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2016 (12) TMI 783 - AT - Central ExciseDenial of CENVAT credit - no stated rationale for distribution of the credit to the appellant-assessee and that the input services cannot be said to have been used for directly or indirectly in the manufacture of output - credit availed on invoices dated prior to 10th September 2004 was also not eligible - whether the denial of credit on the ground that with a number of units and all having derived the benefit of services procured by headquarters, it was the responsibility of the ‘input service distributor’ to articulate the rationale for assigning the said amount to the assessee and, in its absence, it was appropriate to deny the availment for not having been put to use in the manufacture of output, is justified? Held that: - We find from the records that head office of appellant-company is registered as ‘input service distributor’ and is entitled to distribute the credit of services availed for supporting the manufacture of output goods by the constituent units. The impugned order has objected to the distribution for failure to justify the proportion allocated to the Tarapur unit. There was no such allegation leveled in the show cause notice and the adjudicating authority appears to have travelled beyond the notice in holding that the dues are liable to recovery. Also, reliance placed on the decision of the case of Castrol India Ltd v. Commissioner of Central Excise, Vapi [2013 (9) TMI 709 - CESTAT AHMEDABAD], where it has not been alleged in the show cause notice nor there is finding that the credit distributed against the documents is more than the amount of service tax paid and in any case, this can be verified only at the end of ISD. It is also not the case of the department that credit has been received by the assessee in respect of services/goods which are totally exempted. Under these circumstances, on this ground alone, probably the matter can be decided but the learned advocate is fair enough to argue the case on merits and also agree to reverse the credits which are patently inadmissible. The reasoning adopted by the adjudicating authority in the impugned order does not stand the test of legality. For that reason, we set aside the impugned order and allow the appeals - decided in favor of appellant-assessee.
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