TaxTMI 
TaxTMI 
2024 (10) TMI 50
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....e appellant-company is at Kolkata and has been registered as an Input Service Distributor (ISD) under the provisions of the Finance Act, 1994 as amended. The payments of Service Tax for the said services were effected by the Kolkata office of the appellant (hereinafter referred to as 'TSL, Kolkata'). 2.1. Since the steel works at Jamshedpur was also registered as the unit, for which TSL, Kolkata was the Input Service Distributor under the Act, CENVAT Credit of Service Tax paid on input services by TSL, Kolkata was distributed to its steel works at Jamshedpur under ISD invoices. 3. Show Cause Notices were issued inter alia alleging that the appellant had wrongly availed CENVAT Credit of the Service Tax paid on intellectual property service pertaining to their Kalinga Nagar unit during the material period although the same did not allegedly qualify as 'input service' on account of the service not being used by the steel works at Jamshedpur directly or indirectly, in or in relation to the manufacture of final product and towards clearance thereof up to the place of removal. Therefore, it was alleged that the appellant had contravened the provisions of the CENVAT Credit Rules, 20....
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....it emerges that appellant is having its office in Mumbai and as per definition of 'input services' distributor as per Rule 2(m) which is reproduced herein as under : "(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, as the case may be." 5. From the above provision, it is coming out that the inputs service distributor is the office of manufacturer or producer of final product. Therefore, it cannot be said that input service distributor is not the manufacturer. It merely means office of the manufacturer and as per Rule 7 of the Cenvat Credit Rules which provides manner of distribution of Cenvat credit which is reproduced hereunder as : "Rule 7. Manner of distribution of credit by input service distributor. - The input service distributor may distribute the CENVAT credit in respect of ....
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....les. As such, restricting the distribution of Service Tax credit in a manner as has been done by the impugned order of the lower appellate authority (original authority had approved of such distribution) cannot be upheld. In case the Department wants to place such restriction as is sought to be placed in the case, the rule is required to be amended. Said order was challenged by the Revenue before the Hon'ble High Court of Karnataka as reported in [2011 (271) E.L.T. 58 (Kar.)] wherein the Hon'ble High Court has observed as under : 8. It is in this context, the definition of input service distributor makes it clear that a manufacturer or a producer of a final product or a provider of output service may have more than one unit and may be distributed in various parts of the country. It is in this background the definition of service distributor is defined as office of the manufacturer or producer of a final product 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....
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....tribution of the credit, there is no condition of one-to-one correlation between the credit distributed and the quantum of service received and used by a particular factory. Though the service is related to the product which is manufactured in the appellant's company in other factories. But all the factories belonging to one company and in the absence of any provision of one-to-one correlation the credit can be distributed to any factory of one company. This issue has been considered by the Hon'ble Karnataka High Court in the case of Ecof Industries Pvt. Ltd. (supra) wherein it was held as under : 4. The assessee had availed the Service Tax credit based on the invoices issued by the Chennai office indicating that the Service Tax are taken by their unit at Malur. That the Service Tax paid by the Chennai unit pertains to advertisement of their product 'Sabena Dish Wash Bar' which was manufactured by their Cuttack Unit and not by the unit at Malur. Therefore, the assessee was dealing with the very same product. Rule 7 of the Cenvat Credit Rules governs procedure/manner of distribution of credit by input service distributor by imposing two conditions therein, which are as foll....