TaxTMI 
TaxTMI 
2023 (3) TMI 634
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....nufacture of Ceramic articles. They have availed CENVAT Credit of service tax paid by their Head Office situated at Chennai and distributed the same in the capacity of input service distributor. Three Show Cause Notices were issued to them proposing to deny the credit for November 2007 to September 2008 for the following reasons. (i) The input services has been distributed only to Parryware situated at Ranipet, though there were other three manufacturing units at Perundurai in Tamilnadu, Alwar in Rajasthan and Dewas in Madhya Pradesh. (ii) The impugned services in the nature of business auxiliary services provided by EID Parry to the respondents which were accounted as reimbursement of 'Freight charges and Manager Salary',....
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....calculated and reversed by the respondent. The Department has filed the present appeal against such order. 5. The learned AR Shri S. Balakumar appeared and argued for the Department. He reiterated the grounds of appeal. It is submitted by him that the Commissioner (Appeals) has failed to consider and appreciate that trading cannot be considered as a service or a manufacturing activity. The Commissioner (Appeals) held that as the respondent is not maintaining separate accounts, the credit on common input services proportionate to trading activity has to be reversed as per the formula prescribed in Rule 6 (3A) of CENVAT Credit Rules, 2004. It was also directed that the respondents shall pay/reverse the CENVAT Credit so calculated and submi....
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....y services. The main ground raised in the appeal is that the input services were not received and used by the manufacturing unit at Ranipet and therefore the distribution of credit by Head Office is not in accordance with law. The learned counsel submitted that it is not necessary to avail the services within the factory itself. 8. The other allegation is that the Head Office of the respondent company has distributed the entire input service credit to one unit at Ranipet which is the manufacturing unit. The learned counsel adverted to Rule 7 of CENVAT Rules, 2004 and submitted that prior to amendment in 2012 there was no requirement to distribute the credit in a particular manner. Thus, prior to the amendment an assessee had an option as....
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....for credit since it is not necessary that the input services should be consumed in the factory itself. Another ground raised by the Department is that the credit has been distributed to one unit only. Prior to the amendment in 2012, Rule 7 did not provide any manner of distribution of input service credit. An assessee had an option to decide the distribution of the credit. The decision relied upon by the learned counsel for the respondent has analyzed the very same issue in the case of Godrej Consumer Products Ltd. (supra), the Tribunal observed as under: " 6.1 Only with effect from 1-4-2012, Rule 7 has been amended to include that the distribution of credit shall be on pro rata basis. The decision in the case of ECOF Industries P.....