2022 (11) TMI 747 - AT - Central Excise

Tribunal Upholds Appellant's CENVAT Credit Entitlement despite Procedural Lapses

The Tribunal allowed the appeal, upholding the appellant's entitlement to CENVAT credit. It held that the statement transferring credit to Plant-V was ... CENVAT Credit - valid documents or not - photocopy of invoices issued by various service providers to the United Phosphorus Limited, Mumbai, (UPL) - transfer of service tax credit by UPL, Mumbai, as an ISD to the Appellant without obtaining registration - Rule 9 of the Cenvat Credit Rules, 2004 - HELD THAT:- In the present case the Cenvat Credit was denied on two count:-1) That the appellant have availed the Cenvat Credit on the strength of photocopy of invoices of various service providers which is in favour of appellant’s Head Office. Secondly, the Head Office was not registered as an ISD, therefore the Head Office could not have distributed credit under a cover of invoice in terms of Rule 4A (1)(i) of the Rules. Whether the appellant has correctly availed the credit on the strength of photocopy? - credit was denied only on the presumption that there is a possibility of availing the credit by other unit of the appellant - HELD THAT:- Firstly, there is no charge in the show cause notice to these effects. Secondly, without any evidence such serious allegation cannot be accepted. It is further observed that in respect to photocopy of invoices, the same is not relevant for allowing the credit to the appellant, as the Head Office has distributed the credit to the appellant unit. In this case if there is any objection to be raised, it should be by the Jurisdiction Officer of the Head Office which is not the case here - the appellant have taken credit in respect of the distributed input credit by the Head Office on the basis of a statement. Since, there is a large number of services and invoices involved, the same was in co-operated the statement, the statement contains all the details as required under Rule 4A, therefore, on the basis of such statement credit is admissible. There is no dispute about the payment of Cenvat Credit on the input service received and credit thereof was distributed by the Head Office. It has not been established by the department that the credit which distributed on the invoices was distributed to more than one manufacturing unit of the appellant, as the same was neither a charge in the show cause notice nor evident in the impugned order - it is held that ISD registration is a procedural requirement, therefore, even if there is a lapse of non-obtaining the registration for some period, credit passed on by the Head Office cannot be denied to the appellant. The appellant are entitled for the Cenvat Credit, hence, the impugned order denying the Cenvat Credit is set aside - Appeal allowed. Issues Involved:(i) Validity of CENVAT Credit based on photocopies of invoices under Rule 9 of CCR.(ii) Admissibility of service tax credit transfer without ISD registration under the Rules.Analysis:Issue (i):The appellant, engaged in manufacturing, availed CENVAT credit on duty paid items and service tax during 2004-2005. The Head Office transferred credit to Plant-V using a statement before ISD registration was mandatory. The dispute arose when the revenue alleged inadmissible credit availed on photocopies of invoices. The original authority denied credit based on lack of valid documents and ISD registration. The appellant contended that the statement contained necessary details per Rule 4A and was a valid document under Rule 9. They argued procedural lapses should not deny substantial benefits like CENVAT credit. The Tribunal agreed, noting the absence of evidence supporting revenue's allegations. It held that the statement was valid, containing required details, and procedural lapses should not hinder credit entitlement.Issue (ii):Regarding ISD registration, the revenue argued non-registration of the Head Office as an ISD invalidated credit transfer. The appellant cited judgments emphasizing that lack of ISD registration should not disentitle credit availing. The Tribunal concurred, holding that ISD registration is procedural and not obtaining it for a period should not deny credit passed on by the Head Office. Relying on precedent judgments, the Tribunal allowed the appeal, setting aside the order denying CENVAT credit.The Tribunal's decision, supported by legal principles and precedents, upheld the appellant's entitlement to CENVAT credit, emphasizing procedural compliance and substantial benefit considerations.