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TMI Blog2017 (8) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... -CU(DB) dated 01.02.2017, we allow Early Hearing application and take up the appeal for final hearing with the consent of the Parties. 2. The issue in this appeal by the assessee manufacturing drugs and having their manufacturing facilities at different places in India like Gajraula in Uttar Pradesh, Nanjungad in Karnataka and Roorkee in Uttrakhand etc. is that the appellant for the purpose of Pharmaceutical formulation and manufacture of drugs, maintains two Research & Development centres (R & D centrers) owned and managed by the appellant which are located outside the factory premises and the 'Consultancy or Scientific and Technical Consultancy Service' is received by the manufacturing units of the appellant from the two R & D ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at credit of Service Tax attributable to service used in a unit exclusively engaged in the manufacture of exempted goods or providing of exempted services, shall not be distributed as provided in Rule 7 of CCR, 2004. It further appeared that the ISD office/head office of the appellant have wrongly taken Cenvat credit of Rs. 1,04,96,095/- in respect of input services actually received and utilised at the said two R & D centres during the period 2013-2014 and distributed an amount of Rs. 1,02,63,109/- to their group units in contravention of Rule 3 read with Rule 2(m), 7(b) and Rule 9 of CCR, 2004 and the same is liable to be disallowed and recovered from them under Rule 14 of CCR, 2004 read with Section 73(1) of Finance Act, 1994. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (92) readwith Section 65(105)(za) of the Finance Act. The service is not taxable as there is in-house consumption by the manufacturing units, there being no transfer of ownership. It is further admitted fact that the Scientific and Technical Consultancy is received by the manufacturing units of the appellant, which have manufactured and cleared excisable goods. Accordingly, taking of Cenvat credit is correct in terms of Rule 3 read with Rule 2(l) of CCR, 2004, as the input service received in the R & D centres, initially, is indirectly used by the manufacturing units in relation to manufacture and clearance of excisable goods. It is further urged that the service so provided by the R & D centres is not an exempt service under the meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to the plain and literal meaning. It was more so as this broad and comprehensive meaning of it to be readwith Rule 3(1) wherein only stipulation is that manufacturer of final products utilized in relation to installation of Ammonia storage tank situated outside the factory of production, for manufacture of dutiable final products, and the storage and use of Ammonia is an intrinsic part of manufacture. Such inputs services were used by the assessee whether directly or indirectly in or in relation to manufacture of final products. Hence, assessee was entitled to Cenvat credit of the inputs services readwith Rule 2(l) and 3(1) of CCR, 2004. 7. Mr. Mohammad Altaf, learned A.R. for the Department have relied on the impugned order. He has fur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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