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2017 (9) TMI 344 - AT - Central ExciseCENVAT credit - input service distributor - distribution of credit received at the Headquarters of the assessee-Appellants which is registered as input service distributor to its duty paying units - Held that - an identical issue in the assessee-Appellants own case has come up before the Allahabad Bench of this Tribunal in the case of M/s Dabur India Limited Versus Commissioner of Central Excise & Service Tax, Ghaziabad 2017 (5) TMI 599 - CESTAT ALLAHABAD , where it was held that Clause (b) of Rule 7 of the CCR, 2004 that existed during material time provided that such Cenvat credit of Service Tax paid was not admissible to be distributed which was exclusively used in unit engaged in the manufacture of exempted goods - appeal allowed - decided in favor of appellant.
Issues:
Appeals against Order-in-Appeal regarding Cenvat Credit of Service Tax on input services including Advertisement Service, Sales Promotion Service, and Rule 6(5) services. Dispute on credit distribution to duty paying units. Issue of limitation and repetition of Show Cause Notice. Analysis: The appeals were filed by the assessee-Appellants against the Order-in-Appeal passed by the Commissioner of Central Excise, Jaipur. The dispute revolved around the credit of Service Tax paid on advertisement, sales promotion services, and Rule 6(5) services received at the Headquarters of the assessee-Appellants, registered as Input Service Distributors. The Appellants distributed this credit to their duty paying units, but it was disallowed. The Tribunal noted an identical issue in the assessee-Appellants' own case before the Allahabad Bench, where it was observed that the Show Cause Notice lacked legal basis and failed to establish the inadmissibility of the credit. The Tribunal set aside the Order-in-Original and allowed the appeals, leaving the issue of limitation open. In a similar case, the Tribunal allowed the appeal of another assessee-Appellant, emphasizing that full Cenvat credit should be available if services were used in a manufacturing unit making both exempted and dutiable goods. The Tribunal found no evidence that the services were exclusively used in units manufacturing exempted goods, justifying the distribution of Cenvat credit. The Tribunal highlighted that the restrictions on credit distribution applied only to services exclusively used in relation to manufacturing exempted goods. The Tribunal also mentioned the amendment to Rule 7 of Cenvat Credit Rules in 2014, which did not impact the proceedings covering the period before January 2010. Following these precedents, the impugned orders were set aside, and the appeals of the assessee-Appellants were allowed. In conclusion, the Tribunal allowed the appeals of the assessee-Appellants, emphasizing the availability of full Cenvat credit for services used in manufacturing units producing both exempted and dutiable goods. The Tribunal highlighted the lack of justification for restricting the distribution of credit based on services used in units exclusively engaged in manufacturing exempted goods. The decisions in similar cases and the legal amendments were considered in setting aside the impugned orders and granting relief to the appellants.
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