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2025 (3) TMI 428 - AT - Central ExciseCENVAT Credit - cenvat credit availed by the respondent has been distributed by the input service distributor as an ISD and the availment of cenvat credit by the respondent which has been disputed at the end of ISD - HELD THAT - The identical issue has been dealt with by this Tribunal in the case of Tata Steel Limited 2024 (10) TMI 50 - CESTAT KOLKATA wherein this Tribunal has observed that As it is an admitted fact that the availment of CENVAT Credit on intellectual property service was not disputed at the end of the ISD/TSL Kolkata the CENVAT Credit cannot be declared as inadmissible CENVAT Credit to the appellant who has taken the CENVAT Credit on the strength of the invoices issued by the ISD. In these circumstances we hold that the appellant is entitled to take CENVAT Credit and accordingly there is no requirement of reversal of CENVAT Credit by the appellant. Conclusion - A the distribution of cenvat credit to the respondent has not been disputed by the Revenue at the end of the Input Service Distributor in that circumstances it cannot be disputed at the end of the availment of cenvat credit by the respondent. There are no infirmity with the impugned orders - appeal of Revenue dismissed.
ISSUES PRESENTED and CONSIDERED
The core issue considered in this judgment is whether the CENVAT credit availed by the respondent, which has been distributed by the Input Service Distributor (ISD), is admissible when the availment of CENVAT credit at the end of the ISD has not been disputed by the Revenue. Specifically, the legal question is whether the CENVAT credit availed by the respondent can be denied when the ISD has distributed the credit in compliance with the rules, and the distribution itself has not been challenged. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The legal framework involves the CENVAT Credit Rules, particularly Rule 7, which governs the manner of distribution of credit by an ISD. The relevant precedents include cases such as Tata Steel Limited and Nalco Water India Ltd., where the Tribunal held that CENVAT credit cannot be denied if the distribution by the ISD complies with the rules and is not disputed by the Revenue. Court's Interpretation and Reasoning The Tribunal interpreted that the ISD is an integral part of the manufacturing entity and that the distribution of credit by the ISD is valid as long as it adheres to Rule 7 of the CENVAT Credit Rules. The Tribunal emphasized that the ISD acts as an office of the manufacturer and is responsible for distributing the credit of service tax paid on input services to the manufacturing units. Key Evidence and Findings The Tribunal noted that there was no allegation or evidence that the ISD had taken inadmissible CENVAT credit. The distribution of credit was done in accordance with Rule 7, and there were no violations of the conditions stipulated under the rule. The Tribunal found that the services in question were availed at the head office, which is part of the appellant as a manufacturer, thereby justifying the credit distribution. Application of Law to Facts The Tribunal applied the law by confirming that the ISD's distribution of credit was compliant with the legal requirements, and since the Revenue did not dispute the distribution at the ISD's end, the credit availed by the respondent could not be challenged. The Tribunal referenced the Tata Steel Limited case, which dealt with a similar issue, to support its decision. Treatment of Competing Arguments The Tribunal considered the arguments from both the respondent and the Revenue. The respondent argued that the issue had been settled in previous cases, while the Revenue supported the impugned order. The Tribunal found the respondent's arguments more persuasive, given the consistency with established precedents and the lack of dispute at the ISD level. Conclusions The Tribunal concluded that the CENVAT credit availed by the respondent was admissible, as the distribution by the ISD was in compliance with the rules and not disputed. Therefore, the appeals filed by the Revenue were dismissed. SIGNIFICANT HOLDINGS The Tribunal held that the distribution of CENVAT credit by an ISD cannot be challenged at the recipient's end if it complies with Rule 7 and is not disputed at the ISD's end. The core principle established is that the ISD is an extension of the manufacturing entity, and its compliance with the rules ensures the validity of the credit distribution. The final determination was that the respondent's availed CENVAT credit was legitimate, and the Revenue's appeals were dismissed.
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