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TMI Blog2023 (2) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... opting the turnover ratio instead of actual basis of availment of service. The adjudicating authority below has not observed the judicial protocol while denying credit on the ground that the services are not eligible Input Services. Once the services in question have already been settled to be the eligible input services, the Cenvat credit thereof cannot be denied to the assessee. There remains no necessity to invoke Rule 9(6) of Cenvat Credit Rules, 2004. Hence, the adjudicating authority has wrongly held the impugned services to be ineligible input services while disallowing the Cenvat credit of the service tax paid on the said services. Distribution of proportionate Cenvat credit - HELD THAT:- There appears no restriction in Rule 7 of Cenvat Credit Rules, 2004 for distributing even the whole credit by ISD to any one of the units. However, in the present case the entire credit has been distributed based on the turnover ratio formula. It is observed that post order of remand by this Tribunal, the appellant provided additional documents in the form of balance sheets and invoices. The balance sheets contain the details of total turnover of the company, turnover from service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Appellant Shri O.P. Bisht, Authorised Representative for the Respondent ORDER Present appeal has been filed to assail the Order-in-Original No. 26-27/17-18 dated 11.12.2017 vide which the Cenvat credit as was distributed by the appellant s Input Service Credit Distributor (ISD) has been disallowed. Denial of Cenvat credit was proposed vide two separate show cause notices as mentioned below: S. No. SCN No. Date Period of Demand Cenvat credit involved (in Rs.) 1. V(76)15/off/17/09 dated 27.08.2009 November 2006 to June 2009 Rs.53,85,845/- 2. V(H)Adj._I/CE- 76/172/2010 dated 07.09.2010 August 2009 to June 2010 Rs.23,73,986/- 1.1 The facts in brief relevant for the present adjudication are as follows: That the appellants (M/s. IAIL) were engaged in manufacture of Aluminium Alloy Extruded Products at their Bhiwadi Unit. They were also having one APP Division with centralized registration in the category of Commercial Industrial Constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices (Only in SCN dated 27.08.2009) (iv) Clearing Forwarding Services (v) Telephone Service, Courier Services, Banking Services, Online Information Data Services, Professional Services, Management Consultant Services, Chartered Accountant Services (vi) Construction Services (only in SCN dated 27.08.2009) (vii) Tour Operator Services (viii) Air Travel Agency Services (only in SCN dated 27.08.2009) (ix) Test, Inspection, Certification Services Job/Engineering Services (only in SCN dated 27.08.2009) (x) Commission Services and Cleaning Services (only in SCN dated 27.08.2009) (xi) Business Auxiliary Services (xii) Manpower Recruitment Agency Services (only in SCN dated 27.08.2009) (xiii) General Insurance Business Services (xiv) Renting of immovable Property (only in SCN dated 07.09.2010) Accordingly, both the aforesaid amounts were proposed to be disallowed. 1.3 The proposal was initially confirmed vide Order-in-Original No. 43 44/2012-CE dated 19.07.2012 when the order was appealed before this Tribunal, vide Final Order No. 52603-52604/2017 dated 27.03.2017, the matter was remanded back to the original adjudicating authority for denovo adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. The findings are liable to be set aside on this score also. With these submissions, learned counsel has prayed for the order under challenge to be set aside and appeal to be allowed. To support his submissions learned counsel has relied upon the following decisions: (i) Indo Alusys Industries Limited Vs. C.C.E., Alwar reported in 2016 (7) TMI 363 CESTAT, New Delhi (ii) Indo Alusys Industries Ltd. Vs. C.C.E., Alwar reported in 2017 (9) TMI 1766 CESTAT, New Delhi (iii) Indo Alusys Industries Ltd. Vs. C.G.S.T., C. C.E., Alwar reported in 2018 (12) TMI 1238 CESTAT, New Delhi (iv) Central Excise Vs. Inductotherm India Pvt. Ltd. reported in 2014 (36) S.T.R. 994 (Guj.) (v) Ispat Industries Ltd. Vs. Commissioner of C. Ex., Nagpur reported in 2015 (40) S.T.R. 693 (Tri.-Mumbai) (vi) Pepsico India Holdings (Pvt.) Ltd. Vs. Commr. Of Central Tax, GST Commissionerate, Tirupati reported in 2022 (56) GSTL 22 (Tri.-Hyd.) (vii) Ramco Cements Ltd. Vs. Commissioner of Central Excise, Puducherry reported in 2017 (5) GSTL 105 (Tri.- Chennai) (viii) Dalmia Cements (Bharat) Ltd. Vs. Commr. of C. Ex. S.T. (LTU), New Delhi reported in 2017 (3) GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that M/s. IAIL, Bhiwadi was engaged in manufacture of aluminium doors and windows and their APP Division, Delhi was engaged in fixing, installation etc. of manufactured aluminium doors and windows at the premises of their customers. There is also no denial to the fact that for these purposes the appellants were admittedly procuring composite order from their customers i.e. the cost of goods and post delivery services in respect of the manufactured goods. Admittedly, both the premises were registered with Central Excise for their individual activities i.e. for manufacturing activity by Bhiwadi unit and for Commercial Industrial Construction Services activity by APP Division. We also observe that there is no categorical denial to the fact that APP Divison was ISD which used to issue invoices for distribution of Cenvat credit by adopting the turnover ratio instead of actual basis of availment of service. Despite these admissions still violation of Rule 2(m), Rule 3 and Rule 7 of Cenvat Credit Rules, 2004 has been alleged and the services herein are denied to be the input services in terms of Rule 2(l) of said Cenval Credit Rules, 2004. It is therefore foremost necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which have direct or indirect nexus in or in relation to the manufacture of final products and clearance of final products upto the place of removal. 8. A combined reading of Rule 3 with Rule 7 makes it clear that the head office of the assessee registered as an ISD can distribute credit to its manufacturing units/service provider units only in respect of services received in respective units, which should also qualify for eligible input service in terms of the definition of the same given in the Cenvat Credit Rules, 2004. Rule 3 of Cenvat Credit Rules, 2004 is the substantial rule for taking Cenvat credit and is not subordinate to rule 7 thereof which only provides a mechanism. If Rule 7 shall be impressed upon over and above Rule 3, it would become redundant. This in any case would not be the intention of the legislature. 9. Further, in terms of 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 upto the place of removal, (iii) and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly held the impugned services to be ineligible input services while disallowing the Cenvat credit of the service tax paid on the said services. 12. Coming to the issue of distribution of proportionate Cenvat credit: As already observed above that during the period in question i.e. period prior Year 2012, only two conditions were to be met with while distributing credit in terms of Rule 7 of Cenvat Credit Rules, 2004. We observe that in the present case there is no allegation that the credit distributed against any documents referred to in Rule 9 of Cenvat Credit Rules, 2004 exceeded the amount of service tax paid thereon. Neither of the unit of appellant is exclusively engaged in manufacture of exempted goods or in providing the exempted services. Thus, we hold that there appears no restriction in said Rule 7 of Cenvat Credit Rules, 2004 for distributing even the whole credit by ISD to any one of the units. However, in the present case the entire credit has been distributed based on the turnover ratio formula. We observe that post order of remand by this Tribunal, the appellant provided additional documents in the form of balance sheets and invoices. The balance sheets contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment has contended that the amount was reversed only after it was pointed out by the audit team and as such the act amounts to the suppression on the part of the appellant which entitles the department to invoke the extended period of limitation. 16. The extended period is invocable only when suppression, fraud, etc. with an intent to evade payment of duty is established. The initial burden to prove that both these ingredients exist lies upon the department. Except the act of reversal of excess credit subsequent to audit of the appellant, there is no other evidence produced by the department to prove a positive act on the part of the appellant to have an intention to evade the duty. Nothing has been brought on record to falsify the plea of bona fide belief with the appellant about their entitlement to take the entire credit whatever being transferred by their ISD. The various case laws about the impugned services to be held as eligible input services, the case law holding that ISD could distribute the whole credit to any unit before 2012, that the input service need not be used in the same factory wherein credit was taken prior to 2012, the whole credit could be distributed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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