2022 (12) TMI 308 - AT - Central Excise

Appellate tribunal corrects errors, limits disallowance, and allows service tax credits.

M/s. Indo Alusys Industries Ltd. Versus Commissioner of Central Goods & Service Tax, Alwar (Rajasthan)

The appellate tribunal addressed the disallowance of service tax cenvat credit exceeding the amount received from the ISD (Head Office). It corrected ... Disallowance of service tax cenvat credit - disallowance of more than the amount received from the ISD (Head Office) - HELD THAT:- The appellant had taken cenvat credit of Rs. 1,10,11,284/-, out of which the amount disallowed by court below is (Rs.2,06,485/- (-) 16,716) or Rs. 1,89,769/-. That I find that the court below have wrongly disallowed cenvat credit of Rs.10,09,135/-. Thus the impugned order is modified and the amount of disallowance of cenvat credit is restricted to Rs. 1,89,769/-. It is been stated by the learned counsel that this amount has already been deposited with the revenue. Further, I find that the appellant is entitled to cenvat credit on ‘broker services’ and ‘depository service’, as held by the Commissioner(Appeals). The appeal is allowed and the impugned orders are modified - The penalty imposed is also set aside. Issues:1. Disallowance of service tax cenvat credit exceeding the amount received from the ISD (Head Office).Detailed Analysis:Issue 1: Disallowance of service tax cenvat credit exceeding the amount received from the ISD (Head Office)The appellant, a manufacturing unit, received input credit from the ISD (Head Office) on a pro rata basis. A show cause notice was issued, alleging irregular availment of credit exceeding the amount distributed. The adjudication resulted in confirmation of disallowance but with discrepancies in the disallowed amount. The Commissioner (Appeals) observed discrepancies in the disallowed credit and allowed certain credits while disallowing others. The appellant contended that only a specific amount should have been disallowed, not the entire sum. The appellate tribunal found that the lower court had wrongly disallowed a larger credit amount and modified the order to restrict the disallowance to a specific amount. The tribunal also allowed certain credits disallowed by the lower authorities. The appeal was allowed, and the penalty imposed was set aside.In conclusion, the appellate tribunal addressed the issue of disallowance of service tax cenvat credit exceeding the amount received from the ISD (Head Office) by analyzing the discrepancies in the disallowed amount, correcting the error made by the lower court, and allowing certain credits to the appellant. The tribunal modified the order, restricted the disallowance to a specific amount, and set aside the penalty imposed, ultimately allowing the appeal in favor of the appellant.