2015 (1) TMI 350 - AT - Service Tax

Tribunal grants CENVAT credit, stresses timely justice, balances procedural and substantive laws

M/s. PRICOL Ltd. Versus CCE, Coimbatore

The Tribunal allowed the appellant's claim for CENVAT credit under Rule 2(m) as it was found attributable to its manufacturing activity and emphasized the ... CENVAT Credit - credit allocated to it by its head office as input service distributor - ISDs was not registered - held that:- Perusal of the substantial law in Rule 2(m) leads to the conclusion that appellant was entitled to the credit for no finding on the genuinity of the credit availed ad such credit allocated by the ISD. - As a result of which the substantial relief granted by rule making authority, deprived the appellant from its genuine claim of credit due to delay in registration process prescribed. We may state that procedure is not tyrant of the law but is servant thereof and justice cannot be denied for reasons attributable to the procedural law. Hon’ble Supreme Court in the case of Sambhaji Vs. Gangabai - [2008 (11) TMI 393 - SUPREME COURT OF INDIA] held that procedural law should not dominate over the substantial law to deprive the litigant from the process of justice. Therefore, the procedural law deserves to be construed as directory instead of mandatory for its application. - Decided in favor of assessee. Credit on the basis of xerox copies of invoices - Held that:- The appeal on the CENVAT claimed on the basis of xerox copies of invoice is dismissed. However, so far as penalty in respect of denial of credit of ₹ 4,74,233/- on such count is concerned, learned adjudicating authority has not dealt with the same as to whether such a penalty to its extreme dose is leviable. - Penalty waived. - Decided partly in favour of assesse. CHA service - held that:- So far as the credit availed on CHA service is concerned, there is no material fact and evidence on record to rule out the availment of such a service by the manufacturer-appellant. Therefore, in absence of disintegration between the service availed for use in the activity carried out by appellant, credit of ₹ 6,83,349/-is admissible. - Decided in favor of assessee. Issues:CENVAT credit allocation under Rule 2(m) r/w Rule 7 of CENVAT Credit Rules, 2004; Credit availed on xerox copies of invoices; Denial of credit on CHA service.Analysis:1. CENVAT Credit Allocation under Rule 2(m):The appellant claimed CENVAT credit of &8377; 1,03,90,046/- allocated by its head office as an input service distributor (ISD). The appellant argued that Rule 2(m) allowed ISDs to allocate credit to sister units before the registration provision came into force. The Tribunal found that the appellant was entitled to the credit as there was no disintegration between the appellant and its head office, and the credit was attributable to its manufacturing activity. The Tribunal emphasized that justice cannot be denied due to procedural delays, citing the Supreme Court's view that procedural law should not dominate over substantial law. Consequently, the Tribunal allowed the credit.2. Credit Availed on Xerox Copies of Invoices:The appellant took credit of &8377; 4,74,233/- based on xerox copies of invoices. The appellant did not contest the demand but sought relief from the penalty. The Tribunal dismissed the appeal regarding this credit but noted that the adjudicating authority did not determine the penalty amount under Rule 15(4) of CENVAT Credit Rules. Therefore, no penalty was imposed on this count.3. Denial of Credit on CHA Service:The appellant claimed credit of &8377; 6,83,349/- for CHA services availed. The Revenue contended that this credit should be disallowed. However, the Tribunal found no evidence ruling out the appellant's use of CHA services for its activities. As there was no disintegration between the service availed and the appellant's activities, the Tribunal allowed this credit.In conclusion, the appeal succeeded partially, with the Tribunal allowing the CENVAT credit under Rule 2(m) while dismissing the appeal on credit from xerox copies of invoices. The Tribunal also permitted the credit for CHA services, as there was no evidence to refute the appellant's claim. The judgment highlighted the importance of balancing procedural and substantial laws to ensure justice is served.