Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (9) TMI 781 - CESTAT HYDERABAD

2016 (9) TMI 781 - CESTAT HYDERABAD - TMI - Cenvat credit - invoices issued by M/s PPPL as Input Service Distributor (ISD) - appellants are engaged in manufacture of “PARLE” brand sugar boiled confectionary and were clearing their entire production to M/s PPPL - Held that:- the Rule 7 of CCR, 2004 clearly states that the input service distributor may distribute the CENVAT Credit in respect of service tax paid on the input service to its manufacturing units or units providing output service. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of M/s PPPL. However, this issue stands settled against the appellant in the case of Sunbell Alloys Com of India Ltd, Machsons Pvt Ltd., Vs CCE & C, Belapur [2014 (2) TMI 297 - CESTAT MUMBAI]. By following the same, I am able to conclude that appellant cannot be considered as a manufacturing unit of input service distributor, M/s PPPL, for the purpose of availing CENVAT Credit on input invoices issued by M/s PPPL. - The second contention raised by the appellant is that the amendment brought .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tated since the amendment brought forth with effect from 01.04.2016 does not state that it is to apply retrospectively, I am able to conclude without any hesitation that the amendment is to apply prospectively only. From the foregoing I hold that the appellants are not eligible to avail CENVAT Credit on the input invoices distributed by ISD, M/s PPPL. - Invokation of extended period of limitation - Imposition of penalty - appellant contended that the SCN dated 21.02.2012 for the period Augus .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

othing but the ER-1 returns, the letters issued by appellant to the department and authorization letter dated 15.09.2001. In such circumstances it cannot be said that the appellant has suppressed facts with intention to evade payment of duty. The department has failed to establish that there is willfull suppression with intent to evade payment of duty. Moreover, the issue has seen agitated before the Tribunal in many cases and therefore is an interpretational one. On such score I am of the view .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rder. 2. Brief facts are that the appellants are engaged the manufacture of PARLE brand sugar boiled confectionary and were clearing their entire production to M/s Parle Products Private Limited, Mumbai (here after referred to as M/s PPPL). As per the agreement between M/s PPPL and appellant the entire raw materials and inputs is to be supplied by M/s PPPL and the appellant has to manufacture the same into sugar boiled confectionery and clear the same as per the orders given by M/s PPPL. The app .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ENVAT credit on the input invoices issued by M/s PPPL. Show cause notices were issued to the appellant proposing recovery of duty along with interest and for imposition of penalties. The details of the different show cause notices, the period involved and the duty demanded are stated in the following table below: Appeal No. E/27077/13 E/27078/13 E/30012/15 Demand (duty) Rs.4,65,532/- Rs,14,49,469/- Rs.7,32,809/- Penalty Rs.4,65,532/- Rs.14,49,469/- Rs.7,32,809/- Period July, 2001 to May, 2012 Au .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

redit on the invoices issued by ISD (M/s PPPL). Being aggrieved the appellants are now before the Tribunal. 3. On behalf of the appellant, the learned counsel Sh. T.C. Nair made two submissions on merits of the case: (i) Rule 7of CENVAT Credit Rules, 2004 specifies the manner of distribution of credit by ISD and states that CENVAT Credit on input services may be distributed to its manufacturing units. Since the appellants manufacture PARLEY branded confectioneries as contract Manufacture Unit (C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion No. 36/2001-CE (NT) dated 26.06.2001 the appellants would be treated as manufacturer unit of behalf of M/s PPPL so far as central excise formalities are concerned. That since biscuits and confectioneries are manufactured by the CMUs out of the raw materials/packing materials supplied by M/s PPPL, as per specifications of M/s PPPL and regard these CMUs as their own unit and accordingly the appellants would be covered under Rule 7 of the CENVAT Credit Rules. That as a business strategy and to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in any case, Rule 7 of CENVAT Credit Rules, 2004 has been substituted with effect from 01.04.2016, wherein a specific provision has been made for an ISD to distribute the credit of input services to job workers/contract manufacturers who manufacture goods including outsourced manufacturing unit. That this amendment is made by substitution of existing Rule 7 of CENVAT Credit Rules, 2004. That this amendment is made only to correct the mistake/lacuna in the earlier rule and hence the same would ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d) Fosroc Chemicals (India) [2015 (318) ELT 240 (Kar)] e) Mohan clothing co. Pvt. Ltd., [2011 (273) ELT 563 (T)] 4. The learned counsel also put forward arguments raising the issue of limitation. In appeal no. E/27078/2013 the period Involved is from August, 2005 to June, 2011. The show cause notice is issued on 21.02.2012 which makes the period involved fully within the extended period of limitation. It is the case of appellant that department was fully informed about the availment of CENVAT Cr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nput services. That this being so, the department being aware of the agreement between appellant and M/s PPPL as well as the availment of credit on the invoices issued by M/s PPPL as an input service distributor the show cause notice issued alleging suppression of facts is not justified. He contended that there was no intention to evade payment of duty and that the issue was only an interpretation of the provision of CENVAT Credit Rules, 2004. He urged to set aside the penalties imposed. 5. Refu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h receives invoices while consuming input services to their own other units. In the instant case appellant is not a unit of M/s PPPL. Appellant is a totally independent entity having distinguished and different registration for central excise. Therefore, the CENVAT Credit availed by appellant on input service invoices issued by M/s PPPL is irregular and against the provisions of CENVAT Credit Rules. In support of his contention, the learned AR Sh. Arun Kumar relied upon the judgments of the Trib .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

L. It was also argued that the appellant had supressed the facts regarding the availment of CENVAT Credit on invoices issued by M.s PPPL and therefore the extended period of 5 years has been rightly invoked and the equal amount of penalty imposed in right and proper. 6. I have heard both sides and perused the records carefully. 7. The issue involved is whether the appellant is eligible to avail the CENVAT Credit of input service distributed by the M/s PPPL as an input service distributor. For be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

thereon: (b) Credit of service tax attributable to service [used by one or more units] exclusiverly engaged in manufacture of exempted goods or providing of exempted services shall not be distributed; (c) Credit of service tax attributable to service [used wholly by a unit] shall be distributed on to that unit; and (d) Credit of service tax attributable to service used by more than one unit shall be distributed pro rata on the basis of the turnover of such units during the relevant period to th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ould fall under the category of manufacturing unit of M/s PPPL as provided in Rule 7, CCR, 2004. It is the case of the appellant that as the appellant is manufacturing on behalf of M/s PPPL and under the scheme provided in notification no. 36/2001-CE (NT) dated 26.06.2001 the appellant has to be considered as manufacturing unit of M/s PPPL. However, this issue stands settled against the appellant in the case of Sunbell Alloys Com of India Ltd, Machsons Pvt Ltd., Vs CCE & C, Belapur, the rele .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e. In this case, the distributor is M/s. Merck Specialties Ltd. whereas the manufacturers are the appellants. Since these are separate legal entities, office of M/s. Merck cannot be considered as an office of the manufacturer and hence Merck cannot be considered as an input service distributor as defined under Rule 2(m) of the CCR, 2004. Further, as per Rule 7, the input service distributor has to distribute the credit to its manufacturing units . The manufacturing units of the appellants are no .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

utilise the imported bulk drugs in the manufacture of life saving drugs in his factory. A question arose whether his factory would include factory of job-worker and it was held that job-workers factory will not come within the purview of his factory mentioned in the said notification. In the present case, the expression used is its manufacturing unit . The said expression would mean that the manufacturing unit of the input service distributor and not that of the job-worker and, therefore, the c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

law that law has to be interpreted as it is expressly worded. The Finance Minister s speech and the intentions are not relevant for interpreting the law so long as the wordings of the law are very clear. In the present case, the input service distributor scheme under CCR, 2004 envisages distribution of input service tax credit by an office of the manufacturer to its own manufacturing units. There is no ambiguity in the wordings of these provisions in the CCR, 2004. If that be so, we need not go .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

this is subject to the condition that the credit is distributed by the manufacturing unit s head office/office and the distribution has to be made among the various manufacturing units belonging to the same entity. The scheme does not envisage distribution of credit to manufacturing units belonging to others. In the present case, we have already seen that the distribution has been done by M/s. Merck Specialties Ltd. who cannot be considered as input service distributor at all as the appellants .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t I am able to conclude that appellant cannot be considered as a manufacturing unit of input service distributor, M/s PPPL, for the purpose of availing CENVAT Credit on input invoices issued by M/s PPPL. 10. The second contention raised by the appellant is that the amendment brought forth to Rule 7 with effect from 01.04.2016 being a substitution has to be applied retrospectively. At the outset, it has to be stated that there is nothing in the amendment which says that the amendment is to apply .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o remove discrimination. In the case before me, the amendment does not appear to be clarificatory or for correcting any obvious mistake or for removing any discrimination between same class. Therefore, the judgments cited by the learned counsel for appellant in my view does not assist the appellant. As already stated since the amendment brought forth with effect from 01.04.2016 does not state that it is to apply retrospectively, I am able to conclude without any hesitation that the amendment is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version