CENVAT Credit cannot be Denied for procedural lapses if substantial compliance is met: CESTAT Sets aside Reversal of Rs. 16.12 Lakhs [Read Order]

The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held CENVAT credit cannot be denied for procedural lapses if substantial compliance is met and set aside the reversal of Rs. 16.12 lakhs against the appellant, National Engineering Industries Limited.

In this case, the department issued a show-cause notice issued to the appellant, challenging the eligibility of Cenvat credit claimed on two grounds. First, a sum of Rs. 16.12 lakh was denied on the observation that input service invoices did not contain the correct address of the appellant.

Secondly, Rs. 32.95 lakh was disallowed on the findings of observation that credit availed against challans issued under the Comptroller and Auditor General's ( C& AG ) audit findings was impermissible under Rule 9( 1 )( bb ) of the Cenvat Credit Rules 2004.

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The CESTAT observed that the department's denial of the Rs. 16.12 lakh credit was due to a minor procedural issue, which is the incorrect address mentioned on the invoices.

 The bench noted that it was clear that the services had been received, and the discrepancy was rectified when supplementary invoices with the correct details were issued.

 The Tribunal after relying on several judgements, held that such procedural errors should not undermine a taxpayer's rights, especially when there was no doubt about the actual receipt of services or the payment of taxes.

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In conclusion, Dr. Rachna Gupta (Judicial Member), held that the denial of both credit amounts was unsustainable in law.

To Read the full text of the Order CLICK HERE

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