2013 (4) TMI 560 - AT - Central Excise

Distribution of Cenvat Credit - input services - distribution of input credit relation to one unit of a manufacturer/service provider to another unit of the same manufacturer/service provider - Appellant submitted that in the case of Mercedes Benz India Pvt. Ltd. vs Union of India 2010 (3) TMI 300 - BOMBAY HIGH COURT the Hon ble High Court of Bombay held that the Tribunal has to follow the order passed by another co-ordinate bench in the identical set of facts for the earlier period and prays that following the ratio of the above decision, their appeals be allowed. Held that In a multi-judge court, the Judges are bound by precedents and procedure. They could use their discretion only when there is no declared principle to be found, no rule and no authority. The judicial decorum and legal propriety demand that where a learned single Judge or a Division Bench does not agree with the decision of a Bench of co-ordinate jurisdiction, the matter should be referred to a larger Bench. Therefore, as in the appellant s own case for the earlier period on an identical issue wherein this Tribunal held that the appellants are entitled for input service credit and as held by the Hon ble High Court of Bombay in the case of Mercedes Benz India Pvt. Ltd. (supra). - Decided in favor of assessee.

Summary

Issues:
Appeal against denial of credit for service tax on input service received.

Analysis:
The appellant appealed against orders denying credit for service tax on input services. The appellant's counsel argued that a Division Bench of the Tribunal had previously ruled in favor of the appellant in a similar case, citing the case of M/s. Ecof Industries Pvt. Ltd. vs. CCE, Bangalore. The Tribunal in that case clarified that restrictions on the distribution of credit were limited to two aspects: the credit should not exceed the service tax paid, and it should not be attributable to services used in the manufacture of exempted goods or services. The Tribunal held that any additional restrictions imposed by the department without a rule amendment were invalid. Following this precedent, the requirement of pre-deposit was waived, impugned orders were set aside, and the appeals were allowed.

In another argument, the appellant's counsel referred to the case of Mercedes Benz India Pvt. Ltd. vs Union of India, where the Bombay High Court emphasized the importance of following precedent decisions by co-ordinate benches in similar cases. The counsel urged the Tribunal to allow the appeals based on this principle. However, the Revenue's representative opposed this, citing judgments from the Supreme Court and High Courts, as well as a stay order by the Tribunal in a different case. The Revenue argued that the Tribunal had not considered certain decisions regarding service tax on input services in the appellant's earlier case.

After hearing both sides, the Tribunal referred to the observations of the Bombay High Court regarding the importance of following precedent decisions by co-ordinate benches. The Tribunal emphasized the need for judicial discipline and proper procedures when differing from earlier decisions. Based on the precedent set in the appellant's earlier case and the guidance from the Bombay High Court, the Tribunal allowed the appeals by setting aside the impugned orders. The Tribunal stressed the significance of consistency and predictability in legal decisions to guide behavior effectively.