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2024 (10) TMI 50 - AT - Service TaxWrongful availament of CENVAT Credit of the Service Tax paid on intellectual property service pertaining to Kalinga Nagar unit during the material period - input service distribution - input services - whether the CENVAT Credit availed by the appellant on intellectual property service can be denied, when the Input Service Distributor (ISD) i.e., TSL, Kolkata has availed CENVAT Credit and distributed the credit to the appellant as an ISD and the availment of CENVAT Credit at the end of TSL, Kolkata has not been disputed by the Revenue, or not? HELD THAT - As it is an admitted fact that the availment of CENVAT Credit on intellectual property service was not disputed at the end of the ISD/TSL, Kolkata, the CENVAT Credit cannot be declared as inadmissible CENVAT Credit to the appellant who has taken the CENVAT Credit on the strength of the invoices issued by the ISD. In these circumstances, the appellant is entitled to take CENVAT Credit and accordingly, there is no requirement of reversal of CENVAT Credit by the appellant. The impugned order deserves no merit and thus, the same is set aside - Appeal allowed.
Issues Involved:
1. Whether the CENVAT Credit availed by the appellant on intellectual property service can be denied. 2. Whether the Input Service Distributor (ISD) i.e., TSL, Kolkata availed CENVAT Credit and distributed the credit to the appellant as an ISD correctly. 3. Whether the appellant is required to reverse the CENVAT Credit availed on intellectual property service. Issue-wise Detailed Analysis: 1. Whether the CENVAT Credit availed by the appellant on intellectual property service can be denied: The Tribunal examined if the CENVAT Credit availed by the appellant on intellectual property service could be denied when the Input Service Distributor (ISD), TSL Kolkata, availed and distributed the credit. The Tribunal referenced the case of M/s. Nalco Water India Ltd., where it was held that CENVAT Credit cannot be denied if the Head Office availed the credit and distributed it proportionately under Rule 7 of the CENVAT Credit Rules, 2004. The Tribunal reiterated that the ISD is considered part of the manufacturer, and as long as the credit distribution adheres to Rule 7, it cannot be denied. 2. Whether the Input Service Distributor (ISD) i.e., TSL, Kolkata availed CENVAT Credit and distributed the credit to the appellant as an ISD correctly: The Tribunal found no allegations against the appellant that the provisions of Rule 7 were violated. It emphasized that the ISD, as an office of the manufacturer, can distribute the CENVAT Credit to its units, provided it does not exceed the amount of service tax paid and is not attributable to services used in the manufacture of exempted goods or providing exempted services. The Tribunal cited the case of ECOF Industries Pvt. Ltd., where it was established that the credit distribution should not be restricted to the unit where the service was used, as long as the company is a single entity. 3. Whether the appellant is required to reverse the CENVAT Credit availed on intellectual property service: The Tribunal concluded that since the availment of CENVAT Credit on intellectual property service was not disputed at the ISD/TSL Kolkata's end, the credit cannot be declared inadmissible for the appellant. The appellant availed the credit based on invoices issued by the ISD under Rule 7 of the CENVAT Credit Rules, 2004, making the credit legally admissible. Consequently, the Tribunal held that there was no requirement for the appellant to reverse the CENVAT Credit. Conclusion: The Tribunal found no merit in the impugned orders and set them aside. It allowed the appeals with consequential relief, confirming that the appellant is entitled to take the CENVAT Credit on intellectual property service and is not required to reverse it. The operative part of the order was pronounced in open court.
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