CESTAT quashes Rs. 35.68 Lakh CENVAT Credit Recovery against Hindustan Coca-Cola Beverages Pvt Ltd [Read Order]

The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the recovery demand of Rs. 35.68 lakh in CENVAT credit, which was levied against Hindustan Coca-Cola Beverages Pvt Ltd (HCCBPL).

The assessee, HCCBPL, registered as an 'input service distributor (ISD)', had distributed the disputed credit to its various units, including the appellant unit in Goa, under Rule 7 of the CENVAT Credit Rules, 2004. The company contended that it had merely topped up its accumulated credit from the pool of the ISD and utilized it to discharge central excise duties on goods manufactured by them.

HCCBPL contended that any incorrectness in the availment of credit could not be attributed to them, as they had not taken the credit themselves but had received it from the ISD. They further argued that the challenge was primarily linked to the nexus between the service procured and the activity undertaken by them, which was beyond the scope of Rule 7 of the CENVAT Credit Rules, 2004.

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The CESTAT referred to several precedents, including cases like Nalco Water India Ltd v. Commissioner of CGST & Excise, Howrah, and Castrol India Ltd v. Commissioner of Central Excise, Vapi, which held that the admissibility of CENVAT credit could only be challenged at the level of the ISD, not the recipient unit.

 The tribunal observed that the recipient unit was not required to ascertain the eligibility of the credit, as this responsibility lay with the ISD.

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The CESTAT noted that the recipient of the credit was not required to ascertain the eligibility of the credit, and any dispute regarding the admissibility of the credit should be addressed at the level of the ISD.

The CESTAT observed that “the impugned order confirms the recovery of credit taken and distributed under Rule 7 of the CENVAT Credit Rules, 2004, by the input service distributor (ISD). However, the appellant merely utilised the credit, and since there’s no violation of Rule 3(4), they shouldn’t be held accountable for its source. The obligation under Rule 3(1) applies to the ISD, not the recipient.”

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The single bench of C.J. Mathew (Technical Member) allowed the appeal filed by the assessee and thus set aside the impugned orders.

To Read the full text of the Order CLICK HERE

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