2016 (9) TMI 536 - AT - Service Tax

Appellant Wins Appeal: Utilization Over Procedural Irregularities

The Tribunal ruled in favor of the appellant, allowing the appeal and providing consequential relief. The decision emphasized considering the actual ... CENVAT credit admissibility - Services received and utilised in factory - Input Service Distributor registration - Procedural irregularity not vitiating creditCENVAT credit admissibility - Services received and utilised in factory - Input Service Distributor registration - Procedural irregularity not vitiating credit - CENVAT credit on services utilised in the appellant's sole factory is admissible though the Head Office (which paid service tax) was not registered as an Input Service Distributor (ISD). - HELD THAT: - The Tribunal found it undisputed that the services were received and utilised in the appellant's only manufacturing unit. The non-registration of the Head Office as an ISD was held to be a procedural irregularity which cannot, by itself, justify denial of CENVAT credit where the service has been actually availed in the factory. The decision relied on precedents applying the principle that credit is permissible when input services are received by the factory even if documents are in the name of the registered office, particularly where there is no allegation that the factory did not receive the services or that there was suppression or wilful misstatement. In view of those authorities and the facts that there is only one manufacturing unit and invoices/supporting documents were submitted to the Department, the Tribunal allowed the appeal on merits and set aside the adjudicating authority's denial of credit.Appeal allowed on merits: CENVAT credit accepted despite Head Office not being registered as ISD; consequential relief granted and connected service-tax appeal disposed of as infructuous.Final Conclusion: The adjudicating authority's confirmation of service-tax demand and denial of CENVAT credit was set aside on the ground that the services were received and utilised in the sole factory and mere non-registration of the Head Office as ISD is a procedural irregularity not warranting denial of credit; the appeal is allowed with consequential relief, and the related service-tax appeal is disposed of as infructuous. Issues:- Admissibility of CENVAT Credit in the factory premises.- Requirement of Headquarters registration as ISD distributor for CENVAT Credit.Admissibility of CENVAT Credit in the factory premises:The appellant, a cement manufacturer with a single factory in Meghalaya, filed appeals against an Order-in-Original confirming a Service Tax demand. The appellant argued that the issue revolved around the admissibility of CENVAT Credit in their factory premises despite Service Tax payments being made by their Headquarters. The appellant cited case laws to support their position that non-registration of the Headquarters as an ISD distributor should not be the basis for rejecting the credit. They claimed that all credit entries were submitted to the Department with refund claims, asserting that there was no intention to take irregular credit. The appellant contended that the demands were time-barred.Requirement of Headquarters registration as ISD distributor for CENVAT Credit:The Revenue argued that the appellant's Headquarters should have been registered as an ISD distributor for them to claim CENVAT Credit. The Revenue strongly defended the order passed by the adjudicating authority. However, the Tribunal observed that the appellant, having only one manufacturing unit, should not be denied CENVAT Credit for services utilized in their factory due to procedural irregularities like the lack of ISD registration for the Headquarters. The Tribunal referenced the case law of Bloom Dekor Ltd., emphasizing that if services are received and utilized in the factory, procedural irregularities should not obstruct CENVAT Credit. The Tribunal allowed the appeal filed by the appellant, stating that the time bar aspect of the demand was not deliberated upon as the issue was decided in favor of the appellant on merits.In conclusion, the Tribunal ruled in favor of the appellant, allowing the appeal and providing consequential relief. The Tribunal's decision highlighted the importance of considering the actual utilization of services in the factory premises rather than procedural irregularities related to Headquarters registration for ISD distribution when determining the admissibility of CENVAT Credit.