Mere allegation in SCN cannot be ground to deny Credit: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), held that Mere allegation in Show Cause Notice (SCN) cannot be ground to deny credit.

The appellant,M/s.Arkkays National Engineering & Foundry Co. Unit-I was availing the facility of cenvat credit on various input services. During the course of audit of accounts, it was noticed that they have availed ineligible credit on Bank charges. Show cause notice was issued proposing to disallow the credit and also to recover the credit amounting to Rupees sixteen lakhs in respect of these services along with interest and also for imposing penalties.

After due process of law, the original authority confirmed the demand along with interest and imposed penalties. The Appellant filed appeal before the Commissioner (Appeals). The same was upheld hence the present appeal.

The Counsel for the appellant submitted that in respect of bank charges, the credit has been denied alleging two reasons. Firstly, that appellant has not taken Input Service Distributor (ISD) Registration and that the credit availed on various other units were not distributed to the Ambattur Industrial Estate as required under Rule 7 of Cenvat Credit Rules, 2004.

Secondly, that instead of availing credit on the vouchers issued by the bank, they have availed credit on debit advices in the nature of bank statements showing the bank charges.

A Coram consisting of CS Sulekha Beevi, Judicial Member observed that “I am of the view that the denial of credit on the ground that appellant has not taken Input Service Distributor registration in respect of Bank charges cannot sustain.”

“The Department does not dispute the collection of bank charges by the bank for the services provided by them. Merely because the credit is availed on bank advice or bank statement the credit cannot be denied unless there is discrepancy in these documents. It is also submitted by the Counsel that there is no discussion on this allegation either in the Order or the impugned order. Mere allegation in the SCN cannot be a ground to deny credit” the Tribunal noted.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates