9911796707
TMI Blog2021 (2) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act and Section 75 of the Act. The Commissioner also directed appropriation of the sum of Rs. 83,86,784/-, already reversed along with interest by TSL against the said demand and imposed penalty upon TSL of an equivalent amount of the tax demanded, under Rule 15 of the Cenvat Credit Rules read with Section 11AC of the Central Excise Act and Section 78 of the Act. A penalty of Rs. 5,000/- has been imposed upon the appellant no. 2, the Chief of Financial Transaction Centre of TSL, Jamshedpur, under Rule 15A of the Cenvat Credit Rules. 2. The facts of the case in brief are: (a) The appellant, Tata Steel Ltd. ("TSL") entered into a Brand Equity and Business Promotion Agreement ("BEBP") on 28.12.1998 with its holding company, Tata Sons Ltd. Under the agreement, Tata Sons Limited rendered service to TSL in the nature of 'Intellectual Property Services', taxable under Section 65(105)(zzr) of the Act. As consideration, TSL paid yearly subscription to Tata Sons Limited, which was based on a percentage of annual turnover of TSL. (b) Tata Sons Limited issued invoices to TSL's Mumbai Head Office under Rule 4A(1) of the Service Tax Rules, 1994 charging, inter ali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndary & higher education cess) on the strength of ISD invoices issued by its Head Office relating to service tax paid on intellectual property service as per Tata Brand Equity and Business Promotion Agreement dated 18.12.1998 with Tata Sons Limited, Mumbai. The show cause notice therefore proposed disallowance of the cenvat credit availed and recovery of the disallowed credit under Rule 14 of the Cenvat Credit Rules read with the Proviso to Section 11A(1) of the Central Excise Act and Section 73(1) of the Act, along with interest. The show cause notice also proposed imposition of penalties under Section 78 of the Act upon TSL and under Rule 26 of the Central Excise Rules, 2002 and Rule 15A of the Cenvat Credit Rules upon the appellant no. 2. Separate replies, both dated 17.05.2012, were filed by the appellants. (h) The impugned order was thereafter passed by the Commissioner. 3. It is the contention of Dr. Samir Chakraborty, learned Senior Advocate appearing on behalf of the appellants as follows: (i) The impugned order has been passed on complete misappreciation of relevant facts and the provisions of Rule 7 of the Cenvat Credit Rules read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borne or accounted for by any of the divisions proportionately or otherwise. (vii) None of the above facts have been disputed in the show cause notice or the impugned order. (viii) No provision of the Cenvat Credit Rules, including Rule 7, prohibited, during the material period, input service tax paid at a particular unit being sought to be availed in another unit. Once the manufacturer is registered as an input service distributor in terms of Rule 7, it is entitled to distribute the credit of duty paid on such inputs in the manner prescribed to any of its unit keeping into account the limitations imposed by Rule 7. This is the settled proposition of law evident from the following decisions: (i) Commissioner of C.Ex. Vs. ECOF Industries Pvt. Ltd., 2011 (271) ELT 58 (Kar) (ii) Commissioner of C.Ex. Vs. ECOF Industries Pvt. Ltd., 2012 (277) ELT 317 (Kar) (iii) United Phosphorus Ltd. Vs. Commissioner of C.Ex., 2013 (30) STR 509 (T). (ix) There is no "Tata Steel Group Companies". The company is Tata Steel Limited, which is duly incorporated and registered under the Companies Act, 1956 as a public limited company. It has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice duly qualifies as "input service" under Rule 2(l) of the Cenvat Credit Rules: (a) Commissioner of Central Excise Vs. Ultratech Cement Limited, 2010 (260) ELT 369 (Bom) (b) Jubilant Life Sciences Ltd. Vs. Commissioner of Cus., C.Ex. & S.T., 2017 (3) GSTL 298 (T), para 6. (xi) The credit of Rs. 83,86,784/- having been reversed along with interest as applicable by TSL on April 1, 2011 and May 7, 2011 respectively, prior to the issuance of the show cause notice on August 8, 2011, inclusion of the same in the show cause notice and confirming and thereafter directing appropriation of the said amount, which has already been reversed/paid along with interest, is contrary to law and unsustainable. Neither Section 11A(1) of the Central Excise Act nor Section 73(1) of the Act permit such an act. (xii) Therefore the cenvat credit distributed by the Head Office of TSL at Mumbai, as ISD, to the Jamshedpur Steelworks of TSL is legal, valid, proper and in accordance with the relevant provisions of the Cenvat Credit Rules. Hence, the demand confirmed and penalties imposed are unsustainable and are to be set aside. (xiii) Without prejudice the dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in its factory at Jamshedpur. This satisfies the requirement of the main part of Rule 2(l) of the Cenvat Credit Rules. The said service is also a service used in relation to TSL's business of manufacture of final products indirectly. The requirement of the inclusive part of the definition of Rule 2(l) of the Cenvat Credit Rules, as it then was, is also therefore satisfied. Hence, the said service is "input service" on which TSL is eligible to avail cenvat credit, as held by the Hon'ble Bombay High Court in CCE Vs. Ultratech Cement Ltd. (supra). 7.3 A similar issue arose in the case of Jubilant Life Services Ltd. Vs. Commissioner of Cus, C.Ex. & ST, 2019 (29) GSTL 319 (T-All). In this case input services were received and consumed in providing Scientific and Technical Consultancy Services by the R&D centres of the assessee to its own units for manufacturing drugs. In paragraphs 2 and 8 of the order, the Coordinate Bench of the Tribunal held as under: "2. The issue in this appeal by the assessee manufacturing drugs and having their manufacturing facilities at different places in India like Gajraula in Uttar Pradesh, Nanjungad in Karnataka and Roorkee in Uttrakhand etc. is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service tax paid on the said services to such manufacturer or producer or provider, as the case may be." "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 manufacturing units or units providing output service, subject to the following condition, namely:- (a) the credit distributed against a document referred to in Rule 9 does not exceed the amount of service tax paid thereon; or (b) credit of service tax attributable to service use in a unit exclusively engaged in manufacture of exempted goods or providing of exempted services shall not be distributed." 8.2 The definition of "Input Service Distributor" in Rule 2(m) of the Cenvat Credit Rules makes it clear that the manufacturer or the producer of a final product or the provider of output service may have more than one unit which may be situated in various parts of the country. It is in this background that an input service distributor is defined as office of the manufacturer or producer of a final product or provider of output service which receives invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble 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-ST) to take a separate registration. 10. Therefore, these are the only two limitations, which are imposed in Rule 7 preventing the manufacturer from utilizing the CENVAT credit, otherwise, he is entitled to the said credit. Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law. It is in this context, the manufacturer is expected to register himself as a input service distributor and thereafter, he is entitled to distribution of credit of such input in the manner prescribed under law. Therefore, the order passed by the Tribunal is legal and valid and does not suffer from any legal infirmity and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal entities/persons. They are part and parcel of the same legal entity, the company, of which they are divisions/units. None of them can be termed as a company as per the Companies Act, 1956. Registration separately as per the provision of the Central Excise Act, 1944 or the Finance Act 1994 as per the requirement of the said statutes and the rules framed thereunder cannot and does not alter this settled legal position. 8.4.1 In Sahara India Commercial Corporation Vs. Commr. of C.Ex. (supra), a Coordinate Bench of the Tribunal, following the decision of another Coordinate Bench of the Tribunal in Mahindra Logistics Ltd. Vs. CC, Ex. & ST, 2012-TIOL-1919-CESTAT-MUM, dealing with a similar case, held as under: "7. After considering the submissions of both sides and perusal of material on records, we find that AVL was earlier part of the appellant but demerged from the appellant in the year 2008 by a scheme of arrangement and as per the scheme of arrangement, AVL is required to pay royalty to the appellant for use of 'Sahara' brand @5% of the annual turnover. We also find that the invoice raised by the appellant on AVL specifically provides that the service tax will be paid ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
