Tribunal Allows Appellant to Claim CENVAT Credit for Input Services

The Tribunal allowed the appeal, permitting the appellant to avail CENVAT Credit as distributed by M/s. PBPL under Rule 7(d) of the CENVAT Credit Rules. The Tribunal found M/s. PBPL justified in distributing credits on input services to contract manufacturing units on a pro rata basis, similar to previous decisions, and concluded that the appellant could avail the credit attributed to goods subject to excise duty payment.

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Issues:
1. Alleged wrongful availing of CENVAT Credit by the appellant in violation of Rule 7 of CENVAT Credit Rules 2004.
2. Applicability of notification no. 36/2001-CE dated 26.06.2001 and Board's circular no. 97/8/2007-ST dated 23.8.2007.
3. Amendment in Rule 7 of CENVAT Credit Rules w.e.f. 1.4.2016 and applicability of explanation 4.
4. Justification of distributing credits on input services by M/s. PBPL to its contract manufacturing units including the appellant under Rule 7(d) of the CENVAT Credit Rules.

Analysis:

1. The Department alleged that the appellant wrongly availed CENVAT Credit in violation of Rule 7 of CENVAT Credit Rules 2004 based on ISD invoices issued by M/s. PBPL. The proposal to recover the credit amount was confirmed initially but was later challenged before the Tribunal.

2. The appellant argued that they manufacture biscuits for M/s. PBPL under a specific notification and that M/s. PBPL distributed CENVAT Credit as ISD to its manufacturing units, including the appellant. The appellant cited relevant notifications and circulars to support their claim, emphasizing that there was no violation of Rule 7 of CENVAT Credit Rules.

3. The Department pointed out an amendment in Rule 7 of CENVAT Credit Rules w.e.f. 1.4.2016 and the applicability of explanation 4 introduced through the amendment. The Commissioner (A) supported the applicability of the explanation in dismissing the appeal.

4. The Tribunal observed that the appellant is a contract manufacturing unit for M/s. PBPL and availed CENVAT Credit based on inputs supplied by M/s. PBPL for manufacturing biscuits. The question at hand was whether M/s. PBPL was justified in distributing credits on input services to its contract manufacturing units, including the appellant, proportionate to turnover under Rule 7(d) of CENVAT Credit Rules.

5. Relying on previous decisions, the Tribunal held that M/s. PBPL was justified in distributing credits on input services to contract manufacturing units on a pro rata basis. The Tribunal found no distinguished fact in the present appeal and allowed the appellant to avail CENVAT Credit attributed to goods on which excise duty is paid.

In conclusion, the Tribunal set aside the order under challenge and allowed the appeal, affirming the appellant's entitlement to avail CENVAT Credit as per the distribution by M/s. PBPL under Rule 7(d) of the CENVAT Credit Rules.

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