TMI Blog2018 (11) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... t sustain. CENVAT Credit - input service - membership fee for membership in Bombay Gymkhana Club Ltd. - Held that:- Such membership fee paid by the appellant does not have any nexus with their manufacturing activity - credit not allowed - demand upheld. Appeal allowed in part. - Appeal Nos. E/40803 and 40804/2017 - Final Order Nos. 42352-42353/2018 - Dated:- 27-8-2018 - Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri Raghaan Ramabhadran, Advocate for the Appellant Shri K. Veerabhadra Reddy, ADC (AR) for the Respondent ORDER Per Bench The issue involved in both these appeals being same, they were heard together and are disposed by this common order. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of Rule 2(l) r/w third proviso to Rule 3(4) of CENVAT Credit Rules, 2004. The second issue is that the credit of service tax availed on membership fee for membership in Bombay Gymkhana Club Ltd. is not an input service as defined under Rule 2(l) of CENVAT Credit Rules, 2004 and therefore not eligible. Show cause notice dated 8.12.2011 was issued raising both these allegations. Later, show cause notice dated 18.10.2012 was raised alleging violation of credit distributed on ISD invoices as narrated above. After due process of law, the adjudicating authority confirmed the demand along with interest and also imposed penalties. Hence the appellants are now before this Tribunal. 3. On behalf of the appellant, ld. counsel Shri Raghavan Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d proper. He drew support from the decision of the Hon ble High Court of Karnataka in the case of Commissioner of Central Excise Vs. ECOF Industries P. Ltd. 2011 (277) ELT 317 (Kar.) to argue that Rule 7 does not provide any pro-rata distribution prior to 1.4.2012. 3.1 With regard to the issue of credit availed on membership fee for Bombay Gymkhana club, ld. counsel submitted that the same is availed for the activities of business of the company and therefore eligible. 4. The ld. AR Shri K. Veerabhadra Reddy supported the findings in the impugned order. He adverted to paras 33 to 37 of the impugned order and submitted that when the units located in Guwahati, Meghalaya and Jammu Kashmir avail the area based exemption notifications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notifications is availed of The above proviso clearly shows that the units who avail credit of duty or service tax if availing the area based exemptions shall utilize the credit only for payment of duty on final products in respect of which exemption under the respective notifications has been availed. It is an undisputed fact that various services were availed in the name of Head Office of the company which were used commonly by all manufacturing units including the units availing area based exemption. The department is of the view only the proportionate credit attributable to such area based exemption units should be utilized for discharge of duty on final products cleared on availing the exemption as per the notification. The depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect from 1.4.2012, Rule 7 has been amended to include that the distribution of credit shall be on pro-rata basis. The decision in the case of ECOF Industries P. Ltd. (supra) also has laid down that there are no restriction under the said Rules limiting the distribution of service tax credit. In the present case, the appellant has availed the credit on ISD invoices distributed by their Head Office. To such availment or utilization of credit by appellant, the proviso to Rule 3(4) does not apply at all. We therefore are of the view that the demand raised alleging that the appellant has violated provisions of Rule 2(l) r/w proviso to Rule 3(4) cannot sustain and requires to be set aside, which we hereby do. 6.2 The demand of ₹ 1,86 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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