Tribunal allows Cenvat credit appeal, citing GAR-7 challan eligibility. Demand rejected on merit and limitation. Procedural lapses don't invalidate credit.

The tribunal allowed the appeal, holding that the appellant can avail Cenvat credit based on GAR-7 challan. The demand was deemed unsustainable on both merit and limitation grounds. The tribunal emphasized that procedural lapses, such as not obtaining ISD registration, do not invalidate the entitlement to Cenvat credit. The absence of allegations of fraud, willful misstatement, or suppression of facts in the show cause notice or impugned order was noted. The dropping of the demand on limitation by the adjudicating authority was deemed final, leading to the appeal's success.

---

---

Issues Involved:
1. Validity of GAR-7 challan for availing Cenvat credit.
2. Requirement of ISD registration and issuance of ISD invoice.
3. Allegations of fraud, willful misstatement, or suppression of facts.
4. Limitation period for raising demand.

Summary:

Validity of GAR-7 Challan for Availing Cenvat Credit:
The appellant received various services and paid service tax under the reverse charge mechanism through GAR-7 challan. The department argued that GAR-7 challan is not a prescribed document for availing Cenvat credit under Rule 7 of Cenvat Credit Rules, 2004. However, the tribunal found that since the service was received by the appellant and the service tax was undisputedly paid, the credit cannot be denied. The tribunal further noted that GAR-7 challan is a prescribed document under Rule 7 for payment of service tax under reverse charge mechanism, and thus, the appellant is entitled to avail Cenvat credit on this basis.

Requirement of ISD Registration and Issuance of ISD Invoice:
The department contended that the head office should have obtained ISD registration and issued ISD invoices for availing Cenvat credit. The tribunal observed that this specific allegation was not made in the show cause notice, making any order on this issue untenable. Additionally, since the entire service was received and used by the appellant's unit, there was no need for an ISD invoice. The tribunal referenced several judgments, including Mafatlal Industries Ltd and CCE vs. Dashion Ltd, which support the view that procedural lapses like not obtaining ISD registration do not invalidate the entitlement to Cenvat credit.

Allegations of Fraud, Willful Misstatement, or Suppression of Facts:
The appellant argued that there were no allegations of fraud, willful misstatement, or suppression of facts in the show cause notice or the impugned order. The tribunal agreed, noting the absence of any such allegations and thus found no basis for denying Cenvat credit on these grounds.

Limitation Period for Raising Demand:
The adjudicating authority had dropped the demand on both merit and limitation. The department did not raise any grounds on limitation in their appeal before the Commissioner (Appeals), nor did the Commissioner address the issue of limitation. The tribunal concluded that the dropping of the demand on limitation by the adjudicating authority had attained finality, making the demand unsustainable on the grounds of time bar.

Conclusion:
The tribunal set aside the impugned order and allowed the appeal, stating that the appellant is entitled to avail Cenvat credit based on GAR-7 challan and that the demand is not maintainable on both merit and limitation grounds.

(Pronounced in the open court on 02.05.2023)

---