2009 (8) TMI 437 - AT - Service Tax

Tribunal remands input credit distribution dispute for fair allocation after emphasizing consultation and proportionate allocation.

EVEREADY INDUSTRIES INDIA LTD. Versus COMMISSIONER OF C. EX., CHENNAI

EVEREADY INDUSTRIES INDIA LTD. Versus COMMISSIONER OF C. EX., CHENNAI - 2010 (249) E.L.T. 85 (Tri. - Chennai), 2011 (22) S.T.R. 502 (Tri. - Chennai) Issues:1. Distribution of input service credit among different factories.2. Jurisdiction over credit allocation and redistribution.3. Proper examination and proportionate allocation of credit.4. Remand for fresh decision and verification.Analysis:1. The case involved a dispute regarding the distribution of input service credit among various factories, particularly focusing on the Chennai unit's allocation for the year 2006-2007. The appellant's advocate argued that the initial distribution by the Kolkata Corporate office, as the input service distributor, was proportionate and should not have been further redistributed by the adjudicating Commissioner without consulting the authorities overseeing the corporate office's jurisdiction.2. It was highlighted that the adjudicating Commissioner had indeed re-distributed the credit allocated to the Chennai unit without proper consultation, leading to an artificial lowering of the credit available to that unit. The Tribunal emphasized the importance of coordination between authorities, stating that the Commissioner in charge of the Chennai unit should ensure proper and proportionate credit allocation but must consider the total credit received by the corporate office and its distribution method.3. Considering the arguments presented, the Tribunal concluded that the impugned orders were not justified and decided to set them aside. With mutual consent, the matter was remanded to the adjudicating Commissioner for a fresh decision. The Commissioner was instructed to allow adequate opportunity for the appellants to present their case and, if necessary, conduct verification with the counterpart in Kolkata before issuing a new order. The appeals were allowed by way of remand, emphasizing the need for a fair and thorough examination of the credit allocation issue.4. In the operative part of the order pronounced on 6-8-2009, the Tribunal clarified the decision to remand the matter for a fresh decision, ensuring that the credit allocation issue is addressed appropriately and in accordance with the principles of fairness and jurisdictional considerations.