TaxTMI 
TaxTMI 
2024 (12) TMI 404
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....tment noticed that the appellant have availed Cenvat credit on the strength of the invoices issued for distribution of service tax credit by M/s. Syngenta India Limited as 'Input Service Distributor' and the department is of the view that appellant are not eligible to avail and utilize the input service credit distributed by M/s. Syngenta India Limited as the appellant is not a manufacturing unit of M/s. Syngenta India Limited. 2. On the basis of above facts, a show cause notice dated 15.4.2015 came to be issued demanding reversal of Cenvat credit amounting to Rs. 2,72,21,989/-. As per the provisions of Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A(4) of the Central Excise Act, 1944. The show cause notice has also invoked provisions pertaining to levy of penalty as per the provisions of Rule 15 read with Section 11AC of Central Excise Act, 1944 etc. The matter has been adjudicated by the impugned order-in-original dated 15.03.2016 whereunder all the charges as invoked in the show cause notice has been confirmed by the Adjudicating Authority. The appellant are before us against the above mentioned impugned order-in-original dated 15.03.2016. 3. Shri Jigar Shah, learne....
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....principal manufacturer. 6. We have also heard Shri Rajesh R. Kurup, learned Superintendent (AR) who reiterated the findings as given in the impugned order-in-original. 7. Having heard both the sides, we are of the view that the matter is no longer res-integra as in the case of Sweety Industries vs. CCE &C-Anand (supra) has held that Input Service Distributor is also entitled to distribute Cenvat credit of various input services to its job work units. The relevant portion of the above mentioned order is reproduced here below:- "26. What is also important to notice is that rule 7 of the CENVAT Rules allows distribution of credit to its manufacturing units. It does not use the words its own manufactures units. It can, therefore, safely be presumed that the term its manufacturing units should include a contract manufacturer, who manufactures in accordance with the provisions of the Registration Exemption Notification. 27. In this connection it will be pertinent to refer to the decision of the Tribunal in Tamil Trading Corporation. The relevant portion is reproduced below : "6. We have gone through the records of the case carefully. The Customs Notification No. 21/2002-Cus. Prov....
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....ic Research Ltd. cited by the Id. Advocate, has held that literal meaning of statute should be abandoned if it leads to unjustified results. In that case, goods imported under Concessional rate of duty for use in one factory were transferred to the factory of the importer at another place under certain circumstances. The Commissioner (Appeals) decided in favour of the importer. Revenue came in appeal before the Tribunal. The Tribunal held that the importer was entitled to exemption as neither the Rules nor the Notifications itself prohibited such transfer. The above decision was held in the context of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. The ratio of the above decision is applicable to the present case also. The fact that Chennai Commissionerate has permitted Registration in respect of the importer who does not own the factory where the imported Crude Palm Oil is utilized is also supporting the appellants' case. Hence we allow the appeal with consequential relief, if any. ( emphasis supplied ) 28. The Commissioner (Appeals) relied upon the decision of the Tribunal in Sunbell Alloys which was decided on 17....
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....tion is clear, the rules relating to input service credit distribution becomes easy to interpret. As per Rule 2(m) of the CCR, 2004 input service distributor' means an office of the manufacturer or producer of output service. In this case, the distributor is M / s Merck Specialties Ltd. whereas the manufacturers are the appellants. Since these are separate legal entities, office of M / s Merck cannot be considered as an office of the manufacturer and hence Merck cannot be considered as an input service distributor' as defined under Rule 2(m) of the CCR, 2004. Further, as per Rule 7, the input service distributor has to distribute the credit to 'its manufacturing units'. The manufacturing units of the appellants are not that of M/s. Merck Specialties Ltd. and these units belong to the appellants and therefore, M / s Merck cannot distribute Cenvat credit to the appellants under Rule 7 of CCR, 2004 as aforesaid. The expression 'its manufacturing unit' specified under Rule 7 has to be interpreted in terms of the ratio of the decision of the Tribunal in the case of Panasea Biotec Ltd. (cited supra). In that case, for availing the benefit of Notification 23/98 - C....
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....so can be used in the job worker factory. There is no dispute the goods were used on behalf of the appellant in their loan licensee (job work factory) on behalf of the appellant only. The ownership of goods remained with the appellant right from import of the goods up to the use in the final product. In this position, in our view the imported goods used for the specified purpose, the condition of end use stands complied with. The whole objective of the duty free imported bulk drug is that it should be used in the manufacture of life saving drugs or medicine. In our view, if this condition is fulfilled while the ownership of the goods is with appellant, it can be said condition of the end use is satisfied. This issue has come up in the case of Tamil Trading Corporation Ltd. (supra). ( emphasis supplied ) 31. It is, therefore, not possible to accept the contention of the Department that principal and the contract manufacturer being separated legal entities, the contract manufacturer, even when operating under the Registration Exemption Notification, cannot be termed as a manufacturing unit of the principal. 32. It also needs to be remembered that CENVAT credit scheme seeks to a....
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....acts and circumstances of the present case. 36. In this connection reliance can be placed on the decision of the Karnataka High Court in CCE vs. Millipore India Pvt. Ltd. 2012 (26) S.T.R. 514 (Kar.), wherein it was held that if the cost of various services availed forms part of the assessable value of the goods manufactured and sold, there is no reason to deny CENVAT credit of duty and taxes paid on various inputs/ input services availed. The relevant portion of the judgment is reproduced below : "7.5 The principle of law that the services which form a part of the assessable value on which excise duty is discharged, would be available as Cenvat credit has also been accepted by the Hon'ble Karnataka High Court in the Case of CCE v. Milipore India P. Ltd. reported on 2012 (26) S.T.R. 514 wherein, it was held that if service tax is paid in respect of any of the service which for a part of the cost of the final product, certainly the assessee would be entitled to Cenvat credit of the tax so paid. In the appellant's own case this Tribunal has in its Order No. A/225/14/EB/C- II, dated 3-3-2014 [2014 (36) S.T.R. 467 (Tribunal)] = 2014-TIOL-768- CESTAT-MUM held that if the cos....
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.... "52. To sum up, we answer the reference holding as under- (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subjected to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled." 40. The Supreme Court subsequently in Government of Kerala & Another vs. Mother Superior Adoration Convent Civil Appeal No 202 of 2012 decided on 01.03.2021 = 2021- TIOL-156-SC-MISC, drew a distinction between exemption provisions generally and exemption provisions which have a beneficial purpose and the observations are as follows : "23. It may be noticed that the 5-Judge Bench judgment (Dilip Kumar) did not refer to the line of authority which made a distinction between exemption provisions generally and exemption provisions ....