Availment and distribution of Cenvat credit by the Head Office registered as ISD cannot be denied on the ground that the invoices are in the name of Branch Office
Mahindra and Mahindra Ltd. (the Appellant) was engaged in the manufacture of motor vehicle parts falling under Chapter Headings 84 and 87 of the Central Excise Tariff Act, 1985. The Appellant availed Cenvat credit on inputs as well as input services used in or in relation to the manufacture of their final products.
A Show Cause Notice dated June 22, 2012 was issued to the Appellant alleging that the head office of the Appellant located at Worli, Mumbai, which is registered as an Input Service Distributor (ISD), has distributed inadmissible input service credit under the ISD invoices/ challans which have been utilized towards payment of duty. It was further alleged that in many cases, the ISD office has taken Cenvat credit of Service tax paid on input services on the basis of invoices issued by service providers on the address of the branch offices and other offices of the Appellant not registered as ISD. Also, the payments for such services, including Service tax, have been made by the respective branch offices to the service providers.
Thereafter, the Adjudicating Authority vide Order-in-Original dated February 5, 2013 confirmed the demand of duty along with interest and penalty which was further upheld by the Ld. Commissioner (Appeals). Being aggrieved, the Appellant filed an appeal before the Hon’ble CESTAT, Mumbai.
The Appellant placed reliance on the judgment of the Hon’ble Tribunal in the case of Manipal Advertising Services Pvt. Ltd. Vs. CCE, Mangalore [2010 (19) STR 506 (Tri.-Bang.)] wherein it has been held that if a person is discharging Service tax liability from his premises having centralised registration, the benefit of Cenvat credit cannot be denied on the ground that the invoices are in the name of branch office.
The Hon’ble CESTAT, Mumbai after observing that the branch offices have no separate accounting system and their accounts form part of the Head Office accounts, which is registered as an ISD, held that the Appellant had rightly availed Cenvat credit in respect of the services received at the branch office/regional office and consequently, their distribution in the manufacturing unit is also proper.
It was further held by the Hon’ble Tribunal that the Revenue has erred in disallowing the credit on misconception of the fact that the invoices are not in the name of the Appellant. In the facts and circumstances, the invoices are found to be in the name of the Appellant issued to the branch offices. The payments are accounted at the head office which is registered as an ISD. The availment of Cenvat credit and the distribution by the head office are legal and proper.