India Cements Limited Vs Commissioner of Central Tax, Tirupati-GST (CESTAT Hyderabad)
CESTAT Hyderabad held that rule 7 of Cenvat Credit Rules, 2004 (CCR 2004) is just a procedure and procedural lapse cannot be ground to deny the substantial benefit of Cenvat Credit.
Facts- M/s. India Cements Limited and all its units, the appellants herein are engaged in the manufacture of cement and clinker. 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. From the scrutiny of ISD invoices/challans issued by the said five offices, the department observed that they have distributed the service tax credit in three forms: i.e. plant specific, turnover basis and quantity basis.
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 was proposed to be recovered from the appellants. The said proposal was confirmed. Accordingly, being aggrieved, the present appeal is filed.
Conclusion- Rule 7 of CCR, 2004 is a procedure and 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.
We finally observe that there is no dispute of receipt of services, eligibility of services for credit nor any dispute that the invoices are raised by the ISD/Corporate Office of three of the appellants, which was eligible to distribute the credit to their units/factory. We further find that there is no proposal to issue any show cause notice to the said ISD for alleged wrong distribution of the credit.
We hold that the demand even for the normal period is also not sustainable. We accordingly hold that the interests and penalties has wrongly been invoked. Resultantly, we hereby set aside the respective orders under challenge.
FULL TEXT OF THE CESTAT HYDERABAD ORDER
Present order disposes of three appeals. The Appellants therein being three different units of one and the same company and the issue involved in three of the appeals is also same. The details of three of the appeals are as follows:
