Cenvat credit distribution under Rule 7 is not confined to the manufacturing unit where the related product is made.

Rule 7 of the Cenvat Credit Rules, 2004 permits an input service distributor to distribute credit so long as the credit does not exceed the service tax paid and is not attributable exclusively to exempted goods or exempted services. The rule does not add a further restriction that the credit may be taken only by the unit where the related product is manufactured. On that interpretation, distributed Cenvat credit could be availed by another unit, and the revenue objection was rejected. The Tribunal's view was upheld because no substantial question of law arose.

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Issues: Whether, under Rule 7 of the Cenvat Credit Rules, 2004, service tax credit distributed by the input service distributor can be availed by another unit even though the service relates to the manufacture of goods of a different unit.

Analysis: Rule 7 permits distribution of credit subject to two restrictions only: the credit distributed must not exceed the service tax paid, and credit exclusively relatable to exempted goods or exempted services must not be distributed. The rule does not impose a further restriction that credit can be taken only in the unit where the relevant product is manufactured. The credit in question was therefore not hit by any prohibition under the rule.

Conclusion: The assessee was entitled to avail the distributed Cenvat credit, and the revenue's objection was rejected.

Final Conclusion: The appeal failed as no substantial question of law arose, and the Tribunal's view was upheld.

Ratio Decidendi: Rule 7 of the Cenvat Credit Rules, 2004 limits distribution of input service credit only to the extent of tax paid and excludes credit for exempted goods or services, and does not confine credit to the unit where the related product is manufactured.

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