2023 (5) TMI 1131 - AT - Service Tax

Tribunal dismisses Department's appeals on CENVAT Credit, upholding Commissioner's decision.

The Tribunal upheld the Commissioner (Appeals)' decision in the case, dismissing the Department's appeals on both issues raised. The Department's ... Refund of unutilized CENVAT Credit under Rule 5 - Relevant date for Section 11B - date of receipt of payment / FIRC - Registration of premises not a pre condition for availing input service credit - Premature availment of CENVAT credit is a procedural lapse not affecting substantive entitlement - Rule 4(7) CENVAT Credit Rules - credit admissible on or after payment of value of input serviceRegistration of premises not a pre condition for availing input service credit - Refund of unutilized CENVAT Credit under Rule 5 - Denial of CENVAT credit and refund on the ground of non registration of premises. - HELD THAT: - The Tribunal followed the binding decisions of the Madras High Court and coordinate benches of the Tribunal which held that the CENVAT Credit Rules do not prescribe registration of premises as a mandatory condition for availing input service credit and that refund of accumulated/unutilized CENVAT credit cannot be denied for want of registration. Applying those authorities to the facts, the Tribunal held that denial of refund on account of non registration of premises was not justified and set aside that portion of the original order. The admitted position that substantive conditions for credit (receipt of service and discharge of tax) were satisfied weighed against treating non registration as a bar to refund. [Paras 12]Denial of CENVAT credit/refund for non registration of premises is not justified; the impugned order is set aside on this point.Premature availment of CENVAT credit is a procedural lapse not affecting substantive entitlement - Rule 4(7) CENVAT Credit Rules - credit admissible on or after payment of value of input service - Whether CENVAT credit availed before actual payment of service tax (premature availment) can be denied when substantive conditions for credit are satisfied. - HELD THAT: - The Tribunal acknowledged that Rule 4(7) provides that credit shall be allowed on or after the day payment of the value of the input service and service tax is made, but observed that where there is no dispute on substantive eligibility and the tax was ultimately paid, taking credit a few days earlier is a procedural lapse. Relying on earlier Tribunal decisions, the Tribunal held that such premature availment, accepted by the assessee as a procedural lapse, does not defeat the substantive right to credit or refund. The Tribunal also noted that computation of Net CENVAT Credit for refund purposes contemplates processing time and that the credits in question would be usable by the time refund is sanctioned. [Paras 13, 14]Premature availment of credit was a procedural lapse only and cannot be a ground to deny the credit/refund where substantive conditions are met.Final Conclusion: Applying the foregoing principles, the Tribunal upheld the Commissioner (Appeals) on the admitted issue as to the relevant date under Section 11B and rejected the Department's grounds on non registration and premature availment; the departmental appeals are dismissed and the impugned orders are left undisturbed. Issues Involved:1. Eligibility to avail CENVAT Credit without registration of premises.2. Availment of CENVAT Credit on inputs or input services before payment of tax.Summary:1. Eligibility to Avail CENVAT Credit Without Registration of Premises:The respondent, M/s. Ad2Pro Global Creative Solutions Pvt. Ltd., formerly known as M/s. Ad2pro Media Solutions Pvt. Ltd., filed refund claims under Rule 5 of the CENVAT Credit Rules, 2004. The Assistant Commissioner of Service Tax partially rejected these claims due to non-registration of premises. The Commissioner (Appeals) allowed the appeals, stating that the date of receipt of payment in convertible foreign exchange is the 'relevant date' under Section 11B of the Central Excise Act, 1944. The Department contended that registration is a prerequisite for availing CENVAT Credit. However, the Tribunal referenced multiple judgments, including the Hon'ble Madras High Court in Commissioner of Service Tax-III, Chennai v. CESTAT, Chennai & Scionspire Consulting Services (India) Pvt. Ltd. [2017 (3) G.S.T.L. 45 (Mad.)], which held that absence of registration does not justify denial of CENVAT Credit. Consequently, the Tribunal upheld the Commissioner (Appeals)' decision, dismissing the Department's appeal on this issue.2. Availment of CENVAT Credit on Inputs or Input Services Before Payment of Tax:The respondent admitted to availing CENVAT Credit of Rs.18,169/- prior to the payment of tax, considering it a procedural lapse. The Department argued that credit should be taken only after tax payment, as per Rule 4(7) of the CENVAT Credit Rules, 2004. The Tribunal noted that the substantive right to CENVAT Credit cannot be denied if conditions like payment of tax and receipt of service are satisfied. Citing cases such as Commissioner of Central Excise, Surat-II v. White En-All Pvt. Ltd. [2004 (175) E.L.T. 119 (Tri. - Mumbai)], the Tribunal concluded that premature availment of credit is a procedural lapse and does not invalidate the substantive right to credit. Thus, the Tribunal dismissed the Department's appeal on this issue as well.Conclusion:The Tribunal found no merit in the Department's appeals on both issues and upheld the Commissioner (Appeals)' decision. The three appeals filed by the Department were dismissed as not maintainable.