2014 (1) TMI 612

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....eshed tobacco to the manufacturing facilities of the appellant. ILTD purchases leaf tobacco at auctions, gets them threshed and after threshing and segregation of leaf and stem, stores the same in different warehouses and supplies to the factories of ITC Ltd. The ILTD avails services such as storage and warehousing, transport to warehouse from threshing plants and from warehouses to factories, security services and accounting services. ILTD obtained registration as an Input Service Distributor under CENVAT Credit Rules, 2004 in 2006. During the course of audit of records of the appellant ITC Ltd., it was noticed that appellant had availed input service credit passed on by ILTD. Taking a view that the availment of CENVAT credit of service ta....

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....the contention of the department that the service tax paid by ILTD and distributed to be availed as credit by the factories of ITC Ltd. are not at all the service tax amount paid in respect of activities undertaken by ILTD prior to the completion of threshing and segregation of leaf and stem. The credit of service tax passed on related to the activities which are undertaken by ILTD which are namely storage of processed tobacco in warehouses by transporting them from the threshing and segregation facilities and thereafter service availed for storage in warehouses and transportation from warehouses to the factories. Therefore the service tax paid cannot be relatable to the product which suffers 'nil' rate of duty. He submits that procurement ....