By TIOL News Service

NEW DELHI, MAR 03, 2017: THE dispute is about CENVAT Credit availed by the appellant on the strength of invoices issued by the ISD. Revenue was of the view that the Cenvat credit was availed on input services which do not qualify within the definition of input services in Rule 2 (l) of the Cenvat Credit Rules, 2004. It is the claim the appellant that if the credit availed is improper, the same ought to have been taken up against the ISD who has availed the credit and subsequently transferred the same to the appellant.

Revenue contended that in the order-in-appeal, it has been recorded that the appellant has not submitted any documents such as export invoices, purchase order etc. to indicate that the appellant has not exported the goods through merchant exporter and that it has been cleared on FOB/CIF basis. The place of removal in this case becomes the factory gate.

After hearing both sides, the Tribunal held:

+ From the appeal records, it is found that the appellant has submitted copies of the ISD invoices on the basis of which they have availed the Cenvat credit on various services. The copies of these invoices were also submitted before the First Appellate Authority. However, no specific finding has been recorded by the Commissioner (Appeals) on this important issue. From the perusal of some of these sample invoices, it is seen that the credit on various services such as CHA, handling charges, insurance etc. have been availed for export of goods at the port of export. The credit for these services stand availed at the hands of the input service distributor. In the decision of the Tribunal in the case of United Phosphorus Ltd. vs. CCE, Surat - II it stands decided that Revenue ought to have initiated proceedings against the input service distributor for availing Cenvat credits which are not covered under the definition of input services and not against the assessee availing the credit on the basis of ISD invoices.

+ From the records, no such proceedings are on record against the ISD. The dispute in the present proceedings has been initiated by the Revenue against the appellant for availing Cenvat credit on the basis of ISD invoices, on the allegations that the services for which such credits have been availed are not covered by the definition of input services. The proper assessee against whom such proceedings, if at all, ought to have been initiated against is the input service distributor. The proceedings for disallowing the credit would have to be set aside.

(See 2017-TIOL-680-CESTAT-DEL)