Cenvat Credit Can't Be Denied Merely For Non-Registration Of Input Service Distributor : CESTAT

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that cenvat credit cannot be denied on the grounds of non-registration of input service distributor registration in respect of bank charges and chartered accountant services.

The bench of Sulekha Bevi C.S. (Judicial Member) observed that there is nothing in the statutory rules to disentitle an unregistered input service distributor from availing of CENVAT credit.

The appellant/assessee is a manufacturer of bright bars of free-cutting steel, carbon steel, and alloy steel and is registered with the Central Excise Department. The appellant company has several units, and the dispute is with regard to the unit situated in Ambattur Industrial Estate, Chennai.

The appellant was availing of the facility of CENVAT credit on various input services. During the course of the audit of accounts, it was noticed that they had availed themselves of ineligible credit for bank charges as well as chartered accountant services.

A show-cause notice was issued, proposing to disallow the credit and also to recover the credit in respect of the services, along with interest, and also to impose penalties. After due process of law, the original authority confirmed the demand along with interest and imposed penalties.

The assessee contended that the requirement to take ISD registration is only a procedural one and that credit cannot be denied for a procedural error.

The credit availed on chartered accountant services has been denied, stating that one of the bills is addressed and intended to the proprietor, Mr. Ashok Ramchand HUF, and another is in the name of the other units. It is alleged by the department that chartered accountant services relate to other units as well as the individual, and therefore the credit is not eligible.

The tribunal overturned the credit denial and determined that non-taking registration is merely a procedural error that can be corrected.

Case Title: M/s. Arkkays National Engineering & Foundry Co. Versus The Commissioner of GST & Central Excise

Citation: Excise Appeal No.42313 of 2015

Date: 07.11.2022

Counsel For Appellant: Advocate M.N. Bharathi

Counsel For Respondent: Assistant Commissioner (AR) S. Balakumar

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