Eligibility of Cenvat credit of input service on the basis of invoice issued by Input Service Distributor (ISD)

PJ/Case Law /2016-17/3338

Case:-GULF OIL CORPORATION LTD. Versus COMMISSIONER OF C. EX. & SERVICE TAX, VAPI
Citation:-2016 (43) S.T.R. 220 (Tri. - Ahmd.)
Brief facts:-The relevant facts of the case, in brief, are that the Appellants were engaged in the manufacture of Lubricant Oils, Brake Fluids, Additives and Coolants classifiable under Chapters 27 and 38 of the Schedule to the Central Excise Tariff Act, 1985. The Adjudicating authority disallowed the Cenvat credit of Rs. 27,89,100.00 alongwith interest and imposed penalty on the ground that they have availed Cenvat credit on the basis of invoices, which were not in their name. The Commissioner (Appeals) upheld the Adjudication order.
Appellant’s contention:-The learned Counsel on behalf of the Appellant submits that their head office is registered as Input Service Distributor. They have availed credit on the basis of the invoice issued by ISD. He drew the attention of the Bench to the relevant portion of the Adjudication order to the extent that both the authorities below proceeded that they have taken credit on the basis of invoices, which are not in the name of the Appellant. He relied upon the decision of the Tribunal in the case of United Phosphorous Limited v. Commissioner of Central Excise, Surat - 2013 (30) S.T.R. 509 (Tri.-Ahmd.) and Elder Pharmaceuticals Ltd. v. Commissioner of Central Excise, Belapur - 2014 (302) E.L.T. 556 (Tri.-Mum.).
Respondent’s contention:-On the other hand, the learned Authorised Representative on behalf of the Revenue reiterates the findings of the Commissioner (Appeals). He submits that the Appellant Company has other branches and the head office has taken credit in the name of the other Branches. So, both the authorities below correctly denied the credit.
Reasoning of judgment:- The Tribunal found from the records that the Appellant had taken a definite stand that they have taken credit on the basis of the invoices issued by the ISD. The Appellant also submitted the ISD invoices before the Tribunal in respect of the demand in question. It is seen that both the authorities below had not examined this issue. It is well settled by the various decisions of the Tribunal, as relied upon by the learned Counsel, that the jurisdictional officer, of recipient of input/input service credit, is not competent to adjudicate ISD invoice over the jurisdictional officer of Input Service Distributor (ISD), who is competent to decide this matter. So, in Tribunal’s considered view, if the Appellant availed the credit on the basis of the invoices issued by the ISD, the Adjudicating authority cannot deny the credit. But, in the present case, there is a factual dispute and it is required to be examined by the Adjudicating authority.
In view of the above discussion, the impugned order is set aside. The Adjudicating authority is directed to examine as to whether the Appellant availed the credit on the basis of the ISD invoice and thereafter the matter should be decided in accordance with law. The appeal is disposed of in the above terms.
Decision:-Matter remanded.
Comment:-The gist of the case is that the assessee has taken Cenvat credit of input service on the basis of invoice issued by Input Service Distributor (ISD) and the department denied the credit. The assessee contended that since the credit was taken against eligible documents, the credit was not deniable. Further, it is a settled law that authority having jurisdiction over input service recipient unit is not competent to adjudicate upon ISD invoices. So, the matter was remanded to adjudicating authority for re-examining and re-deciding it in accordance with Rule 7 of Cenvat Credit Rules, 2004.

Prepared by:-Praniti Lalwani

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PJ/Case Law /2016-17/3338

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