2013 (5) TMI 737 - AT - Central Excise

Eligibility for availment of Cenvat credit - ISD - Input Service Distributor - Services pertaining to their other units when distributed by the Head Quarters who is also registered as ISD As per appellant cenvat credit was taken by them on the basis of invoices issued by their head office to Unit-III which was utilized for discharging duty liability on the finished goods. Held that - Following the judgment of the Karnataka High Court 2011 (2) TMI 1130 - KARNATAKA HIGH COURT in the case of appellant itself, the tribunal in its order 2013 (5) TMI 702 - CESTAT, AHMEDABAD has held that the appellant cannot be denied the credit on the ground that the input services were received in some other units and during distribution of input services credit was given to another unit of the appellant. Therefore, the appeal filed by the appellant is allowed. - Decided in favor of assessee.

Summary

Issues:
1. Eligibility for cenvat credit of service tax in respect of services distributed by the Head Quarters who is also registered as ISD.
2. Validity of cenvat credit documents and admissibility of cenvat credit.

Analysis:
Issue 1:
The appeal involved the question of whether the appellant is entitled to cenvat credit of service tax for services distributed by the Head Quarters, which is also registered as an Input Service Distributor (ISD). The appellant claimed that they had taken cenvat credit based on invoices issued by their head office to another unit, which was utilized for discharging duty liability on finished goods. The appellant's counsel cited relevant judgments, such as ECOF Industries Pvt. Ltd. vs. CC EX. Bangalore-I and M/s.TVS Motor Company Ltd. vs. CE EX., Chennai, to support their argument that such distributed input credit is admissible. Additionally, a previous order by the Ahmedabad Bench of the Tribunal in the appellant's own case upheld the admissibility of cenvat credit distributed by the Head Quarter.

Issue 2:
The validity of cenvat credit documents and the admissibility of cenvat credit were challenged by the ld. AR, who highlighted certain paragraphs of the adjudication order indicating that the cenvat credit documents were deemed invalid. However, upon reviewing the records and considering the arguments presented, it was observed that the show cause notice did not specify how the documents issued by the appellant's head office were inadequate under the Cenvat Credit Rules. The judgment of the Hon'ble Karnataka High Court in the case of ECOF Industries Pvt. Ltd. was referenced to emphasize the importance of proper distribution of credit by an Input Service Distributor. The Court reiterated the conditions for distributing credit, emphasizing that it should not exceed the amount of service tax paid and should not be distributed to units exclusively engaged in exempted goods or services.

Based on the precedents and the relevant legal provisions, the Tribunal concluded that the appellant could not be denied credit on the grounds that input services were received in other units and distributed to another unit of the appellant. Referring to the earlier order in the appellant's own case, the Tribunal allowed the appeal by setting aside the order in appeal dated 29/09/2011.