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2016 (5) TMI 1047 - CESTAT MUMBAI

2016 (5) TMI 1047 - CESTAT MUMBAI - TMI - Entitlement of Cenvat credit - Security services, Fettling Contract Services and Architectural Services - Services not received in the registered unit - Held that:- Cenvat Credit in respect of the input service cannot be denied merely for the reason that the services were received and used outside the registered premises. There is no prohibition for availing the Cenvat Credit in such cases, the Cenvat Credit on input service is admissible so long the ser .....

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e the factory of the appellant in their own Hinjewadi & Wai unit. - Decided in favour of appellant - Appeal No. E/1706/2010 - Order No. A/86767/16/SMB - Dated:- 22-3-2016 - Ramesh Nair, Member (J) For the Appellant : Shri Prasad Paranjpe, Adv For the Respondent : Shri R K Maji, Asstt Commr (AR) ORDER Per Ramesh Nair The appeal is directed against Order-in-Appeal No. PI/RKS/95/2010 dt. 05/07/2010 passed by the Commissioner (Appeals) Central Excise Pune-I, whereby the Ld. Commissioner upholding th .....

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es received in their Wai unit. However, the credit was taken in their Hinjewadi unit, both the lower authorities have disallowed the Cenvat Credit on the ground that the services were not received by the appellant unit at Hinjewadi whereas it was received at Pirangut unit and Wai unit, these two units are not registered. They are neither manufacturer nor providing any service and not paying excise duty or service tax. Aggrieved by the impugned order the appellant filed this appeal before me. 3. .....

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uct on which excise duty is paid by the appellant unit. As regard Wai unit, it is newly setting up unit where the architectural services were received, this unit is also part of the appellant company only. All the expenditure of both the above units in respect of the services in question were booked in the books of accounts in the company. He submits that all the three units are under the banner of the appellant company only and all the expenditures related to all the three units are obsorbed in .....

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ca Cola India Pvt. LTd. Vs. Commissioner of C.Ex. Pune-III 2009 (242) E.L.T. 168 (Bom.) (iii) Commissioner of C.Ex., Nagpur Vs. Ultratech Cement Ltd. 2010 (20) S.T.R. 683 (Tri.-Mumbai). He also submits that the demand is time barred as the show cause notice was issued beyond 1 year for the reason that the appellant is filing ER. 1 monthly return regularly and showing therein the Cenvat Credit availed by them. Therefore, there is no suppression on the fact on their part. In support, he placed rel .....

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it are used in or in relation to the manufacture of final product whereas appellants other two units i.e. Hinjewadi and Wai units are outside the appellants factory. Therefore, any input services received by these two units cannot be said to have been used in or in relation to manufacture of final product of the appellant. Therefore the appellant is not entitled for the Cenvat Credit in respect of the services received by their Hinjewadi and Wai units. 5. I have carefully considered the submissi .....

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rying out the job work activity on the product which is subsequently cleared as a final product on payment of duty by the appellant unit. Therefore the services received and used by Hinjewadi unit is used in relation to part of the manufacturing process of appellant unit. Therefore, the services deemed to have been used in or in relation to manufacture of final product of the appellant. As regard Wai unit, it is a newly setting up unit though this unit is not started but it is in connection to t .....

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in such cases, the Cenvat Credit on input service is admissible so long the services are used in or in relation to the manufacture of final product or for providing output service irrespective of the location where the services were received and used. I find that the ratio of decision in the case of M/s. Aurobindo Pharma Ltd. (supra) which is based on the Karnataka High Court judgment in the case of Commissioner of Central Excise, Bangalore-I Vs. ECOF Industries Pvt. Ltd. - 2011-TIOL-770-HC-KAR .....

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Ltd. reported in 2011 (23) S.T.R. 337 (Kar.), it is further submitted that transfer of credit by ISD from one unit to another is genuine. Therefore, there cannot be denial of credit on the ground that the input services were not used to provide any output service or manufacture of any excisable goods. 2. Revenue supports the order of the authorities below. 3. Heard both sides and perused the records. 4. The basic principle of Cenvat credit being to avoid cascading effect, genuine credit earned .....

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le of set off:- "3. The learned Counsel for the Revenue assailing the impugned order contends that admittedly the service tax is paid in respect of the unit at Cuttack and it is sought to be availed by the unit at Malur. As the said tax has not been paid in connection with the input used in manufacture of products at Malur unit or in the advertisement or production at Malur Unit, the assesse is not entitled to the benefit of CENVAT credit under the rules. The lower Appellate Authority has r .....

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units and has paid input tax, he is expected to register himself as a input service distributor, collect all these taxes paid and thereafter distribute the same to its various units except to two conditions which are mentioned in Rule 7. Therefore, he submits that there is no reason for interfering with the order passed by the tribunal, which is strictly in accordance with law. 5. In the light of the aforesaid facts and rival contentions, the question that arises for consideration is that when .....

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; as under:- "Rule 2(k) "input" means - (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or fo .....

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r indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research storage upto the place of removal procurement of inputs, activities relating to business, such as accounting, auditing, financi .....

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bill or, as the case may be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be;" 7. Rule 3(1) has been defined as under :- "A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit". 8. It is in this context, the definition of input service distributor makes it clear that a manufacturer or a producer of a final product or .....

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ce tax paid on the said services to such manufacturer or producer or provider, as the case may be. Therefore, the law mandates that the manufacturer who wants to avail the benefit of this service tax if he has more than one unit he should also get registered himself as a service provider and then, he would be able to collect all the input service tax paid in all its units and accumulate them at its head office and distribute the said credit to its various units. At the time of distribution, the .....

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r (b) credit of service tax attributable to service use in a unit exclusively engaged in manufacture of exempted goods or providing of exempted services shall not be distributed." Therefore, only two limitations are put for the distribution of credit by an 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 .....

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nvat credits can be taken) and distributes such credits to its units providing taxable services or manufacturing excisable goods. The distribution of credit is subject to the conditions that - (a) that credit distributed against an eligible document shall not exceed the amount of service tax paid thereon, and (b) credit of service tax attributable to services used in a unit either exclusively manufacturing exempted goods or exclusively providing exempted services shall not be distributed. An inp .....

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