2022 (11) TMI 1144 - AT - Central Excise

Tribunal emphasizes ISD responsibility to verify credit eligibility, sets aside Commissioner's order.

M/s. GP Petroleums Ltd. Versus Commissioner of CGST & Central Excise, Palghar - Mumbai

The Tribunal ruled in favor of the appellant, emphasizing the ISD's responsibility to prove credit eligibility and the limitations on audit procedures. ... Wrongful availment of service tax credit - credit availed against the invoices issued by Input Service Distributor - period May, 2016 to March, 2017 - HELD THAT:- The main reason for initiating the current proceedings against the appellant is the Order-in-Original dated 23.12.2016 in appellants own case for the earlier period i.e. March, 2013 to April, 2015 on the same issue - the said case was challenged by appellant itself in M/S G.P. PETROLEUM LTD. VERSUS CCE & ST, RAIGAD [2019 (3) TMI 33 - CESTAT MUMBAI] where it was held that The legality or admissibility of credit can only be question to the ISD by its jurisdictional authority. In view of the aforesaid decision of the Tribunal, since the basis of the initiation of the current proceedings by the department for the period in issue itself has gone, the current proceedings can’t survive - appeal allowed. Issues:Availment of Service Tax credit against invoices issued by Input Service Distributor (ISD) for the period from May, 2016 to March, 2017.Analysis:The appellant challenged the order rejecting their appeal regarding the availment of Service Tax credit against ISD invoices. The Revenue alleged that the appellant wrongly availed the credit, leading to a show cause notice for recovery. The key issue revolved around the appellant's eligibility for the credit, as previous proceedings disallowed Cenvat credit under Section 11A of the Act for a different period. The Commissioner noted the appellant's defiance in paying the duty despite previous adverse decisions.In a related case, the Tribunal allowed the appellant's appeal for the period of March, 2013 to April, 2015, emphasizing the ISD's responsibility to prove credit eligibility. The appellant argued based on CENVAT Credit Rules and previous judgments, challenging the jurisdiction of the Deputy Commissioner and the limitation period for the show cause notice. The Tribunal found in favor of the appellant, highlighting the ISD's duty to establish credit eligibility and the lack of jurisdiction of the Additional Commissioner (Audit) to issue notices.The Tribunal's decision emphasized the ISD's responsibility to prove credit eligibility and the limitations on audit procedures. It noted that the audit process aims to ensure correct taxation without implying malafide intentions on the appellant's part. The Tribunal set aside the Commissioner's order, ruling in favor of the appellant due to the ISD's obligation to verify credit eligibility.In light of the Tribunal's decision in the related case, the current proceedings were deemed unsustainable as the basis for initiation was no longer valid. Consequently, the impugned order was set aside, and the appellant's appeal was allowed, providing any necessary relief as per the law.This detailed analysis showcases the complex legal issues surrounding the availment of Service Tax credit against ISD invoices and the importance of establishing credit eligibility, jurisdictional boundaries in audit procedures, and the impact of previous legal decisions on current proceedings.