2018 (1) TMI 1010 - AT - Central Excise

CENVAT credit - distribution of credit through ISD to different unit - case of Department is that credit has been wrongly availed by the respondents on input as services were availed by other units of the respondent - Held that - When the respondent has taken ISD registration, we find no reason to deny the credit availed on such ISD invoices, though the services have been consumed in other unit of the respondent - reliance placed in the case of COMMISSIONER OF C. EX., BANGALORE-I Versus ECOF INDUSTRIES PVT. LTD. 2011 (2) TMI 1130 - KARNATAKA HIGH COURT , where it was held that Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against the Commissioner's order allowing credit on input services.

Analysis:
1. Issue of CENVAT credit eligibility: The department contested the respondent's availing of CENVAT credit on certain input services, arguing that they did not fall within the definition of input services. The department specifically highlighted services like housekeeping, guesthouse, copy charges, cleaning charges, conference, advertisement, C&F consultancy, repair, and maintenance services. The department insisted that the respondent needed to establish the usage of these services in or in relation to the manufacture of final products within their unit at Chennai as per CENVAT Credit Rules, 2004.

2. Arguments of the Appellant and Respondent: The department's representative reiterated the grounds of appeal, emphasizing that the credit availed was not justified as the services were not used within the factory of the respondent. On the other hand, the respondent's counsel supported the impugned order, stating that the services were correctly availed based on Input Service Distributor (ISD) invoices. The respondent's counsel cited various decisions of the Tribunal and High Court to support the eligibility of the services as input services used in or in relation to the manufacture of final products.

3. Input Service Distributor (ISD) registration: The Tribunal examined the department's argument that credit was wrongly availed as services were consumed in other units of the respondent. The Tribunal referred to previous judgments, including Commissioner of Central Excise Vs. ECOF Industries Pvt. Ltd. and Commissioner of Central Excise Vs. Godfrey Philips India Ltd., to establish that when a unit is registered as an ISD, credit availed on ISD invoices cannot be denied even if services are consumed in other units of the respondent. The Tribunal emphasized that the manufacturer is entitled to distribute credit of such input services as per the law.

4. Decision and Legal Precedents: Relying on judgments like United Phosphorus Ltd. Vs. Commissioner of Central Excise, Surat, the Tribunal upheld the impugned order, dismissing the department's appeal. The Tribunal concluded that there was no legal basis to interfere with the Commissioner's decision, as the respondent's availing of CENVAT credit on input services through ISD invoices was in accordance with the law. The Tribunal emphasized the responsibility of the jurisdictional officer to decide disputes regarding the eligibility of service tax credit.