By TIOL News Service

MUMBAI, DEC 17, 2015: THE appellant is engaged in the manufacture of S.O. dyes and pigments. On the basis of audit objection, a SCN dated 20.7.2012 was issued questioning the availment of input service credit on invoices issued by their head office as Input Service Distributor (ISD). The head office of the appellant was registered with the jurisdictional excise authorities as ISD vide certificate dated 25.2.2008 and thereafter invoices were issued for duty paid input services for the period April 2005 to 2008.

The lower authorities confirmed the duty demand.

Before the CESTAT, the appellant submitted that it is admitted that the appellant availed the services and has paid the service tax to the service provider; that the only issue is whether the appellant is entitled to cenvat credit of service tax paid on the eligible input services prior to registration of ISD but distributed by the ISD after taking registration to its only manufacturing unit. It is further submitted that the CCR, 2004 does not prescribe any time limit for availing the credit of input services and, therefore, the distribution of credit by the ISD is legal and proper. Rule 2(m), 3(1), 9(1) of the CCR, 2004 are also adverted to emphasize that the said Rules do not stipulate any condition that ISD cannot distribute the credit related to purchase of services prior to ISD registration.

The following case laws were also cited in support viz. mPortal Wireless Solutions - 2011-TIOL-928-HC-KAR-ST, KPIT Cummins Info Systems Ltd. - 2013-TIOL-931-CESTAT-MUM, Dagger Frost Tools Ltd. - 2012-TIOL-2121-CESTAT-MUM, WNS Global Services Pvt. Ltd. - 2012-TIOL-1799-CESTAT-MUM, Imagination Technologies - 2011-TIOL-179-CESTAT-MUM and ONGC - 2015-TIOL-1571-CESTAT-MUM, wherein it is held that there is no time limit prescribed under the CCR for availment of cenvat credit.

The AR with the support of some decisions submitted that registration of input service distributor is a must and if the input service distributor is not registered, credit is not admissible.

The Bench, at the outset, held that the case laws cited by the AR were not applicable to the facts of the present case.

On the issue involved, the CESTAT observed thus -

"6. …, I find that the Cenvat Credit Rules, 2004 do not prescribe any time limit for taking the credit. If the credit is admissible and the documents for availing the credit are available, credit can be taken at any time. The Cenvat Credit Rules do not prohibit availment of cenvat credit in respect of inputs/input services which have been received prior to registration. The Cenvat Credit Rules contain no express restriction on distribution of credit earned prior to taking the registration by the ISD also. Hence the ISD can avail credit of service tax paid on input services received prior to registration and moreover, in this case there is only one manufacturing unit of the appellant and the Revenue was well aware of this fact from the very beginning. The authorities cited by the learned counsel for the appellant squarely cover the case of the appellant…."

Setting aside the order of Commissioner(A), the appeal was allowed with consequential relief, if any.

(See 2015-TIOL-2694-CESTAT-MUM)