The Principal Bench of New Delhi Customs, Excise & Service Tax Appellate Tribunal has held thatno denial of cenvat credit merely on procedural irregularity.
The appellants, Hindustan Zinc Ltd.are engaged in manufacture of zinc concentrate, lead concentrate etc and are also engaged in providing /receiving goods transport agency service, legal consultancy service, manpower supply service, rent-a-cab service etc.
During the course of Audit of records of the appellant Department observed that the appellant has wrongly availed Cenvat Credit. Based on the said observations Rs. 2,64,442/- was proposed to be recovered from the appellant along with the interest and proportionate penalty. The appeal rejected except that the amount of penalty was reduced to 25% of the demand. Aggrieved assessee filed appeal before the Tribunal.
The appellant submitted that there is no denial of duty or tax being paid by the appellant. The credit thereof cannot be denied alleging that the credit has been claimed based upon proforma invoice. Further submitted by the appellant that,the credit cannot be denied for procedural irregularities,such as, invoices have been issued in the name of head office.
The Tribunal submitted that the documents required under the Rule 9 are not confined to merely invoices but these may be any documents, like bill or challanas issued in terms of Rule 4 (2) A of the Service Tax Rules etc. This particular Rule specifies the amount of information as is required in a particular document for availment of Cenvat Credit.
The Tribunal by relying the decision of in The Commr. C. Ex., Delhi-III, Gurgaon vs Myron Electricals Pvt. Ltd, observed that it was clarified that once difference was disputed and it was found that documents were genuine and not fraudulent then the manufacturer would be entitled to take Cenvat Credit on duty paid invoices. Issuance of invoices in the name of head office is merely procedural compliance. Credit based on such invoices is therefore held available. The Coram of Mrs Rachna Gupta, Member (Judicial) has set aside the impugned order and held that “substantial benefit of credit on the admittedly paid duty or tax has been denied by the Adjudicating Authority below on irrational and illogical ground despite having sufficient and relevant documents reflecting entitlement of the appellant to the said benefits”.
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