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TMI Blog2016 (12) TMI 783X X X X Extracts X X X X X X X X Extracts X X X X ..... eing received and utilised by them and confirmed tax liability under section 11A of Central Excise Act, 1944 read with CENVAT Credit Rules, 2004, interest under section 11AB of Central Excise Act, 1944, penalty of like amount under section 11AC of Central Excise Act, 1944 and penalties under Rule 26 of Central Excise Rules, 2002 on S/Shri K R Gupta, Vijaykumar A Kothiwale and Suresh R Gargav. These individuals are also in appeal against the impugned order. All four appeals are taken up for disposal in these proceedings. 2. From the impugned order it is seen that appellant-company with office at Mumbai and manufacturing establishments at Mandideep, Aurangabad, Ankleshwar, Tarapur and Verna had procured taxable services at corporate headquar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit Rules, 2004 as it stood prior to 1st April 2012. Conceding that restrictions were incorporated in the rules with effect from that date, she submitted that distribution prior to that date was not fettered. It was contended that section 11AC could not be invoked without reference to it in the show cause notice and that, in the absence of allegation incorporating ingredients for invoking the provisions of section 11AC, imposition of penalty was also questionable. 4. Learned Authorized Representative vehemently contested the claims of the appellants by highlighting the definition of 'input service' as to be used directly or indirectly in the manufacture of the finished product. It is his contention that the said input services are not ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax paid thereof or; credit of service tax applicable to service used for unit exclusively engaged in the manufacture of exempted goods or providing of exempted services shall not be distributed. 5. Based on the definition given above and Rule 7 of the Cenvat Credit Rules, learned advocate submitted that the grounds taken in the show cause notice for denial of service tax are not at all valid since what was required to be seen by the Revenue in the unit which is receiving invoices from the ISD is whether, two conditions in the Rule 7 of Cenvat Credit Rules, 2004 have been fulfilled or not. In the absence of any allegation in the show cause notice indicating non-fulfilment of these conditions, no case can be said to have been made out. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered sympathetically. Further, it is also noticed that appellant has not got any extra benefit by doing this. In fact from the statement of Shri Chandresh C. Shah, as explained that above Cenvat credit available to them, 20% of service tax payable only was paid and balance was paid in cash. In fact, proper distribution would have enabled them to utilise full credit. It would show that the exercise is totally Revenue neutral and no loss has been caused to the Revenue (infact Revenue has gained). In the absence of any legal requirement to avail credit based on the services received during the relevant time and in the light of the decision cited by the learned counsel, the procedural irregularity has to be ignored and the demand confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one unit to another unit.' 9. The Hon'ble High Court of Karnataka in Commissioner of Central Excise, Bangalore I [2011 (271) ELT 58 (Kar.)] has held that 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 a provider of output service may have more than one unit and may be distributed in various parts of the country. It is in this background the definition of service distributor is defined as office of the manufacturer or producer of a final product or provider of output service which receives invoices issued under Rule 4A of the Service Tax Rules, 1994 towards purchases of input services and issues invoice, bill or, as the case may be, challan for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ively engaged in the manufacture of exempted goods or providing of exempted services. xxxxxxx 10. Therefore, these are the only two limitations, which are imposed in Rule 7 preventing the manufacturer from utilizing the CENVAT credit, otherwise, he is entitled to the said credit. Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law. It is in this context, the manufacturer is expected to register himself as a input service distributor and thereafter, he is entitled to distribution of credit of such input in the manner prescribed under law. Therefore, the order passed by the tribunal is legal and valid and does not suffer from any lega ..... X X X X Extracts X X X X X X X X Extracts X X X X
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