TMI Blog2019 (7) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same. What transpires from the above is clear, that there are only two limitations for distribution of credit by an ISD and in the case on hand, Revenue has not made out a case as to the non-satisfaction of the above two conditions. Consequently, there being no deficiency as to the eligibility of the ISD for distribution, no denial could be made in the hands of the recipient who has only consumed the same. The disallowance as well as the impugned order cannot sustain - Appeal allowed - decided in favor of appellant. - Service Tax Appeal No. ST/42065-42067 of 2018 - Final Order No. 40865-40867/2019 - Dated:- 3-6-2019 - MR P. DINESHA, JUDICIAL MEMBER Shri Naseer Abdullah, Advocate, for the appellant Shri L. Nandakumar, AC, Authorized Representative for the Respondent ORDER The appellant is a manufacturer of paints and varnishes, has manufacturing units located in different parts of India with manufacturing unit also at Chennai. The Registered Office of the appellant is located at Mumbai. 2. The brief facts, as canvassed by the Ld. Advocate for the assessee-appellant, interalia are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ival contentions and perused the records. Ld. Advocate reiterating the submissions made before the lower authorities, emphasized that both the lower authorities have ignored the concept of ISD while passing respective orders and submitted that the Cenvat credit was availed by the ISD at Mumbai and all compliance were made before the Mumbai Commissionerate who has accepted the same, the Cenvat credit was taken in the consolidated Register and then transferred to different units/locations in India. He also submitted that the invoice copies merely carried the name of services in the annexure to enable the department to understand on what services the Cenvat credit was availed at Mumbai that had already been accepted by the Mumbai Commissionerate. Without prejudice to the above, Ld. Advocate would submit, with regard to each of the services against which Cenvat credit was availed, as under :- i. Cargo handling service was utilized for moving parcels between manufacturing units, and hence it was an essential to the manufacturing and marketing process and therefore eligible for Cenvat credit. ii. Air Travel Agents Service was used for booking air tickets fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also undisputed in these cases that the credit was availed based on the credit distributed by ISD. Apparently, the rejection is made not because of any lacunae in the invoice/invoices, no whisper as to any violation of rule 9 of CCR and nor is it the case of the Revenue that the registered ISD was not eligible to distribute service tax to any of its units. 5.2 Rule 2 (m) defines Input Service Distributer and the same reads as under :- 2(m) input service distributor means an office of the manufacturer or producer of final products 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 the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be; 5.3 The scope and mechanism of ISD has also been explained by the Board vide Circular No. 97/8/2007 dated 23.08.2007 and the relevant portion of the Circular reads as under:- 2.3 An 'input service distributor' is an office or esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the absence of any disputes as to the eligibility of credits availed by the ISD, the same cannot be questioned at the receiver s end, who only sought for consumption of the same. 5.6 Hon ble High Court of Karnataka had an occasion to analyse this aspect of ISD, in the case of CCE, Bangalore Vs. ECOF Industries Pvt. Ltd. 2011 (271) ELT 58 (Kar.). The Hon ble Court has analysed the scope and applicability of Rules 2 (k), 2(l), 2 (m) and Rule 7 as under:- 6. As we are concerned only about input service, it is sufficient to extract the definition of input, input service and input service distributor, which are defined at Rule 2(k) - 'Input', Rule 2(l) - 'Input service' and Rule 2(m) - 'Input service provider' as under :- Rule 2(k) input means - (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice 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 the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be. Therefore, the law mandates that the manufacturer who wants to avail the benefit of this service tax if he has more than one unit he should also get registered himself as a service provider and then, he would be able to collect all the input service tax paid in all its units and accumulate them at its head office and distribute the said credit to its various units. At the time of distribution, the manner of distribution is provided in Rule 7 which reads as under :- Rule 7. Manner of distribution of credit by input service distributor. - The input service distributor may distribute the CENVAT credit in respect of the service tax paid on the input service to its manufacturing units or units providing output service, subject to the following conditions, namely :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer 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 legal infirmity and does not call for any interference and therefore it is dismissed. 6. What transpires from the above is clear, that there are only two limitations for distribution of credit by an ISD and in the case on hand, Revenue has not made out a case as to the non-satisfaction of the above two conditions. Consequently, there being no deficiency as to the eligibility of the ISD for distribution, no denial could be made in the hands of the recipient who has only consumed the same. My above view is also supported by the following cases, to name a few:- 1. Greaves Cotton Ltd. Vs. CCE, Chennai 2015 (37) STR 395 (Tri.-chen.) 2. United Phosphorus Ltd. Vs. CCE, Surat 2013 (30) STR 509 (Tri.-Ahmd.) 7. In view of the above discussions, clearly, the disallowance as well as the impugned order cannot sustain for which reason the impugned orders are set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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