The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that no jurisdiction is vested for Adjudicating authority to decide whether availed cenvat credit issued by the Input Service Distributors ( ISD ) is incorrect.
For distribution of credit, ISD issued proper invoices in the name of the appellants and ISD invoices issued by the Head Office of the appellants are valid documents for availing cenvat credit in terms of Rule 9 of the Cenvat Credit Rules, 2004. The present dispute is with regard to the period 2011-12 to 2017- 18 (Upto June, 2017).
The appellants contested the show-cause notices, but the authorities below confirmed the demand against the appellants. The matters were adjudicated and the demands were confirmed against the appellants by denying the cenvat credit on input service credit distributor by ISD.
The counsel for the appellant argued that the adjudicating authority has no jurisdiction and decide that the credit issued by ISD is incorrect and not eligible. Therefore, the observations of the adjudicating authority in the impugned order are beyond the jurisdiction where the service on which ISD taken the credit is eligible for cenvat credit is not correct in the jurisdiction of ISD.
During the course of argument, the A.R. for the Revenue relied on the decision of M/s ACER India Private Limited (supra), in that case also, the facts are not similar to the case in hand as in that case it was the issue before the Tribunal that whether the Revenue can issue the show-cause notice for recovery of inadmissible cenvat credit taken by the assessee, who has ultimately taken the cenvat credit or not.
A Two-Member Bench comprising Ashok Jindal, Judicial Member and K Anpazhakan, Technical Member observed that “As the Head Office of the appellant is registered as ISD and distributed the cenvat credit in proportionate to the appellant i.e. 54.51% is valid documents to avail the cenvat credit in terms of Rule 9 of the Cenvat Credit Rules, 2004. If the Revenue wants to deny the availment of cenvat credit i.e to be only to the Head Office, who is registered as ISD. As no investigation has done at the end of the ISD for distributing ineligible cenvat credit to the appellant, the cenvat credit cannot be recovered from the appellants.”
“Further, in the case of Mahindra & Mahindra Limited, we find that there is a case of distribution of cenvat credit to all the units, whereas one of the unit was exempted from payment of duty. Therefore, it was held that the ISD cannot distribute the cenvat credit to the unit, which is exempted from payment of excise duty. This is not the case in hand with us. Further, we find that all the services in question, on which the Head Office has availed cenvat credit and distributed to the appellants in proportionate in terms of Rule 7 of the Cenvat Credit Rules, 2004, the cenvat credit cannot be denied to the appellant as held by this Tribunal in the case of Balkrishna Industries Limited” the Tribunal concluded.
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