Tribunal rules denial of credit on capital goods unjustified under Cenvat Credit Rules.

The Tribunal held that the denial of credit on capital goods due to discrepancies in invoices was unjustified. It found no evidence of ineligible goods or diversion to a third party, emphasizing the goods were installed and used for taxable services. The Tribunal noted the appellant's centralized registration and ruled that denial based on technical grounds was unwarranted. Citing a similar case, it set aside the denial, allowing the appeal and rejecting the Revenue's recovery claim under the Cenvat Credit Rules.

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Issues:
Dispute over credit on capital goods availed by the appellants.

Analysis:
The dispute in the present appeal revolves around the denial of credit on capital goods by the Revenue due to discrepancies in the invoices mentioning BSNL, Puducherry Office, while the goods were dispatched to various exchanges and installations of BSNL in different locations at Pondicherry. The Tribunal referred to a similar case, BSNL Vs. CCE, Jaipur, where it was observed that there was no dispute regarding the eligibility of the appellant for Cenvat credit on the capital goods. The dispute arose because the goods were cleared to various premises for installation, even though the credit was taken indicating the registered premises. The Revenue sought to recover the credit availed on these goods under Rule 3(5) of the Cenvat Credit Rules, 2004. However, the Tribunal found no legal justification for such recovery as there was no evidence of availing credit on ineligible goods or diversion to a third party. The capital goods were installed and utilized by the appellant for taxable services in different locations, and the objection by the Revenue was deemed to be on technical grounds only.

The Tribunal highlighted that the Revenue's presumption that all capital goods were received at a single registered premises and then cleared to unregistered premises lacked support. It was noted that the appellant had centralized registration at Jaipur, and the equipment and capital goods were intended for installation in various distant locations from Jaipur. The Tribunal emphasized that in the absence of any diversion of goods or clearance to a third party, the Revenue was not justified in denying credit on goods that were installed and utilized for providing taxable output services. The Tribunal also pointed out that the proviso to sub-Rule (5) of Rule 3 of Cenvat Credit Rules, 2004 exempted the provider of output services from paying the credit amount when capital goods were removed outside the premises. Considering that the appellant was paying service tax on services rendered from various premises using the credited capital goods, the Tribunal concluded that there was no basis for demanding or recovering the credit availed by the appellant on such goods.

In light of the similarities with the previous case and the lack of justification for denying credit, the Tribunal held that the denial of credit was not justified. Consequently, the impugned order was set aside, and the appeal was allowed.

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