2025 (7) TMI 1541

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....stributing CENVAT credit. 2.1. During the course of audit of the records of the Appellant, the following discrepancies were noticed: Sl. No. Issue Amount in Dispute (Rs.) 1. Short payment of service tax due to incorrect deduction of R&D Cess from taxable value 5,58,786 2. Short payment of service tax under RCM on GTA for the period 2010-11 and 2011-12 33,419 3. CENVAT credit on ineligible invoice [Appellant Company had total 5 ISD registrations. Each registration accumulated and distributed credit region wise. HO located in Eastern region distributed the credit on the invoices addressed to ISD registrations located in other than east zone] 4,71,71,118   TOTAL 4,77,63,323 2.2. After being pointed out, the Appellant rectified the following mistakes: • Service tax of Rs. 5,58,786/- short paid was paid on 30-07-2014 along with appropriate interest, • Out of alleged Rs. 33,419/- proposed by the department, an amount of Rs. 771/- on GTA services pertaining to the period FY 10-11 was accepted and paid on 07-07-2014 along with appropriate interest. 2.3. Subsequently a SCN dated 20-10-2014 was issued demand....

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....ound that the invoices do not pertain to the jurisdiction of the East Zone. In this regard, the Appellant submits that there is no territorial restriction placed upon the Appellant by the law. Therefore, availment and distribution of credit by an ISD is not limited to a territorial jurisdiction. In any case, the HO ISD had no jurisdictional limitation of regarding availment of credit only on invoices pertaining to East Zone. For East Zone, there was a separate ISD registration. Therefore, the understanding of the department regarding the practice of the Appellant for distribution of credit is not correct. Therefore, the basis of confirmation of demand is erroneous. 3.3. The appellant further submits that after making payment of the invoices from the HO, if such invoices were sent to the respective ISD registrations to whom the invoices are addressed to, then the disputed credit would have been distributed from the other ISD registrations in the same manner to the same locations as has been presently done. Therefore, the entire exercise is revenue neutral. Reliance is placed on the following rulings wherein it has been held that when situation is revenue neutral demand is not sus....

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.....R. 861 (Tri. - Del.) 3.9. Further, receipt and use of the input services by the units of the Appellant is also not disputed. It is also to be noted that payment of the input service invoices have been made by the Appellant HO which has never been disputed. It is submitted that when the receipt and utilization is not in dispute, CENVAT Credit cannot be denied merely on procedural grounds. Reliance in this regard is placed on the following rulings: • M/s. Ripley & Co. Limited Versus Commissioner of Central Excise, Kolkata, 2024 (11) TMI 1131 - CESTAT KOLKATA • CCE, Ahmedabad, vs. Dashion Ltd., 2016 (41) S.T.R. 884 (Guj.), 3.10. In light of the above, it is submitted that denial of CENVAT credit of Rs. 4,71,71,118 /- cannot be sustained. 4. In respect of the demand of service tax of Rs. 32,648/- confirmed on GTA service, the appellant submitted that there is no short payment since demand has been raised on the basis ledger, which is maintained on accrual basis, but service tax is discharged on payment basis. It was also submitted that the actual difference would be Rs. 13,281/- which was discharged in the subsequent years when actual payment was mad....

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....e of Commissioner, Central Tax, Pune-I Commissionerate vs. M/s. Oerlikon Balzers Coating India P. Ltd., 2019 (366) E.L.T. 624 (Bom.), wherein it has been held that when situation is revenue neutral demand is not sustainable. The relevant part of the said decision is reproduced below: "...................10. In any event, the Tribunal, on facts found that the entire exercise would be revenue neutral. This is so as the distribution of Cenvat credit to the various units would result lesser service tax being paid by cash on their activity of coating as they would have utilized the Cenvat credit available for distribution. 11. In this view of the matter, the question of law as proposed does not give rise to any substantial question of law as the entire exercise would be revenue neutral. Thus, making the entire exercise academic. Therefore, the question is not entertained.........." 8.2. We further observe that availment of CENVAT credit based on invoices addressed to other ISD registration of the Company is a mere procedural infirmity on which substantive benefit of CENVAT credit cannot be denied. We also observe that as per Rule 9(2) of the CENVAT Credit Rules, 200....