2019 (2) TMI 25

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.... of Rule 3(4) of the CENVAT Credit Rules (CCR), 2004. It further appeared that in as much as M/s. Pricol Ltd., Plant-I is not a person liable to pay service tax, the unauthorized transfer of service tax and issue of invoice for input Credit transfer appeared to be wrong. The credit transferred as above by M/s. Pricol Ltd., Plant-I to M/s. Pricol Ltd., ISD appeared to be recoverable as per Rule 14 of CCR, 2004. In order to distribute CENVAT Credit availed on input services to various plants situated at different locations, M/s. Pricol Ltd. had obtained Input Service Distributor (ISD) Registration. Verification of records of M/s. Pricol Ltd., ISD indicated that they had availed Credit of Rs. 3,32,14,672/- on the strength of invoice dated 01.02.2009 issued by M/s. Pricol Ltd., Plant-I. The provisions of CCR, 2004 do not permit transfer of Credit by M/s. Pricol Ltd., Plant-I who is the manufacturer and not the Input Service Distributor. 2.3 The Department was of the view that M/s. Pricol Ltd., ISD has availed Credit on the strength of improper documents and is liable for penal action. Accordingly, Show Cause Notice was issued to M/s. Pricol Ltd. alleging wrongful availment of Credit o....

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....e Credit by issuing an invoice to retain status quo. Reversal of Credit has been done on the premises that Credit reversed is equal to 'no Credit taken'. That the Credit was reversed by raising invoice under the bona fide belief that the action of reversal of Credit would restore status quo. Thus, the amount was available to the Input Service Distributor for further transfer. The reversal of Credit by M/s. Pricol Ltd., Plant-I has to be considered as non-availment of Credit. To support this argument, he relied upon the cases of : * Chandrapur Magnet Wires Pvt. Ltd. Vs. C.C.E., 1996 (81) E.L.T. 3 (S.C.); * Hello Minerals Water Pvt. Ltd. Vs. Union of India - 2004 (174) E.L.T. 422 (Allhd.); * Mount Mettur Pharmaceuticals Ltd. Vs. C.C.E. - 2009 (235) E.L.T. 664 (Tri. - Chennai). 3.3.1 He submitted that the allegation of the Department that M/s. Pricol Ltd., Plant-I had issued invoice which is not prescribed under Rule 9 of CCR, 2004 is incorrect. The invoice was raised by M/s. Pricol Ltd., Plant-I as a proof of reversal of Credit and it has nothing to do with the documents mentioned in Rule 9 ibid. The whole attempt was an exercise to restore status quo and to Credit the amou....

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....as been utilized by the respective units which received the Credit distributed for discharging service tax/duty. The re-credit of the amount by the Input Service Distributor and the reversal of Credit by M/s. Pricol Ltd., Plant-I, if at all, can only be viewed as a procedural infraction. The allegation that M/s. Pricol Ltd., Plant-I has transferred the Credit to M/s. Pricol Ltd., ISD, and that this transfer is without any authority of law, is countered by the Ld. Counsel on the submission that if M/s. Pricol Ltd., Plant-I had ISD registration, the same would be within the four corners of law. Thus, the same tantamounts to distribution of Credit without ISD registration only. 3.5 Further, the entire facts were captured in the accounts of the appellant and also in the returns filed by them. The Show Cause Notice issued invoking extended period of limitation alleging suppression of facts, therefore, is without any basis. To support this argument he relied upon the decision in the case of Doshion Ltd. Vs. C.C.E., Ahmedabad - 2013 (288) E.L.T. 291 (Tri. - Ahmd.) which was upheld by the Hon'ble High Court of Gujarat vide 2016 (41) S.T.R. 884 (Guj.) 4.1 Ld. AR Shri. K. Veerabhadra Reddy....

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....ol Ltd., ISD, which is against the law. The allegation against M/s. Pricol Ltd., ISD, is that they have wrongly availed the Credit on the strength of improper documents and thereafter, distributed it to its other units. For better appreciation, the definition of "Input Service Distributor" as defined under Rule 2(m) of CCR, 2004 is reproduced as under : "RULE 2. Definitions. - In these rules, unless the context otherwise requires, - . . (m) "input service distributor" means an office of the manufacturer or producer of final products or provider of output service, which receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards purchases of input services and issues invoice, bill or, as the case may be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, [or an outsourced manufacturing unit] as the case may be;" 7.1 The manner in which the Credit can be distributed among different units is prescribed under Rule 7 of CCR, 2004. During the relevant period, Rule 7 ibid stated that the Input Service Distributor may distribute the Credit to its manufacturing units or units p....