Input service distributor registration is only a procedural defect; outward transportation credit dispute was remanded for fresh adjudication.

Non-registration as an input service distributor, before the relevant amendment to Rule 7 of the Cenvat Credit Rules, was treated as a procedural irregularity and a curable defect, so it did not by itself justify denial of otherwise admissible input service credit. The denial on that ground was set aside. The dispute on credit relating to outward transportation turned on the nature, destination and supporting documents for the services claimed, and because the factual record was incomplete the matter was remanded for de novo adjudication with an opportunity to produce evidence.

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Issues: (i) Whether non-registration as an input service distributor while distributing input service credit disentitled the assessee from availing the credit; (ii) Whether the dispute relating to credit on outward transportation required remand for fresh adjudication.

Issue (i): Whether non-registration as an input service distributor while distributing input service credit disentitled the assessee from availing the credit.

Analysis: The dispute concerned distribution of credit before the amendment of Rule 7 of the Cenvat Credit Rules, 2004. The defect relied upon by the department was only non-registration as an input service distributor. The decision follows the settled view that such non-registration is a procedural irregularity and a curable defect, and by itself does not justify denial of substantive credit when the entitlement otherwise exists.

Conclusion: The denial of input service credit on this ground was set aside and the issue was decided in favour of the assessee.

Issue (ii): Whether the dispute relating to credit on outward transportation required remand for fresh adjudication.

Analysis: The claim regarding outward transportation depended on the nature and destination of the services and the supporting documents. In view of the assessee's request and the lack of a complete factual examination on the revised case now put forward, the matter required reconsideration by the original authority. The assessee was also to be given an opportunity to produce documents and evidence in support of eligibility.

Conclusion: The matter was remanded to the original authority for de novo consideration.

Final Conclusion: The assessee succeeded on the issue of denial of credit for want of input service distributor registration, while the outward freight credit dispute was sent back for fresh adjudication.

Ratio Decidendi: Non-registration as an input service distributor, prior to the relevant amendment, is only a procedural defect and does not by itself bar availment of otherwise admissible credit.

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