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TMI Blog2016 (5) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... . E/1706/2010 - Order No. A/86767/16/SMB - Dated:- 22-3-2016 - Ramesh Nair, Member (J) For the Appellant : Shri Prasad Paranjpe, Adv For the Respondent : Shri R K Maji, Asstt Commr (AR) ORDER Per Ramesh Nair The appeal is directed against Order-in-Appeal No. PI/RKS/95/2010 dt. 05/07/2010 passed by the Commissioner (Appeals) Central Excise Pune-I, whereby the Ld. Commissioner upholding the Order-in-Original No. PI/Div-IV/17/C.Ex/2010 dated 12.4.2010 dismissed the appeal filed by the appellant. 2. The fact of the case is that the appellant M/s. Hardik Founders and Engineers (P) Ltd. are having three units the first unit is at Hinjewadi, second unit is at Pirangut and third unit is at Wai, Satara District. The appellant have availed Cenvat Credit in respect of services such as security services and Fettling Contract Services received in their Pirangut unit and Architectural Services received in their Wai unit. However, the credit was taken in their Hinjewadi unit, both the lower authorities have disallowed the Cenvat Credit on the ground that the services were not received by the appellant unit at Hinjewadi whereas it was received at Pirangut unit and Wai un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x. Coimbatore Vs. Precot Mills Limited 2007 (212) E.L.T. 483 (Tri. - Chennai). 4. On the other hand, Shri R.K. Maji, Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue, reiterates the finding of the impugned order. He submits that the appellant unit is the only manufacturing unit, whatever services are received by the appellant unit are used in or in relation to the manufacture of final product whereas appellants other two units i.e. Hinjewadi and Wai units are outside the appellants factory. Therefore, any input services received by these two units cannot be said to have been used in or in relation to manufacture of final product of the appellant. Therefore the appellant is not entitled for the Cenvat Credit in respect of the services received by their Hinjewadi and Wai units. 5. I have carefully considered the submissions made by both sides. I find that even though the appellant have three units, all the three units are under one entity i.e. M/s. Hardik Founders and Engineers (P) Ltd. Therefore appellants other unit cannot be treated as different from the appellant. Even though there are three units but the business activity of the appellant is only one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide any output service or manufacture of any excisable goods. 2. Revenue supports the order of the authorities below. 3. Heard both sides and perused the records. 4. The basic principle of Cenvat credit being to avoid cascading effect, genuine credit earned by one unit is not disallowed for set off against liability of other in absence of any prohibition thereto by law. This can be appreciated from the ratio laid down by Hon'ble High Court of Karnataka in ECOF Industries Pvt. Ltd. (supra). However, a word of caution may be stated that the manner of distribution of credit should not be contrary to Rule 7 of the Cenvat Credit Rules, 2004. Therefore it would be proper to reproduce relevant portion of the judgment as under to appreciate the principle of set off:- 3. The learned Counsel for the Revenue assailing the impugned order contends that admittedly the service tax is paid in respect of the unit at Cuttack and it is sought to be availed by the unit at Malur. As the said tax has not been paid in connection with the input used in manufacture of products at Malur unit or in the advertisement or production at Malur Unit, the assesse is not entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y output service; Rule 2(l) input service means any service :- (i) used by a provider of taxable service for providing an output service, or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research storage upto the place of removal procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; 2(m) input service distributor means as office of the manufacturer or producer of final products or provider of output service, which receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards purchases of input services and issues in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax attributable to service used shall not be distributed in a unit exclusively engaged in the manufacture of exempted goods or providing of exempted services. 9. In fact, the Board has issued a circular clarifying in this regard, which is extracted by the tribunal at para 7 which reads as under:- Para 7. Para 2.3 of the Master Circular referred to by the ld. Advocate reads as under:- 2.3.- An 'Input service distributor' is an office or establishment of a manufacturer of excisable goods or provider of taxable service. It receives tax paid invoices/bills of input service procured (on which Cenvat 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) that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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