Order Date – 23 June 2023

Parties: M/s. 3M Electro & Communication India Pvt. Ltd. Vs Commissioner of Central Excise

Facts – 

• The Appellants, M/s. 3M Electro & Communication India Pvt. Ltd., is engaged in the manufacture of Main Distribution Frames, Electronic Markers, etc., and the Head Office of the appellant is located at Bengaluru, who have obtained ISD Registration on 24.01.2011 and availed CENVAT Credit on services received between April 2009 and December 2011 and distributed to the manufacturing units at Pimpri, Pune and Puducherry.
• A show cause notice issued dated 17.05.2012 covering the period from May 2011 to December 2011 on the ground that they had availed input service credit on the basis of invoices issued by the Head Office at Bengaluru as Input Service Distributor (ISD) and that the ISD had obtained necessary registration only in May 2011. 
• Also alleged that invoice did not contain the name, address and registration number of the service provider and Credit was distributed without excluding the credit attributable to exempted services.

Issue – 

• Whether the adjudicating authority is correct in denying the CENVAT Credit and thereby ordering recovery of the same?

Order – 

• The Tribunal observed that in the decision of Hon’ble Madras High Court in the case of Commissioner of Central Excise, Coimbatore v. M/s. Pricol Ltd. [2021 (48) G.S.T.L. 235 (Mad.)], the Hon’ble High Court has categorically held, following the judgement of the Hon’ble Gujarat High Court in the case of Commissioner of Central Excise v. M/s. Dashion Ltd. [2016 (41) S.T.R. 884 (Guj.)], that there is nothing in the said Rules of 2005 or Rules of 2004 which would automatically and without any additional reasons, disentitle an input service distributor from availing credit unless and until such registration was applied and granted.
• In view of the above, the Tribunal does not approve the finding of the learned authority for denying credit on the ground that the credit taken was pertaining to the period prior to registration. Further, merely because the invoices do not have the details of person who provided the service, the same is not a valid ground to deny the benefit of credit.
• Since Revenue has not placed on record any material with regard to the allegations that are made in the Show Cause Notice as to the trading units, and consequently, the allegations in the Show Cause Notice are clearly without any foundation. The consequent action of denying credit is clearly therefore illogical and unsustainable in the eye of law.
• It was held that the denial of credit is clearly unwarranted and therefore, set aside the impugned order and allow the appeal with consequential benefits.