TMI Blog2019 (2) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... e whole case is based on the allegation that the Credit which was distributed by M/s. Pricol Ltd., ISD, was re-transferred to it and later distributed to the other units. Rule 7 ibid was later amended vide Notification No. 18/2012 CE (NT) dated 17.03.3012 wherein a restriction for proportionate distribution was introduced - True, there may not be any specific provision to facilitate such return of non-required credit which has been transferred in the first place by the Input Service Distributor, but it has to be kept in mind that there would be situations when an Input Service Distributor may transfer Credit amounts inadvertently or in excess of what was intended, to a constituent unit. In such situations, the only recourse would be by way of return/reversal of such Credit back to the Input Service Distributor, which in turn can be facilitated only by the recipient unit reversing the unintended Credit and issuing a document confirming the facts of the same - There is no prohibition in law for such reversal of Credit to the Input Service Distributor. Thus, it is evident that M/s. Pricol Ltd., Plant-I has only returned/reversed the exact quantum of Credit that was transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice was issued to M/s. Pricol Ltd. alleging wrongful availment of Credit on improper documents and for imposing penalties under various provisions of CCR, 2004. Show Cause Notice was issued to M/s. Pricol Ltd., Plant-I for wrongly transferring the Credit to M/s. Pricol Ltd. demanding recovery of such Credit and for imposing penalties. After due process of law, the Original Authority confirmed a demand of ₹ 3,32,14,672/- on M/s. Pricol Ltd., Plant-I and imposed equal penalty. The Original Authority held that M/s. Pricol Ltd. has availed wrong Credit on improper documents and distributed the same, for which penalty of ₹ 2,000/- was imposed. Aggrieved by such Order, the appellants are now before the Tribunal. 3.1 Ld. Counsel Shri. M. Karthikeyan appeared and argued the matter on behalf of the appellants. He gave the details of the appeals as well as the nature of demand, which is furnished in the table below : Sl. No. Appeal No. Appellant Nature of demand 1. E/332/2011 M/s. Pricol Ltd., Plant-I Recovery of CENVAT Credit of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Plant-I had issued invoice which is not prescribed under Rule 9 of CCR, 2004 is incorrect. The invoice was raised by M/s. Pricol Ltd., Plant-I as a proof of reversal of Credit and it has nothing to do with the documents mentioned in Rule 9 ibid. The whole attempt was an exercise to restore status quo and to Credit the amount into the ISD account of the appellant. Ld. Advocate submitted that M/s. Pricol Ltd., ISD had distributed Credit to M/s. Pricol Ltd., Plant-I which was having a huge balance of CENVAT Credit at that time. However, since there was dearth of Credit with regard to the other plants of the appellant, the Credit availed by Plant-I based on ISD invoices was reversed and such reversal was evidenced by an invoice raised by M/s. Pricol Ltd., Plant-I on M/s. Pricol Ltd., ISD. Thereafter, the ISD availed back such Credit and subsequently re-distributed the same to Plant-III (Rs.1,92,75,000/-), Plant-IV (Rs.1,22,415/-) and also to Plant-I (Rs.1,38,17,257/-) over a period of one year. Ld. Advocate contended that in the absence of any restriction as to the manner of distribution of Credit by an ISD, the quantum of Credit that can be distributed by an ISD to its various units ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleging suppression of facts, therefore, is without any basis. To support this argument he relied upon the decision in the case of Doshion Ltd. Vs. C.C.E., Ahmedabad 2013 (288) E.L.T. 291 (Tri. Ahmd.) which was upheld by the Hon ble High Court of Gujarat vide 2016 (41) S.T.R. 884 (Guj.) 4.1 Ld. AR Shri. K. Veerabhadra Reddy appearing on behalf of the respondent supported the findings in the impugned Order. He submitted that M/s. Pricol Ltd., Plant-I is not the Input Service Distributor and only the unit which has obtained ISD registration can distribute the Credit. In the present case, the Credit was distributed by M/s. Pricol Ltd. to M/s. Pricol Ltd., Plant-I On noticing that they have sufficient Credit, M/s. Pricol Plant I has reversed the Credit under an invoice and M/s. Pricol Ltd. has availed re-credit of the said amount. There is no provision in law to reverse the Credit by the unit to which the Credit has already been distributed. So also there is no provision in law for the Input Service Distributor to avail Credit on an invoice issued by its own unit. Therefore, the reversal of Credit by M/s. Pricol Ltd., Plant-I as well as the availment and re-distribution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such manufacturer or producer or provider, [or an outsourced manufacturing unit] as the case may be; 7.1 The manner in which the Credit can be distributed among different units is prescribed under Rule 7 of CCR, 2004. During the relevant period, Rule 7 ibid stated that the Input Service Distributor may distribute the Credit to its manufacturing units or units providing output service subject to two conditions stated therein. The two conditions are : (i) The Credit distributed against a document referred to in Rule 9 does not exceed the amount of service tax paid thereon; (ii) Credit of service tax attributable to service use in a unit exclusively engaged in manufacture of exempted goods or providing exempted services shall not be distributed. 8.1 The Department has no case that these conditions have not been satisfied. The whole case is based on the allegation that the Credit which was distributed by M/s. Pricol Ltd., ISD, was re-transferred to it and later distributed to the other units. Rule 7 ibid was later amended vide Notification No. 18/2012 CE (NT) dated 17.03.3012 wherein a restriction for proportionate distribution was introduced. At the cost of repetition, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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