Whether credit can be taken on invoice issued in name of head office that is not registered as service distributor?

PJ/ Case Law/2013-14/1616

Case:-HINDUSTAN ZINC LTD. VERSUS COMMISSIONER OF CUS. & C.EX., JAIPUR-II

Citation:-2013 (30) S.T.R. 199(Tri.-Del.)

Brief Facts:- The fact of this case is appellant taking the CENVAT credit on certain invoice which in respect of services received were in name of Head office and head office distributed the credit without being a registered service distributor allowed its units to enjoy the Cenvat credit, such credit was denied. Hence these appeal.

Appellant Contentions:- The counsel for the appellant submitted thatat the initial stage there were difficulties in following procedure of input service distributor. Neither genuinety of the service availed nor identity of service provider is in question. When service was availed by the smelter unit of the head office, there cannot be any doubt or suspicion except Revenue needing protection that double claim of the same credit is not made elsewhere. Accordingly, the appeal should be allowed.

Respondent Contentions:- The Respondent submitted that identity of the head office and its smelter unit Debari in Udaipur of Rajasthan is established on record. Because certain invoices in respect of services received were in the name of head office and head office distributed the credit without being a registered service distributor allowed its units to enjoy the Cenvat credit, such credit was denied. Revenue also submits that when there is a codified procedure prescribed in respect of input credit distribution that should have been followed.

Reasoning of Judgment:-We have considered the submission from both parties and perused the record, we find that identity of the head office and Smelter unit remained unquestioned. So also the service received by the Debari Smelter unit under invoices showing the head office address remained unquestioned. Only because the invoices carry name of the head office, denial of Cenvat credit shall defeat the object of avoiding cascading affect. No doubt, input service distribution scheme was introduced to enable central agencies to distribute credit available to its units under certain procedures. But at the initial stage of implementation of law, difficulties were experienced because of the registration procedure and certain technical procedures involved. When the identity of service recipient and provider as well as genuinety of transaction is not in doubt there may not be difficulty to allow Cenvat credit of Rs. 2,88,062/-. Pre-deposit is waived and appeal is disposed by this common order.

Decision:-Appeal is allowed.

Comment:- The crux of this case is that when the identity of service provider and recipient and the genuineness of the transaction is not in doubt, the credit cannot be denied merely on the fact that the invoices were in the name of head office, that was not registered as input service distributor and could not distribute credit. The substantial benefit cannot be denied for procedural lapses.

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PJ/ Case Law/2013-14/1616

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