The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to Acer India by quashing the recovery of availed CENVAT credit of excise duty on the grounds of lack of jurisdiction limit.
Acer India Private Limited, the appellant assessee was engaged in the manufacture of computer/Automatic Data Processing Machines falling under the Central Excise Tariff Act, 1985, and are registered with the Central Excise Department and the assessee was availing CENVAT Credit of duty paid on inputs and service tax paid on input services in terms of CENVAT Credit Rules (CCR) 2004.
The assessee appealed against the order passed by the adjudicating authority for confirming the recovery of wrongly availed credit, along with interest, and for imposing penalties.
Lakshmikumaran and R. Charulatha, the counsels for the assessee contended that the eligibility of credit taken and distributed by the Input Service Distributor (ISD) had to be decided by the formation having jurisdiction over the corporate office and not over the manufacturing unit of the assessee situated at Puducherry.
It is also submitted that the eligibility of input services was not to be ascertained at the factory level both in terms of law and on account of practical difficulties.
R. Rajaraman, the counsel for the department contended that the assessee had availed input service tax credit based on the ISD invoices issued by their Head office in Bangalore. The Head office in Bangalore had obtained registration as an input Service Distributor (ISD) for the distribution of credit in terms of Rule 7 of CCR.
The Bench observed that the Puducherry unit being the unit which had received the credit was distributed by the Bangalore unit, the eligibility of credit cannot be questioned at the end of the recipient unit, and Show cause notices issued to the assessee- manufacturing unit at Puducherry was without jurisdiction. The Head office situated at Bangalore is registered as ISD and thus distributed the credit to the assessee in terms of Rule 7 of CCR.
The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) quashed the recovery of CENVAT credit on the grounds of lack of jurisdiction.
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