Procedural Irregularities can be Ignored when there is no Apparent Loss to Revenue nor any Apparent Benefit to Assessee: CESTAT [Read Order]

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), comprising PV Subba Rao, Technical Member and Dr Rachna Gupta, Judicial Member observed that procedural irregularities can be ignored when there is no apparent loss to revenue nor any apparent benefit to assessee .

M/s. India Cements Limited and all its units, the appellants herein are engaged in the manufacture of cement and clinker.

They appellant availed Cenvat credit of excise duty paid on the inputs, service tax paid on input services used in relation to the manufacture of cement and clinker and also of excise duty paid on capital goods. However, during the course of audit of the accounts of appellants conducted in December 2013, the department observed that the appellants have availed the service tax credit on the basis of ISD challans.

The Department alleged that the credit availed on quantity-based distribution is in violation of amended Rule 7 of Cenvat Credit Rules, 2004 (CCR, 2004). Resultantly, the show cause notices as mentioned in the table above were served upon the appellants alleging the credit availed on quantity basis to be irregular and the respective amount in the above table was proposed to be recovered from the appellants.

Rule 7 of the Cenvat Credit Rules, 2004 states that the CENVAT credit in respect of input service shall be allowed, on or after the day which payment is made of the value of input service and the service tax paid or payable as is indicated in invoice, bill or, as the case may be, challan referred to in rule 9.

The Two Member Bench noted that the alleged violation of Rule 7 of CCR, 2004, in the given facts and circumstances, is nothing more than the procedural lapse.

The Bench relied on the judgment in Commissioner of Central Excise Vs. Dashion Ltd. wherein it is held that when the invoices for input services are not disputed by the Revenue, the availment of Cenvat credit by the unit of an ISD Distributor cannot be denied on the ground that the service was availed by some other unit, it being merely a procedural deficiency.

The Tribunal concluded that Rule 7 of CCR, 2004 is a procedure. As already discussed above the procedural lapse cannot be a ground to deny the substantial benefit of Cenvat credit. The procedural irregularities are held to be ignored when there is no apparent loss to the revenue nor any apparent benefit to the assessee.

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