2025-VIL-1914-CESTAT-CHE-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - ISD credit distribution, technical deficiencies in supplier invoices, extended period of limitation – Appellant availed CENVAT credit on the basis of invoices issued by their Input Service Distributor (ISD) - Department disallowed the credit on the grounds that the supplier invoices were addressed not to the ISD; invoices lacked details of the original service providers and relied upon internal ledger entries - Whether the distribution of ISD credit to the Ambattur unit is valid even though the supplier invoices were addressed to the another unit - HELD - The mere technical defects in supplier invoices, such as the invoice being addressed to another unit instead of the ISD, are not sufficient to disallow the ISD distributed credit, as long as the substantive documentary trail establishes genuine receipt of service and lawful distribution by the ISD. Since the payments were accounted and paid from the head office, which is registered as the ISD, the distribution of credit to the Ambattur unit is valid – Further, the absence of non-essential particulars in the ISD invoices, such as the details of the original service providers, is not sufficient to disallow the ISD distributed credit, as long as the genuineness of the invoices and the payments can be established through other documentary evidence like bank payments, contractual letters, delivery/performance certificates, etc. The appellant had provided such corroborating evidence and hence, the distribution of credit cannot be denied on this ground – Moreover, the Department failed to establish the ingredients for invoking the extended period of limitation, such as fraud, collusion, or deliberate misstatements. Mere non-payment of duties is not equivalent to collusion or willful misstatement or suppression of facts. The burden of proving any form of mala fide lies on the Department, which it failed to discharge in this case. Accordingly, the demand is time-barred and the penalties imposed on both the Appellants are not justified - the demand of ineligible CENVAT credit, interest, and all the consequent penalties are set aside – The appeal is allowed
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