9911796707
TMI Blog2018 (11) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... are registered with the Central Excise Department. They are availing CENVAT credit on inputs, capital goods and input services used in the manufacture of the finished goods and also on the input services distributed by their Head Office as Input Service Distributor (ISD). They were availing CENVAT credit on the ISD invoices raised by the head office at Mumbai. They have other manufacturing units located in Guwahati, Meghalaya and Jammu and Kashmir where the units have availed area based exemption under Notification No. 32/1999-CE dated 8.7.1999 and under Notification No. 56/2002-CE dated 14.11.2002. According to department, in terms of third proviso to Rule 3(4) of CENVAT Credit Rules, 2004, the CENVAT credit of duty and service tax paid on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assam, Meghalaya and Jammu & Kashmir avail area based exemption under Notification No.32/1999-CE dated 8.7.1999 and Notification No.52/2002-CE dated 14.11.2002. The head office of the appellant company is located in Mumbai and is registered as ISD. The present dispute pertains to the availment of CENVAT credit distributed based on ISD invoices to the appellant unit situated at Puducherry. The input services which were used commonly by all the units including the units availing area based exemption were distributed by the head office, which is registered as ISD. The demand has been confirmed on wrong and erroneous interpretation of third proviso to Rule 3(4) of the CENVAT Credit Rules, 2004. The said proviso does not restrict availment of cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be unjustly enriched which cannot be allowed. As per proviso to Rule 3(4), the appellants are not eligible for credit and the demand raised is legal and proper. 5. Heard both sides. 6. For better appreciation, proviso to Rule 3(4) is reproduced as under:- "Provided further that the CENVAT credit of the duty, or service tax, paid on the inputs, or input services, used in the manufacture of final products cleared after availing of the exemption under the following notifications of Government of India in the Ministry of Finance (Department of Revenue):- (i) No. 32/99-Central Excise, dated the 8th July 1999 [GSR 508(E) dated 8th July 1999]; (ii) No. 33/99-Central Excise, dated the 8th July 1999 [GSR 509(E) dated 8th July 1999]; (iii) No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credit on input services which have been availed by all the units cannot be distributed by the head office on the premise that the area based exemption units have to utilize the credit only for payment of duty of final products to which the area based exemption applies. Interestingly, the show cause notice is not issued to such units who have availed area based exemptions. The appellant situated in Puducherry has availed credit on the ISD invoices issued by their Head Office. Prior to 1.4.2012 there was no restriction as to how much credit can be distributed to each unit. During the relevant period, Rule 7 did not lay down any manner of distribution based on pro-rata basis. The said proviso under Rule 7, during the disputed period read as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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