Input Service Credit when Distributed by ISD, cannot be held Inadmissible on Pretext that such Invoices did not contain Particulars under Rule 4A of CCR: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that input service credit when distributed by ISD, cannot be held inadmissible on the pretext that such invoices did not contain particulars under Rule 4A of the Cenvat Credit Rules ( CCR ), 2004.

M/s. Pricol Limited, Plant-III, the appellant is a registered manufacturer of Oil Pumps and its assemblies falling under Chapter 84 and they were availing Cenvat Credit of duty paid on inputs, capital goods and tax paid on input services and utilizing the same for payment of duty on their finished product clearances.

The appeal was filed against the order passed by the Commissioner of Central Excise, Salem, confirming the demand of recovery of irregularly availed Cenvat Credit of an amount of Rs.3 crores under Rule 14 of Cenvat Credit Rules, 2004 (CCR, 2004) read with Section 11 A (1) of Central Excise Act, 1944 (CEA) along with applicable interest and imposing a penalty equal to the demand of duty under Rule 15 (2) of the said Rules.

M/s. Pricol Limited had its head office in Coimbatore and it was registered as an Input Service Distributor (ISD) under the service tax law. They were availing credit in respect of various input services availed by them and were transferring the said credit to their manufacturing units including Plant-III, the appellant herein.

Appearing for the appellants, Advocate M. Karthikeyan has submitted that M/s. Pricol Ltd., ISD had distributed credit around Rs. 3.22 Crores to their Plant I and since Plant I had accumulated a Cenvat credit balance and they could not utilize it, Plant I had returned such credit back to ISD by the issue of an invoice. Based on such Plant I invoice, ISD had distributed such credit to all other units including the appellant unit.

The Counsel further submitted that all the details of input service invoice-wise as mentioned in Rule 4A of CCR could not be captured in the ISD invoice itself, though they had mentioned in the ISD register which contained all the requisite details of input service invoices and a copy of the said register with the copy of the input service invoices were furnished to the adjudicating authority for verification.

The Bench of Sulekha Beevi C.S, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that input service credit when distributed by the ISD, cannot be held as inadmissible on the pretext that such invoices did not contain all the particulars as required in terms of Rule 4A of CCR 2004 when it was possible for the department to verify all the input service invoices on the basis of which the credit has been accumulated by ISD.

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