2012 (3) TMI 367 - AT - Central Excise

Tribunal Upholds Genuine Credit Transaction, Prevents Double Claiming

HINDUSTAN ZINC LTD. Versus COMMISSIONER OF CUS. & C. EX., JAIPUR-II

The Tribunal allowed the appeal, recognizing the genuine nature of the transaction and the need to prevent double claiming of credit. It emphasized that ... Denial OF cenvat credit - invoices in respect of services received were in the name of head office and head office distributed the credit without being a registered service distributor allowed its units to enjoy the Cenvat credit - Held that:- Identity of the head office and Smelter unit remained unquestioned. So also the service received by the Debari Smelter unit under invoices showing the head office address remained unquestioned. Only because the invoices carry name of the head office, denial of Cenvat credit shall defeat the object of avoiding cascading affect. No doubt, input service distribution scheme was introduced to enable central agencies to distribute credit available to its units under certain procedures. But at the initial stage of implementation of law, difficulties were experienced because of the Registration procedure and certain technical procedures involved. When the identity of service recipient and provider as well as genuinety of transaction is not in doubt there may not be difficulty to allow Cenvat credit - Decided in favour of assessee. Issues:1. Denial of Cenvat credit due to invoices in the name of head office.2. Compliance with input service distribution scheme.3. Identity of head office and smelter unit.4. Genuineness of service availed and identity of service provider.Analysis:1. The issue at hand involves the denial of Cenvat credit due to certain invoices being in the name of the head office, which led to the denial of credit to the units. The counsel for the Appellant argued that the identity of the head office and its smelter unit was established, and the credit distribution was done without being a registered service distributor. The counsel emphasized that the service availed and the identity of the service provider were not in question. The Revenue also agreed that a codified procedure for input credit distribution should have been followed. The Tribunal noted that denying Cenvat credit based solely on the name on the invoices would defeat the purpose of avoiding cascading effects. Ultimately, the Tribunal allowed the appeal, recognizing the genuine nature of the transaction and the need to prevent double claiming of credit.2. Regarding compliance with the input service distribution scheme, it was acknowledged that difficulties were faced during the initial implementation of the law due to registration procedures and technical complexities. Despite these challenges, the Tribunal emphasized that when the identity of the service recipient and provider, along with the genuineness of the transaction, are not in doubt, Cenvat credit should not be denied. In this case, the Tribunal waived the pre-deposit and disposed of the appeal, highlighting the importance of ensuring that legitimate credits are not unjustly withheld due to procedural issues.3. The Tribunal underscored the unquestioned identity of the head office and the smelter unit, as well as the service received by the smelter unit under invoices bearing the head office address. Recognizing that the denial of Cenvat credit in such circumstances would defeat the purpose of preventing cascading effects, the Tribunal emphasized the need to focus on the substance of the transaction rather than technicalities. By allowing the Cenvat credit in this case, the Tribunal upheld the principle of facilitating legitimate credit distribution within the framework of the law.4. The issue of the genuineness of the service availed and the identity of the service provider was crucial in this judgment. The Tribunal highlighted that when there is no doubt regarding the authenticity of the transaction and the parties involved, denying Cenvat credit would be unjust and contrary to the objectives of the credit distribution scheme. By recognizing the validity of the transaction and ensuring that the credit was rightfully availed by the smelter unit, the Tribunal upheld the principles of fairness and efficiency in the application of Cenvat credit regulations.