Tribunal allows Cenvat Credit appeals citing Rule 7, supports credit distribution

The Tribunal allowed the appeals filed by M/s. Transpek Silox Industry Ltd, overturning the denial of Cenvat Credit due to the absence of ISD registration and the attribution of services to units other than where credit was utilized. The decision relied on Rule 7 of the Cenvat Credit Rules and previous Tribunal judgments supporting credit distribution among manufacturing units in similar situations.

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Issues:
Denial of Cenvat Credit availed by M/s. Transpek Silox Industry Ltd due to failure to register as an Input Service Distributor (ISD) and attribution of services to units other than the one where credit was availed.

Analysis:
The appellant, M/s. Transpek Silox Industry Ltd, filed appeals against the denial of Cenvat Credit they availed. The appellant has four manufacturing units, with the Head Office located in Vadodara, where one of the units is also situated. They availed Cenvat Credit for input services at the corporate level, with invoices received in the name of the Head Office. The appellant did not have ISD registration at the material time, although they obtained it later. The argument was made that the failure to register as ISD should not disentitle them from the Cenvat Credit. The appellant relied on previous Tribunal decisions, including one in their own case, where benefits were allowed under similar circumstances.

The Assistant Commissioner relied on the impugned order and highlighted that a portion of the demand pertained to services attributable to units other than the one located with the appellant's Headquarter. The Tribunal found the facts similar to a previous case involving PIRAMAL GLASS PVT, where the issue of attribution of common input services to multiple units was discussed. The Tribunal referred to Rule 7 of the Cenvat Credit Rules, both pre and post amendment, emphasizing that the option to distribute Cenvat credit among manufacturing units was available to the assessee. The Tribunal cited judgments in other cases, such as Hindustan Zinc Ltd. and Gloster Cables Ltd., where similar disputes were decided in favor of the appellants based on the interpretation of Rule 7.

It was noted that no objection regarding the admissibility of Cenvat Credit on services, other than being received at the Head Office, was raised by the lower authorities. Additionally, the failure to register as an ISD at the material time was not considered a disentitling factor for Cenvat Credit, especially in the absence of malafides. Relying on the decision in the case of PIRAMAL GLASS PVT, the appeals were allowed, emphasizing the similarity of facts and nature of the dispute with previous cases.

In conclusion, the Tribunal allowed the appeals filed by M/s. Transpek Silox Industry Ltd, overturning the denial of Cenvat Credit availed by them due to the absence of ISD registration and the attribution of services to units other than the one where credit was utilized. The decision was based on the interpretation of Rule 7 of the Cenvat Credit Rules and previous Tribunal judgments supporting the distribution of credit among manufacturing units under similar circumstances.

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