2011 (4) TMI 406 - AT - Service Tax

CENVAT credit allowed for pre-registration inputs and missing registration on invoices under CENVAT Credit Rules, 2004; refunds upheld

CESTAT, Mumbai held that the appellant, a software service exporter, was entitled to CENVAT credit on inputs and input services received prior to ... Entitlement to CENVAT credit on inputs/input services prior to their registration with the Central Excise department - provisions of Rule 5 of the CENVAT Credit Rules, 2004 - software development and support services used in exporting services before their registration with the excise department - denial of CENVAT credit on account of not indicating registration number of the input service provider on the invoices - service tax paid on repair of coffee machine - HELD THAT:- There is no provision in the CENVAT Credit Rules specifically prohibiting availment of CENVAT credit in respect of input/input service which have been received prior to their registration as an output service provider. So long as they can establish that they have borne the incidence of duty on the inputs/input services and they have utilized the same in providing taxable output services, they are eligible for the tax credit on the inputs/input services. Denial of CENVAT credit on account of not indicating registration number of the input service provider on the invoices - This issue also has been settled by the decision of this Tribunal in the case of Secure Meters Ltd.[2010 (1) TMI 284 - CESTAT, NEW DELHI]. In the said order, it was held that credit cannot be denied on the basis of invoices wherein registration numbers were not mentioned so long as the payment of tax was established and the said input service was utilized in the provisions of output service. In the instant case as can be seen from the order of the adjudicating authority the receipt of the service, its utilization and payment for the service are clearly established from the records maintained by the party and produced before the adjudicating authority. Therefore, in deference to the judgment cited above, I am of the view that the appellant is eligible for the amount of service tax credit and consequent refund in respect thereof. Eigibility to CENVAT Credit of the service tax paid on repair of coffee machine - Repair of the coffee vending machine is an input service in or in relation to the output service provided by the appellant and, therefore, they are rightly entitled to the service tax paid on the repair of the coffee vending machine as it is an eligible input service. Appeals allowed. Issues:1. Entitlement to CENVAT credit on input services used prior to registration.2. Denial of CENVAT credit due to missing registration number on invoices of input services.3. Eligibility of CENVAT credit for service tax paid on repair of coffee machine.Analysis:Issue 1: Entitlement to CENVAT credit on input services used prior to registration:The appellant, a software services provider, sought a refund of input service tax credit for services used in exporting services before their registration with the excise department. The claim was rejected based on the timing of registration. The appellant argued that there is no specific provision prohibiting credit before registration as long as the duty was borne and services were used in output services. The Tribunal cited a previous order supporting the appellant's position, emphasizing that credit cannot be denied for the period before registration. The Tribunal agreed with this view, allowing the appellant's claim.Issue 2: Denial of CENVAT credit due to missing registration number on invoices:The appellant's claim was partially rejected due to missing registration numbers on service provider invoices. However, the appellant contended that as per Rule 9(2) of the CENVAT Credit Rules, if the service has been accounted for and utilized, credit should be allowed even with missing particulars. The Tribunal referred to a previous case where credit was allowed despite missing registration numbers, emphasizing that as long as payment and utilization were established, credit should be granted. The Tribunal found in favor of the appellant, allowing the service tax credit and subsequent refund.Issue 3: Eligibility of CENVAT credit for service tax paid on repair of coffee machine:The appellant claimed CENVAT credit for service tax paid on repairing a coffee machine used to provide coffee to employees. They argued that this service was essential for their output service and thus eligible for credit. The Tribunal agreed with the appellant, stating that the repair of the coffee machine was an input service in relation to the output service provided. Consequently, the Tribunal upheld the appellant's entitlement to the service tax credit for the repair of the coffee machine.In conclusion, the Tribunal allowed the appeals filed by the appellant, granting them relief in all three issues discussed in the judgment.