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TMI Blog2024 (6) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 stands set aside. Eligibility of Cenvat taken by the Mumbai unit which distributed the Cenvat Credit - HELD THAT:- Admittedly the Cenvat credit on various input services have accrued to the Head Office. They are duly registered as ISD in Mumbai for the Cenvat credit coming to them on account of various input service invoices. For the ISD invoices raised by them towards distribution of such Cenvat credit, they have been filing their ST-3 Returns before their jurisdictional authorities at Mumbai. Therefore, if they have taken the Cenvat credit in respect of any input services which is considered as ineligible, it was for the Mumbai Revenue officials to initiate recovery proceedings against them. The Paharpur unit (the present Appellant) has only taken the credit, so distributed by the Mumbai ISD unit. They have no control over the Cenvat taken by the Mumbai Head Office on various services. It has been time and again held by various Tribunals that the recipient cannot be questioned for the eligibility or otherwise of the Cenvat availing Head Office registered under ISD - the Kolkata authorities had no jurisdiction to question the eligibility of Cenvat taken by the Mumbai unit which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious ineligible input services. Being aggrieved, the Appellant is before the Tribunal. 2. The Ld.Advocate for the Appellant submits that the only allegation contained in the show cause notice was on the ground that the input services were utilized by other manufacturing units of the Appellant and the same were not used within the factory premises or in relation to the manufacturing process of the appellant s unit. He submits that there was no allegation to the effect that certain input services were not eligible for Cenvat credit. He further submits that the demand has been confirmed only by listing various input services as ineligible services. Since this was not the ground taken in the Show Cause Notice, he submits that the Adjudicating authority has traversed beyond the scope of the Show Cause Notice. 3. The second objection is on the ground that the Cenvat Credit was taken and pooled by the Mumbai Head Office and was distributed by the Head Office to various manufacturing units including to the present Appellant. He submits that Rule 7 of the Cenvat Credit Rules, 2004 specifies the manner of distribution of credit by the Input Services Distributors. Till 30.06.2012, the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that in all these cases it has been held that the Cenvat taken at the recipient s end cannot be questioned towards eligibility of Cenvat credit passed on by the ISD unit. 8. In view of the above submissions, he prays that the Appeal may be allowed on merits. 9. The Ld.AR for the Department reiterates the findings of the lower authority and submits that where it was found that the Appellant was eligible for Cenvat credit, the same has been allowed and a major portion of the demand has been dropped. The Adjudicating authority has gone into the details of various services involved and only after thorough verification he has confirmed the demand by listing out various ineligible services amounting to Rs.13,55,26,043/- which have been listed at Page 20 of the Order-in-Original for the Cenvat credit taken during the period April 2011 to March 2013. Therefore, he justifies the confirmed demand. 10. Heard both sides and perused the appeal papers and the documentary evidences placed before us. 11. The summarized allegation in the Show Cause Notice as given in the Order-in-Original is extracted below:- From the definition of input service , as provided under Rule 2(1) of the CENVAT Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be distributed. W.e.f. 01.04.2012, the Rule 7 reads as under:- 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 conditions, 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 used in a unit exclusively engaged in manufacture of exempted goods or providing of exempted services shall not be distributed. (c) credit of service tax attributable to service [used wholly by a unit] shall be distributed only to that unit: and [(d) credit of service tax attributable to service used by more than one unit shall be distributed pro rata on the basis of the turnover of such units during the relevant period to the total turnover of all its units, which are operational in the current year, during the said relevant period.] 14. From a careful reading of the above provisions, it could be seen that upto 31.03.2012, no condition is specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenge can only be made by the authorities supervising SEZ unit. At the end of SEZ unit, the question of receipt or admissibility of these services cannot be raised. Consequently, I find no merit in the order in appeal. The same is set aside and appeal is allowed. 16. This Bench in the case of M/s. Nalco Water India Limited (supra) was dealing an identical issue. In this case, the Bench has relied upon in the case of Balkrishna Industries Limited, wherein it is held as under:- 7. As the services has been availed at the head office and same is a part of the appellant itself as a manufacturer. Therefore, I hold that appellant has availed the input service credit correctly. Consequently, the impugned order is set aside. Appeal is allowed with consequential relief, if any. 12. In view of the above discussions, as it has not been questioned that ISD has taken inadmissible cenvat credit, in that circumstances, the cenvat credit cannot be recovered from the appellants holding that the appellant has availed inadmissible cenvat credit. In fact, the appellant has availed cenvat credit on the invoices issued by ISD under Rule 7 of the Cenvat Credit Rules, 2004, which is eligible to avail the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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