2022 (10) TMI 875

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....e of Input Service Distributor (ISD) invoice by M/s Parle Biscuits Pvt. Limited to its contract manufacturing unit (M/s M.B. Industries Pvt. Ltd.,) is legal and correct when the contract manufacturing is carried in terms of Notification No. 36/2001-CE (NT). 2. The details of appeals are as follows:- Sl. No. Appellants Appeal No. Duty (Rs.) Penalty (Rs.) 1 M/s M. B. Industries Pvt. Ltd., E/51572/2019 1,12,81,585/- 1,12,81,585/- 2 M/s Parle Biscuits Pvt. Ltd., E/51573/2019 - 12,00,000/- 3 M. V. Joshi E/51574/2019 - 12,00,000/- 4 Mariamma Iyer E/51575/2019 - 12,00,000/- 5 M/s M. B. Foods Pvt. Ltd., E/51576/2019 1,52,17,339/- 1,12,81,585/- 6 Maria....

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....ules provide for registration of every person, who produces, manufactures, carries on trade, holds private store-room or warehouse or otherwise uses excisable goods. iii. Rule 9(2) provides that the Board, may by notification, and subject to such conditions or limitations as may be specified in the notification, specify person or class of persons who may not require such registration. iv. Notification No.36/2001-CE (NT) dated 26.6.2001 has been issued under Rule 9(2) of the 2001 Rules and provides exemption from registration to the Contract Manufacturing Unit subject to conditions and stipulations. v. Rule 2(m) read with Rule 7 of CCR, 2004, provides a facility to an office of manufacturer of final product to dist....

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....all liabilities under the Act and Rules made thereunder. ix. Therefore, in view of the obligation cast under Clause (ii) of Notification No.36/2001-CE(NT), the Appellants complied with all the procedural formalities; such as maintenance of records of the goods manufactured, credit taken and utilized under Cenvat Credit Rules, payment of excise duty on finished goods, filing of Returns and furnishing of necessary information to the Department, as and when called for, etc. on behalf of the Principal Manufacturer (PBPL) and the Appellants were complying with the same in toto. x. Since the Biscuits, Confectioneries, etc. are manufactured not only in the factories of PBPL, but also in the factories of CMUs, as a business strate....

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....voices, issued under Rule 4A of STR and the Appellants took credit of the same in their Cenvat Account and utilized the same for payment of excise duty on the Biscuits exclusively manufactured and cleared to PBPL. The Appellants understand that PBPL-ISD had distributed such proportional credit to other CMUs also, alike the Appellants. The credit taken and utilized was reflected in the Cenvat Account and periodical Returns (ER-1 & ST-3) filed from time to time. xiii. Thus, the inputs required for manufacture of the Biscuits on contract manufacturing basis are procured by PBPL, which were supplied by the manufacturer-suppliers directly to the Appellants' factory on payment of excise duty. The invoices of the suppliers were showing th....

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....rms of the provisions of Rule 2(m) and Rule 7 of the CENVAT Rules, prior to 01.04.2016, the Appellants could distribute CENVAT credit in respect of the service tax paid on inputs services to its manufacturing units, including a job workers. xvii. Without prejudice, Rule 7 of CCR was substituted w.e.f. 1.4.2016, wherein a specific provision was made for an ISD to distribute the credit of input services even to outsource manufacturers/job-workers/contract manufacturers, manufacturing goods on their behalf and paying duty on their sales price/MRP. This amendment by "substitution" of Rule 7 of CCR was made only to correct the possible mistake/lacuna in the earlier Rule and, hence, the same would have retrospective effect from the incep....

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.... the contract manufacturing is carried out in terms of Notification No. 36/2001-CE (NT). (ii) Irrespective of the position that whether issuance of Input Service Distributors' invoice by Parle to Krishna is correct or otherwise, whether Krishna still is entitled for cenvat credit when the input service is attributed to the goods on which excise duty is paid includes the cost of services on which credit was taken." 7. The Larger Bench have answered the questions as follows:- "41 As noticed above, CENVAT is a beneficial scheme with the stated purpose of allowing CENVAT credit of all taxes paid on inputs and services so as to avoid cascading effect of taxes and duties. 42 Thus, even in terms of the provisions of R....