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2020 (3) TMI 1276 - AT - Service TaxCENVAT Credit - input services - appellant has created a single Integrated Product Development Organisation Unit (IPDO) at Bachupally to undertake research and development activities of their products, it caters to the requirements of various manufacturing units of the appellant - extended period of limitation - HELD THAT:- Pharmaceutical industry is a specialised industry distinct from other industries. Not only is the manufacturer required to manufacture the correct drug but is also required to make it of the requisite quality and standards. Further, a manufacturer is also required to obtain the necessary clearances and certifications from the authorities before the product can be marketed. Without any of these activities, the product cannot be manufactured and sold. Therefore, for a marketable pharmaceutical product to come into existence, the certifications and quality control are absolutely essential. Further, pharmaceutical industry is one which involves a lot of research and development which distinguishes the product of the manufacturer from those of others. The services used in the R&D have a direct nexus with the manufacture of the final products. It is not necessary that the pharmaceutical industry has a complete R&D facility in each of its manufacturing units. In order to economise and benefit from the economies of scale, R&D units are set up as independent units for serving various manufacturing units of the manufacturer. In such a case, the services availed in the R&D units have a direct nexus to the manufacture of the products in various units. If the assessee is registered as an input service distributor, the CENVAT Credit availed on the services used in the R&D unit can be distributed to various manufacturing units. The appellant has just done that. This view is consistent the view taken by the Tribunal Allahabad in the case of Jubiliant Life Sciences Ltd. [2017 (8) TMI 358 - CESTAT ALLAHABAD] and upheld by the Hon’ble Apex Court. The impugned orders are unsustainable and need to be set aside - Appeal allowed - decided in favor of appellant.
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