2024 (4) TMI 171 - AT - Service Tax

Tribunal Allows Appeal: Procedural Errors Shouldn't Block Substantial Cenvat Credit Compliance.

M/s. Concast Steel & Power Limited (Formerly known as M/s. SPS Steel & Power Limited) Versus Commissioner of Central Excise & Service Tax, Bhubaneswar-II

The Tribunal set aside the confirmed demand and allowed the appeal, granting consequential relief. It determined that procedural irregularities should not ... Recovery of CENVAT Credit alongwith interest and penalty - CENVAT Credit - duty paying documents - demand on the sole ground that the appellant had not followed the ISD Procedure for passing on the Cenvat Credit by their Head Office - HELD THAT:- There is no allegation in respect of goods on which Cenvat Credit has been taken as having not been received, the utilization within the factory is also not disputed. Admittedly, all the original documents have been produced by the Appellant, before the Adjudicating Authority at a later date. Since the Appellant has clearly claimed that they have only one unit and there was no possibility of taking the Cenvat Credit in different units when the vendor has raised the invoice in the name of head office, there are no reason as to why the said submission was not taken up for consideration by the Adjudicating Authority. The Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD [2016 (2) TMI 183 - GUJARAT HIGH COURT] has held that even in the absence of any ISD Challan in such cases, Cenvat Credit cannot be denied. The CBIC Circular No.1063/2/2018-CX dated 16/02//2018 has accepted the decision of the Hon’ble High Court of Gujarat. The demand is set aside - appeal allowed. Issues involved: Disallowance of Cenvat Credit u/s Rule 14 of Cenvat Credit Rules, 2004 read with proviso to section 73(1) and 75 of the Finance Act, 1994 and imposition of penalty u/s Rule 15 of Cenvat Credit Rules read with section 78 of the Finance Act.The judgment pertains to an appeal challenging the disallowance of Cenvat Credit amounting to Rs.4,88,11,814/- by the Commissioner, Central Excise, Customs & Service Tax, Bhubaneswar-II. The disallowed credit was said to be wrongly taken and utilized by the noticee, along with the imposition of a penalty under relevant provisions. The appellant did not appear despite notice, leading to the appeal being considered with the help of the department's Authorized Representative. The department argued that the noticee had availed service tax credit against documents that did not meet the requirements under the relevant rules, specifically citing non-compliance with Rule 4A(2) of the Rules. The documents were issued before obtaining the necessary registration certificate, leading to the charge of suppression as the information was not disclosed in the ER-1 returns.The adjudicating authority upheld the demand based on the appellant's failure to follow the Input Service Distributor (ISD) Procedure for passing on the Cenvat Credit by their Head Office. However, upon review of the appeal papers and evidence, it was noted that there were no disputes regarding the receipt of goods or their utilization within the factory. The appellant had produced all original documents later, claiming to have only one unit and no possibility of taking credit in different units when invoices were issued in the name of the head office. The Gujarat High Court precedent and CBIC Circular were referenced to support the position that denial of Cenvat Credit in such cases is not justified even in the absence of an ISD Challan.The Bench referred to a previous case and the CBIC Circular to emphasize that procedural irregularities should not lead to the denial of substantial Cenvat credit when necessary records are maintained. It was highlighted that mere procedural infractions should not be grounds for credit denial when there is substantial compliance with statutory procedures. Consequently, the confirmed demand was set aside, and the appeal was allowed with consequential relief, if any, as per law. The judgment concluded by pronouncing the operative part in the open Court.