9911796707
TMI Blog2018 (5) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... buted the credit on pro rata basis between two units but has failed to do so. It has also been alleged that the assessee had suppressed this fact and therefore extended period of demand is invokable. An amount of Rs. 7/97,077/- was demanded being excess irregular CENVAT availed and utilised along with interest It was also proposed to impose penalty under Section 11AC read with Rule 15(2) of CENVAT Credit Rules 2004. The demand was confirmed by the original authority and this order was upheld by the Commissioner (Appeals). Hence this appeal. 3. The appellant argued that the demand is not sustainable for the following reasons: * During the relevant period, distribution of credit by input service distributor was optional and not mandatory- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (d) of Rule 7 was never changed and it always required the credit of service tax attributable to the service used in more than one unit to be distributed pro rata. The operative part of the word in clause(d) has always been "shall" and not "may". Hence the assessee should have distributed the credit and they could not have taken credit only in Unit-I. He also argued that this fact would have never come to the notice unless the Audit pointed it out. Thus there was suppression of this fact by the assessee and the extended period is invokable and so is the penalty. 5. I find that there is no dispute regarding the facts of the case. The assessee had taken credit of the common services in only one Unit instead of distributing the credit b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f all the units to which the service relates during the same period 6. It is evident from the plain reading of Rule 7 that the service distributor may distribute the CENVAT credit in respect of service tax paid on the input service to its manufacturing units subject to certain conditions. If he chooses to distribute: he will have to follow all the conditions laid down therein including clause (d) which mandates that such distribution be done on pro rata basis. In 2016 the word "may" Was changed to "shall" thereby making it mandatory for an assessee to distribute the credit between Units. I therefore find that the assessee has not violated the CENVAT Credit Rules as they existed during the period by not distributing the credit of service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
