9911796707
TMI Blog2013 (7) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, one at Ahmedabad and two units at Pune. All the manufacturing units have Central Excise registration with the department. The corporate office at UB City has registration with the department for providing taxable services such as management, maintenance or repair service, business auxiliary service, renting of immovable property service, etc. The Electronic City unit and one of the Pune units have similar registration with the department apart from their registration for manufacture of excisable goods. (b) The corporate office at UB City and the unit at Electronic City paid service tax to the extent of Rs.5,62,86,663/- under 'reverse charge mechanism' under Section 66A of the Finance Act, 1994 in respect of management consultancy service received from their foreign parent company. Out of the said amount of service tax, the corporate office distributed a sum of Rs.2,24,70,573/- to the manufacturing units at Bangalore (Electronic City), Pune (Ranjangaon Industrial Area) and Ahmedabad by raising challans but without obtaining registration as 'input service distributor' (ISD) defined under Rule 2(m) of the CENVAT Credit Rules, 2004. (c) The amount of CE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice did not allege that the 'management consultancy service' imported by the appellant was not an input service vis-`-vis their final products and output services. In such circumstances, the denial of CENVAT credit to the manufacturing units was not sustainable and no penalty was liable to be imposed on them or on their corporate office. 4. In adjudication of the dispute, the learned Commissioner passed the impugned order (i) holding that the challans issued by the corporate office for transferring/distributing CENVAT credit of Rs.2,24,70,573/- to the manufacturing units at Bangalore (Electronic City), Ahmedabad and Pune in 2009-10 and 2010-11 without obtaining ISD registration were invalid for the purpose of availment of CENVAT credit; (ii) denying the said credit to the said manufacturing units and ordering its recovery under Rule 14 of the CCR, 2004 read with Section 73 of the Finance Act; (iii) demanding interest on the said amount of CENVAT credit under Rule 14 read with Section 75 of the Act; (iv) imposing penalties of Rs.10,000/-, Rs. 1,63,77,285/-, Rs.36,03,763/- and Rs.24,89,525/- on the corporate office (UB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferring CENVAT credit from the account of one unit to the account of another unit. It is significant to note that the text of Rule 12A begins with a non obstante clause (notwithstanding anything contained in these rules). (iv)The learned Commissioner failed to discern correctly the distinct features of 'transfer' of credit on the one hand and distribution of credit on the other. He failed to address the issue in proper perspective. He failed to appreciate that the purpose of requiring registration for an input service distributor was different from the purpose of making provision for transfer of credit between different manufacturing/service providing units of a LTU. (v) It is not the case of the Revenue that 'management consultancy service' imported by the appellant is not an 'input service' for their manufacturing/service-providing units. The fact that service tax was paid on the said service in terms of Section 66A of the Act is not in dispute. Again, the department has no case that the said service was not used by the three units (Bangalore, Pune and Ahmedabad) in, or in relation to, the manufacture of final products or rendering of output service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de Commissioner vs. Myron Electricals Pvt. Ltd.: 2007 (207) E.L.T. 664 (P&H), Sutham Nylocots vs. Commissioner: 2005 (188) E.L.T. 26 (Tri.-Chennai) and mPORTAL India Wireless Pvt. Ltd. vs. Commissioner: 2012 (27) S. T.R. 134 (Kar.) 6. The learned Additional Commissioner (AR) has reiterated the findings of the adjudicating authority. 7.1 We have given careful consideration to the submissions. The learned Commissioner framed two issues as follows: (i) Whether the distribution, by the corporate office of the company, of credit of service tax (paid by the said corporate office and their manufacturing unit at Bangalore (Electronic City) on management consultancy service received from abroad, under the reverse charge mechanism in terms of Section 66A of the Finance Act, 1994) to the manufacturing units at Bangalore (Electronic City), Ahmedabad and Pune without taking ISD registration under the Service Tax (Registration of Special Category of Persons) Rules, 2005 was legally proper and regular and, if not, whether the challans issued by the corporate office for such distribution of CENVAT credit to the three manufacturing units in the year 2009-2010 were valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (premises) under Rule 12A (4) of the CCR, 2004. 7.3 It should have been borne in mind by the learned Commissioner that ISD registration was required only where CENVAT credit was distributed. If CENVAT credit was only transferred from one manufacturing/service-providing unit of LTU to another manufacturing/service-providing unit of the LTU, the transactions were governed by the provisions of Rule 12A. Therefore, in order to ascertain the applicability of Rule 12A to the case on hand, it was imperative on the part of the adjudicating authority to determine whether the transactions under the challans issued by the corporate office to the three manufacturing units constituted 'transfer' of credit or `distribution' of credit. We find that the learned Commissioner chose to rule out the applicability of Rule 12A without even attempting a distinction between 'transfer' and 'distribution'. This is abundantly clear from the very first clause of para 21 of the impugned order, which reads thus: "I hold that the challans under which service tax credit of Rs.2,24,70,573/- was transferred/ distributed by the corporate office to the manufacturing units at Bangalore (Electronic City) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id challans. The case of the appellant is that the entire exercise was in terms of sub-rule (4) of Rule 12A of the CCR, 2004 and that the provisions requiring ISD registration were not applicable to them. At this stage, it will be useful to refer to the provisions of Rule 12A ibid. 7.6 The text of Rule 12A opens with a non obstante clause reading "notwithstanding anything contained in these rules". The rule lays down a special procedure for large tax payers. Sub-rule (1) provides for removal, without payment of the amount specified under sub-rule (5) of Rule 3, of inputs (except a few specified items) or capital goods as such by a LTU, under cover of a transfer challan/invoice, from any of its registered premises to its other registered premises (other than premises of first or second stage dealer) for further use in the manufacture of final products in the recipient premises subject to certain conditions. The chief condition is that the final products should be cleared from the recipient premises on payment of appropriate duties of excise within six months from the date of receipt of the inputs in the said premises. Alternatively, the final products should be exporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (viii) 7.7 From the above provisions, it appears that the CENVAT credit available with any one of the registered manufacturing/serviceproviding premises of a LTU can be transferred to other registered manufacturing/service-providing premises of the same LTU. For this purpose, appropriate entry has to be made in the record maintained under Rule 9 (See sub-rules (5) and (6) of this Rule). The transfer of credit has to be effected by issue of transfer challan containing the registration number, name and address of the transferor-premises (sender-premises) as well as the registration number, name and address of the transferee-premises (recipient-premises), the amount of credit transferred and also the particulars of the entry made in the record maintained under Rule 9. The CENVAT credit on the basis of transfer challans can be taken at the transferee (recipient) premises. Nowhere in sub-rule (4) of Rule 12A is there any requirement of any ISD registration number to be mentioned in a transfer challan. What the sub-rule requires, inter alia, is the mention of "registration number" i.e. Central Excise registration number or Service Tax registration number. This being the legal position ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
