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2023 (6) TMI 554 - AT - Central ExciseCENVAT Credit - common input service utilized in its Die Lube Unit as per the provision of Rule 7 of Cenvat Credit Rules, 2004 - Suppression of facts or not - revenue neutrality - HELD THAT:- Similar issue came up for consideration before the Hon’ble High Court of Judicature at Bombay in the matter of THE COMMISSIONER, CENTRAL TAX, PUNE-I COMMISSIONERATE VERSUS M/S. OERLIKON BALZERS COATING INDIA P. LTD. [2018 (12) TMI 1300 - BOMBAY HIGH COURT] in an appeal filed by the department and in that matter the assessee having units at various places viz. Pune, Gurgaon, Chennai, Jamshedpur etc. took the Cenvat credit in its books during the period October, 2009 to March, 2014 at the Pune Unit only which was objected to by the department and it was the specific case of the department that the assessee should have distributed the tax credit to the various units situated across the country and should not have availed Cenvat Credit at Pune Unit only. In that decision the Hon’ble High Court after considering Rule 7 ibid as it was existing both pre and post amendment in 2012 held that the assessee was entitled to utilize the Cenvat credit at its one unit only i.e. Pune unit. The Hon’ble High Court also gone into the issue of revenue neutrality in that matter. The opening words of Rule 7 is ‘may distribute’ and therefore the assessee is not under any obligation to distribute. The word ‘shall’ which has been used later in the clauses/ subclauses to rule 7 will come into operation only if the assessee chooses to distribute among its units. Meaning thereby if the appellant chooses to distribute then only he has to follow all the conditions laid down in Rule 7 therein including clause (d) which mandates that such distribution be done on pro rate basis. During the period in issue the distribution was optional only was further strengthen from the fact that in the year 2016 Rule 7 was further amended and the word ‘may’ was substituted with the word ‘shall’ which makes it mandatory for the assessee to distribute the credits between the units - Otherwise also it is no doubt true that the entire excise would be revenue neutral as the utilization by any unit of the same entity would not make any loss to the exchequer as the credit disallowed from one unit in proportion to second unit will be eligible as credit to such other unit and the net credit availment and utilization form a company’s perspective will remain unchanged and also that the appellant is not going to gain anything extra to its entitlement. In such a scenario there is no question of any suppression on the part of the appellant and therefore extended period is also not invokable in the facts of the case and on this count also the demand fails. The impugned order is set aside and the appeal filed by the appellant is allowed.
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