2019 (10) TMI 1038 - AT - Central Excise

Tribunal Overturns Order, Grants Refund: CENVAT Credit Eligibility Unquestionable at Refund Stage, Procedural Lapses Excused.

M/s. RMC Ready Mix (India) Versus Commissioner Of Central Tax, Belagavi Commissionerate

The Tribunal allowed the appellant's appeal, setting aside the impugned order that rejected the refund claim. The Tribunal concluded that the eligibility ... Refund of CENVAT Credit - rejection on the ground that they should have availed credit only on the strength of invoices issued by the ISD as pointed out by the audit and not otherwise - scope of SCN - HELD THAT:- The SCN was issued only on the ground that the CENVAT credit has been availed on the basis of challan and not on the basis of invoices issued by the ISD. The Commissioner (A) has travelled beyond the show-cause notice and has also questioned the eligibility of credit availed by the appellant and has also remanded the case to the original authority to examine the question of eligibility of credit which in view of the decision of the Hon’ble Supreme Court in the case of Toyo Engineering India Ltd. [2006 (8) TMI 184 - SUPREME COURT] is not tenable in law. Further, it is not in dispute that the services availed by the appellant falls in the definition of ‘input service’ and the said service was availed and service tax was paid and the said service was utilized by the appellant and once this is admitted and undisputed, then, in my view CENVAT credit cannot be denied. Further, the Commissioner (A) himself in para 10 has admitted that certain input services were received by Biakampady Unit and invoices were raised in their name and it appears that Biakampady Unit is entitled to CENVAT credit on the same. Once this finding is recorded, there is no justification for denial of CENVAT credit and consequently, the refund. Appeal allowed - decided in favor of appellant. Issues:- Eligibility of CENVAT credit availed by the appellant- Correctness of rejecting the refund claim by the original authority- Compliance with CENVAT Credit Rules regarding ISD invoicesAnalysis:Issue 1: Eligibility of CENVAT credit availed by the appellantThe appellant, engaged in manufacturing ready mix concrete, availed CENVAT credit at a concessional rate without CENVAT credit initially. Subsequently, they started paying full duty and availing CENVAT credit. The audit revealed discrepancies in availing credit based on service tax paid challans instead of invoices issued by the Input Service Distributor (ISD). The appellant initially repaid the disputed credit but later filed a refund claim. The Asst. Commissioner rejected the refund claim, leading to an appeal before the Commissioner (A) who remanded the case for de novo adjudication. The learned counsel argued that the impugned order was unsustainable as it went beyond the show-cause notice's allegations, challenging the eligibility of CENVAT credit. The Tribunal held that if eligibility is not questioned in a show-cause notice, it cannot be questioned at the refund stage, especially when services qualify as 'input service' under CENVAT Credit Rules.Issue 2: Correctness of rejecting the refund claim by the original authorityThe impugned order rejected the refund claim based on the alleged need to examine the eligibility of the CENVAT credit. However, the eligibility of the credit was not questioned at any stage, and no show-cause notice was issued proposing to recover such credit. The Tribunal emphasized that once the receipt and utilization of input services are established, CENVAT credit cannot be denied. The Commissioner (A) admitted that certain input services were received by a specific unit, implying eligibility for CENVAT credit. The Tribunal reiterated that substantial benefits of CENVAT credit cannot be denied due to procedural lapses, as seen in the present case.Issue 3: Compliance with CENVAT Credit Rules regarding ISD invoicesThe original authority rejected the refund claim citing non-production of ISD invoices. The learned AR argued that as an Input Service Distributor, the appellant must follow the prescribed procedures under CENVAT Credit Rules. However, the Tribunal found that the impugned order went beyond the show-cause notice's grounds and questioned the eligibility of credit improperly. The Tribunal set aside the impugned order, emphasizing that the eligibility of credit cannot be questioned at the appellate stage if not raised in a show-cause notice, especially when the services qualify as 'input service' and have been utilized by the appellant.In conclusion, the Tribunal allowed the appeal of the appellant, setting aside the impugned order and providing consequential relief, if any.