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2015 (9) TMI 1468 - CESTAT NEW DELHI

2015 (9) TMI 1468 - CESTAT NEW DELHI - TMI - Job-work - Cenvat credit - credit attributable to services rendered by Unit-II was taken in the books of accounts of Unit-I - unit II is undertaking the job work activities for the Unit I and the finished goods manufactured in the Unit I is removed from the factory on payment of appropriate Central Excise Duty - Held that:- since both the Unit I and unit II belonging to the appellant are interlinked, the services utilized by one unit can be taken by t .....

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zed by the appellant, credit should be allowed to Unit I, even if, the input services have been provided to the Unit II. - Sub-rule (1) of Rule 3 entitles a manufacturer to take cenvat credit of service tax paid on any input service received by the manufacturer of the final product. In the present case since the ultimate finished product manufactured in the factory of Unit I who removed the goods on payment of Central Excise Duty. The job worker unit II only manufactures the intermediate go .....

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e Hon’ble Karnataka High Court reported in [2011 (2) TMI 1130 - KARNATAKA HIGH COURT]. Therefore, the appellant is eligible to take cenvat credit on the disputed services and, thus, the impugned order is set aside. - Decided in favour of appellant - E/3353/2012 EX. [SM] - FINAL ORDER NO. 54085/2015 - Dated:- 18-9-2015 - Mr. S.K. Mohanty, Member (Judicial) Present for the Appellant : Shri Manoj Chauhan, C.A. Present for the Respondent: Shri G.R. Singh, D.R. ORDER The brief facts of the case are a .....

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dit in the books of Unit I was disputed by Central Excise Department on the ground that though the service tax invoices are in the name of unit II but the credit has been taken in the books of Unit I, which is not in conformity with the cenvat statute. The proceedings initiated in this regard culminated in the adjudication dated 19.01.2012, wherein cenvat credit taken in the books of Unit I to the tune of ₹ 6,16,403/- was disallowed and equal amount of penalty was imposed. In appeal, the C .....

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nt of appropriate Central Excise Duty. He referred to Rule 2 (m) and 7 of the Cenvat Credit Rules, 2004 to substantiate his stand that input service distributor can distribute the credit among its manufacturing units for the purpose of taking cenvat credit. To substantiate such stand, the ld. Chartered Accountant has relied on the decision of this Tribunal in the case of Greaves Cotton Ltd. Vs. Commissioner of Central Excise, Chennai-II & IV reported in 2014 TIOL 1519-CESTAT-MAD. 4. He furth .....

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enied. 5. Per-contra, Shri G.R. Singh, the ld. D.R. for the respondent submits that Rule 3 of the Cenvat Credit Rules entitles a manufacturer to take the cenvat credit, if the input service is received by the manufacturer. He, further submits that since the invoices were in the name of unit II and the cenvat credit was taken by the Unit I, without following the procedures prescribed in Notification No.214/86 dated 25.03.1986, the appellant shall not be eligible to take cenvat credit on service t .....

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have no application and the credit cannot be distributed to Unit I for taking cenvat benefit. 6. I have heard the ld. Counsels for both the sides and perused the records. 7. It is noticed that both the Unit I & Unit II are of the appellant M/s.Raymond Ltd. The Unit II is undertaking the job work activities exclusively for unit No.1 and after receipt of the job worked goods from the Unit II, the same after further processing removed from the Unit No.1 on payment of appropriate Central Excise .....

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pellant are interlinked, the services utilized by one unit can be taken by the other unit. The cenvat statute in Rule 7 has provided that the input service distributor may distribute the credit among its other manufacturing units. The restrictions contained in the said rule have no application to the facts of this case. The statute specifically provides for taking of cenvat credit upon fulfillment of the conditions that the input service has been received and utilized for the intended purpose an .....

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and Diesel Engine through their Unit-I and Unit-II respectively. There is no dispute that Unit-I availed the credit on the service tax paid on advertisement charges which has been accounted as an expense to the appellant-company. It is a fact that the appellant-company is eligible to avail the benefit of the input service credit on the advertisement charges. The dispute relates to Unit-II should avail the credit instead of Unit-I. The adjudicating authority accepted this fact. In terms of Rule 2 .....

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Cuttack unit. The Tribunal while dealing with Rule 7 of Cenvat Credit Rules, 2004 and para 2.3 of the Master Circular of Service tax dt. 23.8.2007 held as under:- "8. The combined reading of the Rule 7 and the clarificatory Circular dated 23-8-2007 clearly shows that there are only two restrictions regarding the distribution of the credit. The first restriction is that the credit should not exceed the amount of Service Tax paid. The second restriction is that the credit should not be attri .....

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e by the impugned order of the lower appellate authority (original authority had approved of such distribution) cannot be upheld. In case the Department wants to place such restriction as is sought to be placed in the case, the rule is required to be amended." 8. The submissions of the ld. D.R. that the requirement of Notification No.214/86-CE dated 25th March 1986 has not been complied with and, thus, input service credit shall not be available to the appellant. 9. Sub-rule (1) of Rule 3 e .....

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