TaxTMI 
TaxTMI 
2024 (5) TMI 325
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....ce. The payment against such invoices along with service tax was paid by the Head Office. The head office distributed the credit of service tax so paid to its manufacturing unit at Athal (Silvassa) i.e. the appellant in terms of Rule 7 of the Cenvat Credit Rules, 2004. The credit was distributed by raising ISD invoices on the basis of invoices issued by the service provider in terms of Rule 4A of Cenvat Credit Rules, 2004. During the period in question the entire credit of service tax was distributed by head office (ISD) to the Athal (Silvassa) unit alone and no amount of credit was distributed to the remaining two units of the Appellants in Haryana and Jammu & Kashmir. 1.3 During the course of CERA audit it was observed by the department that the head office (ISD) had distributed the whole of the cenvat credit of input services to the Silvassa Unit although the appellant also had other manufacturing units in Haryana and Jammu & Kashmir. Based on the audit objection, total 5 show cause notices were issued to the appellant from time to time proposing to deny and recover the cenvat credit availed by the Silvassa unit during the period April 2008 to March, 2012 based on ISD invoices.....
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....lant unit is in order and the same cannot be disputed. In support of his submission he placed reliance on the following judgments : - Dabur India Ltd vs. CCE - 2023(1) TMI 186 - CESTAT Ahmedabad CCE vs. ECOF Industries (P) Ltd - 2011 (2) TMI 1130- Karnataka High Court Hindustan Zinc Ltd vs. CGST - 2019 (4) TMI 1843 -CESTAT Primal Glass Pvt Ltd vs. CCE - 2021 (9) TMI 1198 - CESTAT Ahmedabad Shalimar Paints Ltd vs. CCE - 2022(8) TMI 469 - CESTAT Shree Flavours LLP vs. CCE - 2022 (8) TMI 825 -CESTAT Unifrax India Pvt Ltd Vs CCE, ST, 2023(10) TMI 955-CESTAT Ahmedabad Dabur India Limited v. CCE & Customs, Vapi 2018 (2) TMI 618 - CESTAT Ahmedabad Secure Meters Ltd. v. CCE & ST, Jaipur 2017 (3) GSTL 422 (Tri. Del.) Praj Industries Ltd. v. CCE, Pune-III 2014 (36) S.T.R. 1273 (Tri. - Mumbai) CCE Vs Ecof Industries Pvt. Ltd 2011(23) STR 337 (kar.) 2.1 He also submits that the show cause notices issued to the appellant are without jurisdiction for the reason that whether the ISD could have distributed the entire credit to the Silvassa unit or not has to be examined at the ISD and not at the end of the recipient Silvassa Unit. Therefore, the dispute raised on avail....
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....viding of exempted services shall not be distributed. 4.1 From the above provision it is clear that there was no requirement that the entire credit to be distributed by the head office should be in proportionate manner among the various units of the manufacturer. However, the above provision was amended from 01.04.2012. the amended provision is as under:- Rule 7 Post 2012- amendment RULE 7. Manner of distribution of credit by input service distributor - The input service distributor may distribute the Cenvat credit in respect of the service tax paid on the input service to its manufacturing units or units providing output service, subject to the following condition, namely : - (a) The credit distributed against a document referred to in Rule 9 does not exceed the amount of service tax paid thereon; or (b) credit of service tax attributable to service used in a unit exclusively engaged in manufacture of exempted goods or providing of exempted services shall not be distributed; (c) credit of service tax attributable to service used wholly in a unit shall be distributed to the unit; and (d) credit of service tax attributable to service used in more than one unit shal....
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....ercise academic. Therefore, the question is not entertained. 12. Accordingly, the Appeal is dismissed." 4.3 Similarly in the case of Unifrax India Ltd vs. CCE, Bhavnagar - 2023 (10) TMI 955- CESTAT Ahmedabad following view has been taken:- "2. Shri Jigar Shah, learned Counsel appearing on behalf of the appellant submits that as regard the issue (A) that whether the CENVAT Credit which was distributed by their head office prior to its registration as Input Service Distributor, the issue is no longer res integra as in the following judgments, it has been consistently held that prior to registration of ISD credit can be passed on to the manufacturing unit: CCE Vs. Hinduja Global Solutions Ltd- 2022 (4) TMI 71- Karnataka High Court CCE Vs. Dashion Ltd.- 2016 (2) TMI 183- Gujarat High Court Spice Degital Ltd Vs. CCE- 2023 (5) 196 CESTAT Chandigarh 3M Electro & Communication India Pvt Ltd Vs. CCE- 2023 (6) TMI 1104- CESTAT Chennai United Phosphorus Ltd Vs. CCE-2022 (11) TMI 747-CESTAT Ahmedabad Sanghi Industries Ltd Vs. CCE-2019 (12) TMI CESTAT Ahmedabad Philips Electronics (I) Ltd Vs. CCE- 2019 (6) TMI 361- CESTAT Ahmedabad Hindalco Industries Ltd Vs CCE-201....
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....erein the Hon'ble Court has observed as under: "7. The second objection of the Revenue as noted was with respect of non-registration of the unit as input service distributor. It is true that the Government had framed Rules of 2005 for registration of input service distributors, who would have to make application to the jurisdictional Superintendent of Central Excise in terms of Rule 3 thereof. Sub-rule (2) of Rule 3 further required any provider of taxable service whose aggregate value of taxable service exceeds certain limit to make an application for registration within the time prescribed. However, there is nothing in the said Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons dis-entitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. It was in this background that the Tribunal viewed the requirement as curable. Particularly when it was found that full records were maintained and the irregularity, if at all, was procedural and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, in our opinion, r....
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.... 2013 & 662 of 2014 [2016-TIOL-111- HC-AHM-ST 2016 (41) S.T.R. 884 (Guj] = (b) Decision of the Hon'ble High Court of Rajasthan dated 08.02.2016 in the matter of Commissioner Central Excise Commissionerate, Jaipur v. National Engineering Industries Ltd CEA No. 3/2016 [2016-TIOL-922-HCRAJ- CX=2016 (42) S.T.R. 945 (Raj.)]. 2.1 Department has accepted the judgments where the Hon'ble High Courts dismissed the Department's appeal inter alia holding that substantial benefit cannot be denied because of procedural irregularity. 2.2 In the case of Dashion Ltd., the assessee was engaged in manufacture of water treatment plant and other connected items and was availing benefit of CENVAT credit on the duty paid on inputs, capital goods and input services as permissible under CENVAT Credit Rules, 2004. The assessee had five manufacturing units and had its registered office at Vatva, Ahmedabad. The assessee was also providing several taxable services such as erection and commissioning, repairing and maintenance of water treatment plant, etc. 2.3 The revenue authorities, during scrutiny of the records of the assessee, noticed that it was availing the credit of service tax p....
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....STR 758 (Tri-Ahmd.), held that not taking ISD registration is at best a procedural irregularity and credit is not deniable on this ground. It is observed that there are many other judgments cited by the appellant which support the case of the appellant on this issue. Therefore, merely because the ISD registration was not obtained the CENVAT Credit cannot be denied. As regard the second issue that the head office of the appellant distributed 100% credit to a single unit i.e appellant, we find that in Rule 7(d) of CENVAT Credit Rules, 2004, existing during the relevant period there was no restrictions for distribution of CENVAT Credit to one particular unit of an assessee despite having more than one unit. Accordingly, on this ground also credit cannot be denied. In this regard, we reproduce Rules existing prior to 2012 and post 2012 as under: Rule 7 as Existing Prior to 2012 :- "RULE 7. Manner of distribution of credit by input service distributor - The input service distributor. may distribute the Cenvat credit in respect of the service tax paid on the input service to its manufacturing units or units providing output service, subject to the following condition, namely: (a....
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...." in the substituted Rule 7 as Cenvat Credit Rules 2004 w.e.f. 1.4.2016. Therefore, on plain reading of Rule 7 as existing both pre and post amendment 2012 covering period involved in these proceedings, the respondent assessee was entitled to utilize the CENVAT credit available at its Pune unit." From the reading of the above rule and interpretation made by the Hon'ble Bombay High Court, it is clear that before the amendment was carried out in the year 2016, the assessee was given the option to distribute the CENVAT Credit to one unit or also to other unit, and provision for proportionate credit was brought only post amendment of 2016. Therefore, it is at the option of the head office whether it wanted to distribute the credit to the appellant only or to distribute it to other units. Therefore, in view of existing provisions of CENVAT Credit Rules, 2004 during relevant period, we are of the view that the 100% credit availed by the appellant is in order in terms of Rule 2007, existing at the relevant time. Therefore on this count also the adjudicating authority has wrongly denied the credit. On this issue also various other judgments relied upon by the appellant are applicable in....