9911796707
TMI Blog2014 (11) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... ribution of Service Tax credit in a manner as has been done by the impugned order by the lower appellate authority (original authority had approved of such distribution) cannot be upheld - appellant is entitled to take Cenvat credit during the impugned period as distributed by their head office - Therefore, the allegation of suppression, fraud, collusion, wilful misstatement or intent to evade payment of duty does not sustain. It is also supported by the Notification 18/12-CE dated 17.03.2012 wherein the Rule has been amended in the light of the decision of Ecof Industries (2009 (10) TMI 171 - CESTAT, BANGALORE) - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order. Aggrieved from the said order, the appellant is before us. 4. The ld. counsel for the appellant submits that the appellant is having two units one DTA and other EOU unit. The service tax has been paid at their head office located in Pune and registered as input service distributor. As the service tax of both the units have been paid by head office, therefore as per Rule 7 of the CENVAT Credit Rules, 2004, the Head office has correctly distributed the Cenvat credit to the appellant and therefore same is admissible as input service credit. To support this contention, he relied on the CBEC Circular no. 97/8/2007 dated 23.08.2007 and the decision of the Tribunal in Ecof Industries 2010 (17) STR 515 (T) which has been affirmed by the Hon'ble High Court of Karnataka in 2011 (27) ELT 58, 2011 (26) STR 100, 2011 (29) STR 107. 5. He further submits that the dispute is in nature revenue neutral as there is not loss to the revenue because the Cenvat credit was available to EOU unit and the said unit was converted into DTA unit and the credit was transferred to DTA unit as per Rule 10 of CENVAT Credit Rules, 2004. Therefore the situation is revenue neutral and in that situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the several units of the input service distributor. Therefore, in this case the question of examination is whether input service distributor was entitled to take Cenvat credit on these services or not. If the allegation of the ld. AR is admitted that it is not a input service in that case the service tax was not required to be paid by the head office particularly in this case, the service tax liability has been arising on the head office under reverse charge mechanism which has been paid by head office. In these set of facts, it cannot be said that it is not an input service for the head office. Therefore, now we have to see whether head office has correctly transferred the credit or not. To transfer the Cenvat credit by head office to various units has been provided through Rule 7 of the CENVAT Credit Rules, 2004. 10. Therefore, we have to look into Rule 7 of CENVAT Credit Rules, 2004 for distribution of input service credit. 11. Rule 7 is reproduced as under:- "Rule 7. Manner of distribution of credit by input service distributor . - The input service distributor may distribute the CENVAT credit in respect of the service tax paid on the input service to its manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Credits can be taken) and distributes such credits to its units providing taxable services or manufacturing excisable goods. The distribution of credit is subject to the conditions that,-(a) the credit distributed against an eligible document shall not exceed the amount of service tax paid thereon, and (b) credit of service tax attributable to services used in a unit either exclusively manufacturing exempted goods or exclusively providing exempted services shall not be distributed. An input service distributor is required (under Section 69 of the Act, read with Notification No.26/2005-S.T.) to take a separate registration." 8. The combined reading of the Rule 7 and the clarificatory circular dt.23/8/2007 hereby shows that there are only two restrictions regarding the distribution of the credit. The first restriction is that the credit should not exceed the amount of Service Tax paid. The second restriction is that the credit should not be attributable to services used in manufacture of exempted goods or providing of exempted services. There are no other restrictions under the rules, the restriction sought to be applied by the Department in this case in limiting the distribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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