TaxTMI 
TaxTMI 
2011 (2) TMI 1130
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....he exemption in respect of CENVAT credit which was set aside by the 1st Appellate Authority. 2. The assessee is a manufacturer of excisable goods falling under Chapter 34 of the Central Excise Tariff Act, 1985. The assessee has availed a service tax credit based on the invoice issued by the Chennai head office, which is registered as 'Input Service Distributor' and has paid service tax for services received by them from various service providers like insurance, telephones, security charges, travelling expenses, advertising, market research, courier, xerox maintenance, utility services, bank charges, AMC, professional charges, etc. The head office in turn distributed the service tax to the assessee. The assessee availed and utilized ....
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....l as the circular issued by the Board dropped the proceeding. Aggrieved by the same, the revenue preferred an appeal before the Commissioner of a Central Excise (Appeals-I), Bangalore. The Commissioner found that the credit distributed was pertaining to the advertisement of the product which were manufactured at the respondent's other unit and not in their unit at Malur. The credit availed on other services viz., telephone, security services, insurance etc on which the service tax was paid at Chennai and that services provided were, not in the respondent's unit at Malur. Therefore, he held that the assessee has not received the input service and there is no discussion in the findings as to whether the credit has been utilized in relation to....
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....he Cuttack unit finds no mention in the relevant rules and therefore the said restriction cannot be upheld. Accordingly, he allowed the appeal, set aside the order of the appellate authority and restored the order-in-original. Aggrieved by the same, the Revenue is in appeal. 3. The learned Counsel for the Revenue assailing the impugned order contends that admittedly the service tax is paid in respect of the unit at Cuttack and it is sought to be availed by the unit at Malur. As the said tax has not been paid in connection with the input used in manufacture of products at Malur unit or in the advertisement or production at Malur Unit, the assessee is not entitled to the benefit of CENVAT credit under the rules. The lower Appellate Au....
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....ce provider' as under :- "Rule 2(k) "input" means - (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel o....
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....r producer or provider, as the case may be;" 7. Rule 3(1) has been defined as under :- "A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit". 8. It is in this context, the definition of input service distributor makes it clear that a manufacturer or a producer of a final product or a provider of output service may have more than one unit and may be distributed in various parts of the country. It is in this background the definition of service distributor is defined as office of the manufacturer or producer of a final product or provider of output service which receives invoices issued under Rule 4A of the Service Tax Rules, 1994 towards purchases of input services ....
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....e tax paid and secondly, the credit of service tax attributable to service used shall not be distributed in a unit exclusively engaged in the manufacture of exempted goods or providing of exempted services. 9. In fact, the Board has issued a circular clarifying in this regard, which is extracted by the tribunal at para 7 which reads as under :- "Para 7. Para 2.3 of the Master Circular referred to by the ld. Advocate reads as under :- "2.3.-  An 'Input service distributor' is an office or establishment of a manufacturer of excisable goods or provider of taxable service. It receives tax paid invoices/bills of input services procured (on which Cenvat credits can be taken) and distributes such credits to its units provid....