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TMI Blog2020 (12) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing units. In order to economise and benefit from the economies of scale, R D units are set up as independent units for serving various manufacturing units of the manufacturer. In such a case, the services availed in the R D units have a direct nexus to the manufacture of the products in various units. If the assessee is registered as an input service distributor, the CENVAT Credit availed on the services used in the R D unit can be distributed to various manufacturing units. Appeal allowed - decided in favor of appellant. - MISC Application No. ST/EH/30165/2020 Service Tax Appeal No. 30268 of 2020 - FINAL ORDER No. A/31260/2020 - Dated:- 9-12-2020 - Mr. P.V. SUBBA RAO, MEMBER (TECHNICAL) AND Mr. P. DINESHA, MEMBER (JUDICIAL) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Research Development in terms of product development, testing, process improvements, cost reduction and meeting the legal certification requirements of various authorities such as Drugs Controller of India and his counterparts in other countries. 3. The appellant has created a single Integrated Product Development Organisation Unit (IPDO) at Bachupally to undertake research and development activities of their products. It caters to the requirements of various manufacturing units of the appellant. The appellant had taken CENVAT Credit on the services used in the IPDO. Revenue is of the opinion that the IPDO not being a manufacturer of excisable goods nor provider of taxable services, no CENVAT Credit is admissible on the input services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, a large proportion of the cost of any pharmaceutical product is on account of the amounts spent on research and development both in terms of discovery of a new molecule and also in terms of developing an appropriate formulation containing various quantities of different drugs. Once a product is developed, the product has to be necessarily certified by the Drugs Controller for it to be marketable and this involves requisite paper work, clearances and obtaining the certificates without which the product cannot be marketed. We, therefore, find that as far as pharmaceutical industry is concerned, research development is an essential part of the entire manufacturing process. Therefore, the services used in the R D have a direct nexus wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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