2018 (10) TMI 1543 - AT - Central Excise

ISD Invoices Valid for Cenvat Credit: Tribunal Decision

Commissioner of Central Excise, Pune-I Versus Mahindra & Mahindra Ltd.

The Tribunal upheld the Commissioner's order, ruling that invoices issued by the assessee's head office, registered as an Input Service Distributor (ISD), ... CENVAT Credit - duty paying invoices - input services availed by their head office located at Kandivali, Mumbai, which was registered as ISD under Rule 4(A) of the Service Tax Rules. Whether the invoices issued by the assessee’s head office, which is also registered as ISD, can be held to be eligible cenvatable invoices, even if the same relate to various services received at the head office and is not connected with the assessee’s manufacturing unit? Held that:- The issue is no more res integra and stands settled by the Tribunal’s decision in the case of ECOF Industries Pvt. Ltd. vs. CCE, Bangalore [2009 (10) TMI 171 - CESTAT, BANGALORE], where it was held that the distribution of credit by input service distributor to a unit where the services were not availed, cannot be question in terms of Rule 7 of the Cenvat Credit Rules, 2004 - Admittedly, in the present case, the assessee’s final product is neither exempted nor the credit stands availed in excess of the tax paid. Credit cannot be denied - appeal dismissed - decided against Revenue. Issues:Whether the invoices issued by the assessee's head office, registered as ISD, are eligible cenvatable invoices if they relate to services not connected with the manufacturing unit.Analysis:The case involved a dispute regarding the demand of duty against the respondents for availing cenvat credit of service tax paid on various input services by their head office registered as ISD. The Revenue initiated proceedings against the respondents, alleging that the services availed were not connected to the manufacturing activities. The Commissioner observed that input service credit availed by ISD can be distributed to manufacturing units or units providing output services, irrespective of whether the services are used in relation to manufacturing. The Commissioner also noted that the allegation of suppression of facts by the Assessee was not sustained. The Commissioner's order was challenged before the Tribunal.The main issue before the Tribunal was whether the invoices issued by the assessee's head office, registered as ISD, could be considered eligible cenvatable invoices if they were not connected to the manufacturing unit. The Tribunal referred to a previous decision in the case of ECOF Industries Pvt. Ltd. vs. CCE, Bangalore, which held that the distribution of credit by an input service distributor to a unit where services were not availed cannot be questioned as long as the credit does not exceed the tax paid and is not attributable to exempted goods or services. Since the assessee's final product was not exempted, and the credit did not exceed the tax paid, the Tribunal found no reason to interfere with the Commissioner's order. The Tribunal rejected the appeal filed by the Revenue, upholding the decision of the Commissioner.In conclusion, the Tribunal upheld the Commissioner's order, emphasizing that the distribution of credit by an ISD to a unit not availing services cannot be questioned under the Cenvat Credit Rules as long as certain conditions are met. The Tribunal found no justification to interfere in the impugned order and rejected the Revenue's appeal.