT Credit - input services - transportation of consignment - denial of credit on the ground that the input service with regard to transportation of consignment had not been received by the appellant unit and that the input credit documents were in the name of the sister unit - Held that - This Bench in the above case of M/s. Greaves Cotton Ltd. 2014 (8) TMI 654 - CESTAT CHENNAI after considering an identical situation and after considering the decisions of various higher fora has held that when two units belong to the same manufacturer and the input service relates to the business of the same assessee, there is no reason to deny input service - credit allowed - appeal allowed - decided in favor of appellant.

Issues:
Denial of CENVAT Credit on service tax paid for transportation of goods.

Analysis:
The case involved the denial of CENVAT Credit on service tax paid for the transportation of goods by one unit within the same company to another unit. The dispute arose when the input credit documents were in the name of the sister unit that paid the service tax. The appellants argued that since both units belonged to the same manufacturer, credit should not be denied based on the payment source. The appellant cited precedents where it was held that when two units belong to the same manufacturer and the input service relates to the business of the same assessee, denial of input service credit is unjustified. The appellant also relied on cases where credits were allowed for services related to the business of the assessee, emphasizing the nexus between the input service and the business. The Tribunal considered these arguments and concluded that credit cannot be denied solely based on the unit that paid the service tax, especially when both units are under the same company and the input service credit is related to the business of the assessee.

The Tribunal referenced previous decisions and highlighted that the denial of credit for procedural infractions should not occur when a substantial part of the rule is complied with. It was emphasized that the credit should not be denied if the input service is related to the business of the assessee, as per the inclusive part of the definition of "input service" under the Cenvat Credit Rules, 2004. The Tribunal noted that the nexus between the relevant services and the business of the assessee was established in this case, leading to the conclusion that there was no reason to deny the input service credit to the appellants. The Tribunal set aside the impugned orders and allowed all the appeals with consequential relief, following the precedent set by previous cases and emphasizing the importance of the relationship between the input service and the manufacturer's business.

In conclusion, the Tribunal found that the denial of CENVAT Credit on the service tax paid for the transportation of goods between units of the same company was unjustified. The Tribunal emphasized the importance of the nexus between the input service and the business of the assessee, following established precedents and setting aside the lower authorities' decisions. The appellants' appeal was allowed, granting them consequential benefits, if any.

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