Order date – 15 November 2022

Facts –

• The appellant’s, United Phosphorus Ltd Head Office at Mumbai was purchasing various inputs services and distributing to various factories of the appellant.
• During the period December, 2004 to September, 2005 the Head Office of the appellant transferred Cenvat credit by issuing a statement giving the details of the credit transferred. The appellant obtained ISD registration on 18.08.2005, however, the Cenvat credit was distributed by the Head Office to the appellant before obtaining the registration.
• During audit, it was observed that the appellant had availed inadmissible credit, accordingly, a show cause notice dated 20.08.2009 was issued to the appellant calling upon the appellant show cause as to why inadmissible Cenvat credit of Rs. 1,41,32,634 should not be denied and recovered with interest and penalty be imposed on the appellant.
• The adjudicating authority denied the entire credit and order recovery thereof under Rule 14 of the Cenvat Credit Rule read with proviso to Section 11A (1) of Central Excise Act.
• Aggrieved appellant had filed an appeal.

Issue –

• Whether CENVAT Credit availed on the basis of the photocopy of invoices issued by various service providers to the United Phosphorus Limited, Mumbai, (UPL) is a "valid document under Rule 9 of the Cenvat Credit Rules, 2004 ("CCR")?
• Whether the transfer of service tax credit by UPL, Mumbai, as an ISD to the Appellant without obtaining registration under the Rules admissible to the Appellant or otherwise for the period covered under the SCN?

Order –

• The Tribunal found that the credit was denied only on the presumption that there is a possibility of availing the credit by other units of the appellant. Firstly, there is no charge in the show cause notice to these effects. Secondly, without any evidence such serious allegation cannot be accepted.
• The Tribunal observed that in respect to photocopy of invoices, the same is not relevant for allowing the credit to the appellant, as the Head Office has distributed the credit to the appellant unit. Further, Tribunal found that the statement is also document which contains all the details as required under Rule 4A at the same time it is valid document under Rule 9 of Cenvat Credit Rules, 2004. Also, issuance of documents under Rule 4A is a procedural requirement and substantial benefit like Cenvat Credit cannot be denied on the basis of procedural infraction
• The Tribunal relied on the judgment of Dashion Ltd-2016 (41) S.T.R. 884 (Gij.) and in other cases wherein it was held that non-obtaining the ISD registration will not disentitled the assessee from availing the Cenvat credit. Thus ISD registration is a procedural requirement, therefore, even if there is a lapse of non-obtaining the registration for some period, credit passed on by the Head Office cannot be denied to the appellant.
• Hence it was held that the appellant is entitled for Cenvat Credit, accordingly appeal is allowed.