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2013 (6) TMI 528 - AT - Central ExciseStay - ISD - Cenvat Credit - Input service distributor - distribution of credit to single unit - recovery of excise duty - penalty under Rule 15 of CCR with section 11AC - Held that - On going through the above Rule (7), we find that input service distributor may distribute the Cenvat credit to its manufacturing units or units providing output service, subject to the condition (a) and (b) of the rule. From the wording of the rule, we find that input service distributor has to be only one and the credit can be given to different manufacturing units because the manufacturing units is used in the rule in plural whereas the input service distributor is mentioned as singular. In the present case we find that the input service credit is being taken by M/s Hindalco Industries Ltd. at Renukoot whereas the input service distributor are more than one as separately registered as Lohardaga and Samri etc. - prima facie view that the Cenvat Credit of service tax paid on input services utilised by the mines located at Lohardaga and Samri etc. is not available to the applicant. - However extended period of limitation may not be applicable to the present case. - pre-deposit ordered partly.
Issues:
1. Denial of Cenvat credit for input services utilized at different mines. 2. Validity of ISD invoices issued by the mines. 3. Interpretation of Rule 7 of the Cenvat Credit Rules. 4. Time limitation for issuance of Show Cause Notices. Issue 1: Denial of Cenvat credit for input services utilized at different mines: The appellant, a manufacturing unit of a company, sought waiver of pre-deposit and stay of recovery of Excise Duty and penalty. The department alleged that the appellant availed inadmissible Cenvat credit at mines in Lohardaga and Samri, treating them as captive mines. The Commissioner confirmed the denial of credit, citing improper distribution of credit and non-exclusive use of bauxite ore by the appellant. The Tribunal noted the separate identity of the mines and ruled that the credit was not available due to the bauxite supply to other units. Issue 2: Validity of ISD invoices issued by the mines: The appellant argued that ISD invoices from the mines were valid for credit. However, the Tribunal found that the mines did not mention the appellant as the recipient of credit in their ST-I applications, making the credit prima facie unavailable. Rule 7 of the Cenvat Credit Rules mandates proper distribution of credit by the input service distributor, which was not fulfilled in this case. Issue 3: Interpretation of Rule 7 of the Cenvat Credit Rules: Rule 7 allows an input service distributor to distribute credit to manufacturing units, subject to conditions. The Tribunal noted that the distributor must be singular, while the appellant had multiple registered distributors. Therefore, the credit on input services utilized at the mines was deemed unavailable to the appellant. Issue 4: Time limitation for issuance of Show Cause Notices: The Tribunal found that two Show Cause Notices were within the time limit, but one invoked the extended period. Considering the appellant's communication about credit availed earlier, the extended period was deemed inapplicable. A partial deposit was ordered, with a stay on the balance amount pending compliance until the appeal's disposal. In conclusion, the Tribunal upheld the denial of Cenvat credit for input services at the mines, citing improper distribution and non-exclusive use of resources. The validity of ISD invoices and compliance with Rule 7 were crucial factors in determining the credit availability. Time limitations for Show Cause Notices were also considered, leading to a partial deposit requirement for the appellant.
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