TaxTMI 
TaxTMI 
2026 (2) TMI 834
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.... per the impugned order disallowed and confirmed the demand of wrongly availed excess Cenvat credit and imposed penalties under the provisions of Cenvat Credit Rules, 2004 and Finance Act, 1994. Aggrieved by said order present appeal is filed before the Tribunal. 3. When the appeal came up for hearing, Learned Counsel for the appellant submits that based on the invoices received from Hosur unit of M/s. TVS Motors company registered as Input Service Distributor (ISD), Appellant had availed credit of inputs services and that the appellant is merely a recipient of credit distributed by the ISD unit and did not have any control over the availment or distribution of the credit. Appellant has been filing ER-1 Returns and ST-3 Returns disclosing the facts of such credit availment and alleging that the appellant had claimed ineligible Cenvat credit proceedings were initiated and the Adjudicating Authority confirmed the demand. Learned Counsel draws our attention to Rule 9 of the Cenvat Credit Rules, 2004 and to Rule 3(1) of the Cenvat Credit Rules, 2004 and submits that as a manufacturer of final products the appellant is eligible to claim and utilize the Cenvat credit of Service tax pa....
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....he Cenvat credit provision should not be denied on the mere ground of procedural lapse. In the present case also there is no dispute about the invoices raised by the ISD, also there is no dispute that major amount of the credit has been distributed on pro rata distribution basis only, except that in some invoices it was distributed on the quantity basis. Rule 7 of CCR, 2004 is a procedure. As already discussed above the procedural lapse cannot be a ground to deny the substantial benefit of Cenvat credit. Also, the situation is discussed to be revenue neutral. Question of demanding interest and imposition of penalty does not at all arises. This Tribunal, Ahmedabad Bench in the case of Doshion Ltd. Vs. Commissioner of Central Excise, Ahmedabad reported in 2013 (288) E.L.T. 291 (Tri.-Ahmd.) -2012-VIL-35-CESTAT-AHM-CE........ 15. We finally observe that there is no dispute of receipt of services, eligibility of services for credit nor any dispute that the invoices are raised by the ISD/Corporate Office of three of the appellants, which was eligible to distribute the credit to their units/factory. We further find that there is no proposal to issue any show cause notice to the s....
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....t, 1944 and any recovery can be effected only under section 11A of that Act. More so, the duty liability intended to be recovered must have been short-paid or not paid; no such allegation has been made in the notice or held to be so by the lower authorities. The corporate enterprise that has established this manufacturing facility is not acknowledged by Central Excise Act, 1944 a dereliction on their part, if any, cannot be brought within the purview of this Act unless it be in relation to manufacture. Even if such recovery is ordered with reference to rule 14 of CENVAT Credit Rules, 2004, wrongful availment must be established. In the scheme of input service distribution, the assessee-appellant is not required, by the framework Rules, to ascertain eligibility or be cognizant of the source of credit. It is a well-settled principle of natural justice that an assessee must not only be made aware of the reasons for proposed detriment but also be capable of defending its actions. The scheme of CENVAT credit precludes such defence by the appellant-assessee. The appellant-assessee is a recipient of credit that is assigned by the distributor who, undisputedly, has borne the incidence of t....
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....SD and therefore no liability can be fastened on them. We also find force in the argument of the appellant that no case has been made out by the department for invoking extended period of limitation in as much as mere not indicating the formula adopted for distribution of cenvat credit does not amount to suppression of facts as there was no obligation upon the assessee to disclose the formula adopted by them. Therefore, even on limitation we rule in favour of the assessee. We also find force in the argument of the assessee that the cenvat credit distributed by the ISD cannot be modified by a recipient of the ISD invoices namely appellant. The impugned order is not sustainable on all the three grounds." 8. Learned Counsel further draws our attention to the case of Philips Carbon Black Ltd. Vs. C.C.E. - Bharuch, reported at 2024 (10) TMI 1334 - CESTAT Ahmedabad, wherein it has been held that the proportionate distribution of the input service credit was made mandatory by amendment with effect from 01.04.2016. However, prior to the said amendment, there was no compulsion on the ISD to distribute the credit either to one unit or proportionately to different units. Therefore, even if....