Case Law Details
ACC Limited Vs Commissioner of GST & Central Excise (CESTAT Mumbai)
CESTAT Mumbai held that Rule 14 of the CENVAT Credit Rules, 2004 (CCR, 2004) can only be made applicable against the manufacturer/service provider or the person who availed the allegedly inadmissible credit and accordingly recovery of CENVAT Credit against Input Service Distributor unsustainable.
Facts- Appellant’s Thane Office was registered as ISD during the Service Tax regime for its several manufacturing units located Pan India and it is primarily engaged in manufacturing of Cement and Clinker. Its manufacturing units were selling cement etc. directly to the Customers or through its sister concern M/s. BCCL in which Appellant is having more than 94% of share while Government of India, Ministry of Industries was having balance share. M/s. BCCL namely Bulk Cement Corporation of India Limited is situated in Karnataka state which had been receiving bulk cement and packing the same as well as supplying those to the Customers as per instruction of the Appellant. Appellant was reimbursing Excise duty and other expenses made by M/s. BCCL EA-2000 Audit was conducted and certain credits totaling Rs.39,48,047/- availed by the Appellant were objected by the Auditors.
Appellant had accepted part of its objection and reversed credit to the tune of Rs.20,28,904/- along with interest but was served with show-cause cum demand notice dated 28.10.2016 for refund of the entire amount with interest and penalties. Common Order-in-Original dated 18.01.2019 was passed confirming demand, proportionate interest, equal penalty, etc. by the Adjudicating Authority. Appellant’s appeal before the Commissioner (Appeals) yielded no fruitful result and the said order of rejection has been assailed in this appeal.
Conclusion- Held that Rule 14 of the CENVAT Credit Rules, 2004 can only be made applicable against the manufacturer/service provider or the person who availed the allegedly inadmissible credit and show-cause notice can’t be issued against the Input Service Distributor for recovery of CENVAT Credit. Board Circular dated 10.03.2014 re-affirmed the same position and clarified further that show-cause notice can’t be issued against ISD under Rule 14 of the CENVAT Credit Rules, 2004.
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