Reduction of CENVAT credit on Intangible Services
SOMETIME back, after the visit of the Audit team in his factory a netizen called me and said – The audit was smooth; they loved the food and the dessert but said that for the sake of raising an objection they would be taking the following issue – Inputs are chemicals supplied in tankers and the quantity is obtained by dip measurement. On occasions there are shortages in the receipt of inputs due to various factors like transit / evaporation / handling losses/ incorrect measurements etc. Since there are Tribunal decisions which have held that the CENVAT credit attributable to the short receipt of inputs cannot be demanded as such shortages are inevitable and are within acceptable industry standards, they would be raising an unanswered issue – that the CENVAT credit availed on the Inward Transportation service would be sought to be denied to the said extent of short receipt.
I was taken aback and said that the Audit team may have playfully threatened him but asked the netizen to wait for the SCN, if and when it comes.
Its surreal, I told myself!
That was the last I heard from him on the subject matter.
But a recent case decided by the Mumbai CESTAT proves that such objections certainly survive the cosy confines of the adjudicating and lower appellate authorities and the assessee is required to trudge to the Tribunal.