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TMI Blog2024 (5) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... te the Cenvat Credit in the substituted Rule 7 as Cenvat Credit Rules 2004 w.e.f. 1.4.2016. Therefore, on plain reading of Rule 7 as existing both pre and post amendment 2012 covering period involved in these proceedings, the respondent - assessee was entitled to utilize the CENVAT credit available at its Pune unit.' Thus, the entire demand which is contrary to the Provision of Rule 7 and the various judgments given on this issue, the demand is not sustainable - the impugned order is set aside - appeal is allowed. - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR Shri Ishan Bhatt , Advocate appeared for the Appellant Shri Himanshu P Shrimali , Superintendent ( AR ) for the Respondent ORDER RAMESH NAIR The brief facts of the case are that the appellant are engaged in the manufacture of Diesel Generator sets which are dutiable goods falling under Chapter 85 of the first schedule to the Central Excise Tariff Act, 1985. The head office of the Appellants is located in Gurgaon which is also registered as an input service distributor (ISD) in terms of Rule 2 (m) of the Cenvat Credit Rules, 2004. During the relevant period, the appellant have excise registered manufacturing unit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central Excise, Vapi who vide Order-In-Appeal dated 03.01.2014 rejected the appeal for non- compliance of pre-deposit without going into the merits of the case. Thereafter the appellant being aggrieved by the Order-In-Appeal dated 03.01.2014 filed an appeal before this Tribunal vide Appeal No. E/11340/2014. This Tribunal vide Final Order No. A/11025/2014 dated 27.05.2014 set aside the Order-In-Appeal dated 03.01.2014 and remanded the matter back to the Commissioner (Appeals) for passing an order on the merits without insisting on any pre-deposit. The Commissioner (Appeals) vide Order-In-Appeal No. VAD-EXCUS-003-APP-13/14-15 dated 17.12.2014 rejected the appeal and upheld the demand of Cenvat credit of Rs. 49,58,186/-along with equivalent penalty. Being aggrieved by the said Order-In-Appeal dated 17.12.2014, the appellant filed the present appeal. 2. Shri Ishan Bhatt, Learned Counsel appearing on behalf of the Appellant submits that the issue in the present case is no longer res-integra as the same is settled law that prior to amendment of Rule 7 of Cenvat Credit Rules, 2004 w.e.f. 01.04.2012 there was no restriction in distribution of credit by ISD only to one unit. Pro-rata dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of his above submission, he requests to set aside the impugned order and allow the appeal. 3. Shri Himanshu P Shrimali, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. I have carefully considered the submission made by both sides and perused the records. I find that the limited issue to be decided in the present case is that whether during the relevant period the appellant was entitled for the Cenvat credit on the entire credit distributed by their head office despite the fact that the appellant company having three units. I find that the period involved in the present case is April 2008 to March 2012, during the relevant period the provision of distribution of the credit by head office (ISD) was in Rule 7 as under :- Rule 7 as Existing Prior to 2012 : - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This is evident from the use of word may distribute the CENVAT credit is found in Rule 7 both prior and also post 2012. Thus, from the reading of the Rules, the option was available to the assessee whether to distribute the CENVAT credit or not. In fact, our attention is invited to Rule 7 of the CENVAT credit Rules, 2004 as substituted w.e.f. 1.4.2016 which has made it mandatory for distribution of input services to the various units providing output services. This is evidence by the use of words shall distribute the Cenvat Credit in the substituted Rule 7 as Cenvat Credit Rules 2004 w.e.f. 1.4.2016. Therefore, on plain reading of Rule 7 as existing both pre and post amendment 2012 covering period involved in these proceedings, the respondent - assessee was entitled to utilize the CENVAT credit available at its Pune unit. 10. In any event, the Tribunal, on facts found that the entire exercise would be revenue neutral. This is so as the distribution of Cenvat Credit to the various units would result lesser service tax being paid by cash on their activity of coating as they would have utilized the cenvat credit available for distribution. 11. In this view of the matter, the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led their the monthly return and had provided all the details required therein. He submits that the ST3 return does not have any column for providing all the details. Accordingly for non-disclosure of any detail in present case will not amount to suppression. In support, he placed reliance on the following judgments: GID Goenka Pvt Ltd Vs. CCE-2023 (8) TMI 995- CESTAT 3. Shri Anand Kumar, Learned Superintendent (Authorized Representative) appearing on behalf of the respondent reiterates the findings of the impugned order. 4. On careful consideration of the submissions made by both the sides and perusal of record, we find that the issue involved is that whether the appellant can avail the CENVAT Credit on ISD invoice which was issued by their head office without having ISD registration is correct or otherwise. 4.1 We find that there is no dispute about the payment of Service Tax on the service received by the appellant. Therefore, merely because the ISD invoice was issued without having registration of the appellant s head office, the fact of the payment of Service Tax will not get extinguished. Hence the credit cannot be disallowed. This issue has been considered by the Hon ble Jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of Rule 3 further required any provider of taxable service whose aggregate value of taxable service exceeds certain limit to make an application for registration within the time prescribed. However, there is nothing in the said Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons disentitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. It was in this background that the Tribunal viewed the requirement as curable. Particularly when it was found that full records were maintained and the irregularity, if at all, was procedural and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, in our opinion, rightly did not disentitle the assessee from the entire Cenvat credit availed for payment of duty. Question No.1 therefore shall have to be answered in favour of the respondent and against the assessee. 9. Considering this judgment, the Department in the Circular dated 16.02.2018, has observed thus: 2.(a) Decision of the Hon'ble High Court of Gujarat dated 08.01.2016 in the matter of Commissioner of Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Special Category of Persons), Rules 2005. 2.5 Hon'ble High Court dismissed the department's appeal holding that such view was not sustainable as there was no previous restriction of this nature under Rule 7 of the CENVAT Credit Rules, 2004. Further nonregistration of ISD is only a procedural irregularity for which substantial benefit of CENVAT credit cannot be denied when all the necessary records have been maintained by the respondent. 10. The Hon'ble High Court of Madras referring to the judgment of Dashion Ltd., supra, in M/s. Pricol Ltd., supra has held thus: 4. The above decision has been accepted by the Central Board of Excise and Customs, vide Circular dated 16.02.2018. Therefore, the above questions have to be decided against the Revenue and accordingly, decided so. From the above decision, it can be seen that not only the Hon ble Courts have decided, but the Board also vide Circular No. 1063/2/2018-CX dated 16.02.2018, accepted the orders of the High Court and clarified that the credit in the given circumstances cannot be denied. This Tribunal relying on the Hon ble Gujarat High Court decision in the case of Doshin Ltd in a case of Demosha Chemicals Pvt L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt period of the concerned unit to the sum total of the turnover of all the units to which the service relates during the same period. 4.3 The above provisions were interpreted by the Hon ble Bombay High Court in the case of M/s. Overlikon Balzers Coating India Pvt Ltd-2018 (12) TMI 1300 (Bombay High Court), wherein the following interpretation was made: 9. From reading of the above Rules both pre and post amendment, it would be noticed that both provisions give an option to the assessee concerned whether to distribute input services tax available to it amongst its other manufacturing units which are providing output services. This is evident from the use of word may distribute the CENVAT credit is found in Rule 7 both prior and also post 2012. Thus, from the reading of the Rules, the option was available to the assessee whether to distribute the CENVAT credit or not. In fact, our attention is invited to Rule 7 of the CENVAT credit Rules, 2004 as substituted w.e.f. 1.4.2016 which has made it mandatory for distribution of input services to the various units providing output services. This is evidence by the use of words shall distribute the Cenvat Credit in the substituted Rule 7 as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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