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2021 (5) TMI 366 - HC - Central ExciseInput service distributor (ISD) - Void ab initio distributed credit - office or establishment of the said manufacturer or not - satisfaction of provisions of Rule 2(m) of Cenvat Credit Rules, 2004 - HELD THAT:- The ILTD belongs to the assessee viz., ITC and is an integral division of the assessee. The aforesaid Division is not a separate legal entity and controls the supply chain of un-manufactured tobacco to the factories. The Company is registered as Input Service Distributor under the Cenvat Credit Rules, 2004 read with Service Tax Rules, 1994 for its Indian Leaf Tobacco Division in Guntur. The aforesaid registration enables distribution of service tax paid input credits to manufacturing activities carried on in the factories. A division bench of this court in COMMISSIONER OF C. EX., BANGALORE-I VERSUS ECOF INDUSTRIES PVT. LTD. [2011 (2) TMI 1130 - KARNATAKA HIGH COURT] has held that there are only two limitations imposed under Rule 7 of the Rules, for distribution of credit by a Input Service Distributor. Firstly, it cannot exceed the amount of service tax paid and secondly, the credit of service tax attributable to service used shall not be distributed in a unit exclusively engaged in the manufacture of exempted goods or providing of exempted services. The manufacturer is therefore, required to register himself as Input Service Distributor and thereafter, is entitled to distribution of credit of such input in the manner prescribed under the law - No submission has been made before us as to how the aforesaid decision is not applicable to the case of the assessee. Since, the revenue has accepted the entitlement of the assessee to avail off the input credit for the assessment periods viz., November 2010 to July 2011 and for a period from August 2011 to December 2011, the revenue cannot be permitted to challenge its correctness. The substantial questions of law are answered against the revenue and in favor of the assessee.
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