Whether credit is admissible on the invoice in the name of corporate office and in absence of any registration under ISD?

PJ/Case Law/2013-14/1724

Case:-M/s ZENITH FIBRES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, VADODARA-I

Citation:-2013-TIOL-1107-CESTAT-AHM

Brief Facts:-The issue involved in this case is regarding denial of CENVAT Credit to the appellant as the Service Tax which has been paid by them on the services received in the corporate office as well as in the factory only on the ground that the invoices of service provider has address of the corporate office and corporate office did not have input service distribution registration. Since the issue involved in this case seems to be covered by various decisions of this Bench, after allowing the application for waiver of pre-deposit of the amounts involved, the appeal itself is taken for disposal.

Appellant’s Contention:-The Appellant would draw attention to the various decisions and also the facts of the case and also bring to my notice the decision of the Division Bench in the case of Doshion Ltd. - Final Order No. A/1658-1661/WZB/AHD/2012, dt.31.10.2012 = (2013-TIOL-395-CESTAT-AHM).

Respondent’s Contention:-The Respondent submits that the appellant should not have availed CENVAT Credit on the invoices which were addressed in the name of their corporate office and in the absence of any registration under ISD, the CENVAT Credit was correctly denied.

Reasoning of Judgment:-We have considered the submission from both the parties and perused the record, we find that the facts are not disputed by both sides in as much as the credit was availed on the invoices which were addressed in the name of their corporate office. It is also undisputed that the appellant has got only one factory situated at Vadodara. It is found that there is no dispute as to the receipt of the services as indicated in the invoices of the service provider and it is also not in dispute that the appellant had discharged the consideration to service provider. It is found that the ld. Counsel was correct that the issue is now squarely covered by the decision of division bench of this Tribunal in the case of Doshion Limited (supra), wherein the Bench has held as under:

We have considered the submissions made by both sides. We find considerable force in the arguments advanced by the learned counsel. The registered office and Vatva office both are located in the same place and appellant has simply utilised the credit at Vatva instead of distributing it to various units. As submitted by the learned counsel, during the relevant period, there was no restriction for utilisation of such credit without allocating proportionately to various units. The omission to take registration as an Input Service Distributor can at best be considered as procedural irregularity and in view of the decisions cited, has to be considered sympathetically. Further, it is also noticed that appellant has not got any extra benefit by doing this. In fact from the statement of Shri Chandresh C. Shah, as explained that above Cenvat credit available to them, 20% of service tax payable only was paid and balance was paid in cash. In fact, proper distribution would have enabled them to utilise full credit. It would show that the exercise is totally Revenue neutral and no loss has been caused to the Revenue (in fact Revenue has gained). In the absence of any legal requirement to avail credit based on the services received during the relevant time and in the light of the decision cited by the learned counsel, the procedural irregularity has to be ignored and the demand confirmed has to be set-aside on this ground. In the result, demand for Cenvat credit of Rs. 1,07,07,142/- with interest and penalty equal to the same imposed under Section 11AC of Central Excise Act, 1944 are set-aside.

Proceedings also include proposal of recovery of service tax credit amounting to Rs. 43,159/- paid before 10-9-2004, which has been taken by the appellant and utilised for payment of service tax. Learned counsel admitted that prior to 10-9- 2004, credit of service tax paid was not available to the manufacturing unit and therefore, this has been correctly disallowed. Since the credit has been availed which was not eligible and not admissible and which has been availed without knowledge of the department, extended period has been rightly invoked and the demand has been correctly confirmed. Accordingly, we uphold the demand for service tax credit of Rs. 43,159/- with interest and penalty equal to the same.

In the facts and circumstances of the case and in view of the fact that entire demand has been set-aside except for a small amount, it is felt that no penalty on the employees and the Director is warranted. Accordingly, appeals filed by the Director, General Manager and Authorised Signatory are allowed."

In view of the ratio of the decision of the Division Bench as reproduced above, it is found that the impugned order is unsustainable and liable to be set aside. The impugned order is set aside and the appeal is allowed.

Decision:-Appeal is allowed.
Comment:-The essence of this case is that the CENVAT Credit taken on the invoice in the name of corporate office is admissible and should not be denied on account of procedural lapse of not taking registration under ISD.

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PJ/Case Law/2013-14/1724

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