TMI Blog2022 (3) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... rule is required to be amended. As per this decision, the reason for denial of cenvat credit in terms of the rule as it existed during the material time cannot be sustained. Time Limitation - unjust enrichment - HELD THAT:- The grounds raised by the learned AR on issue of limitation and unjust enrichment do not carry forward the case of Revenue as we observed that these grounds were never taken by the original authority - In view of the specific provisions in Section 11B, the refund claim by the appellant could not have been denied on these grounds. It is observed that when the Revenue seeks to deny the credit distributed by the input credit distributor to amongst more than one office unit, then the credit is sought to be denied in a particular unit. For whatever reason the same credit would be admissible to another unit to whom this credit could have been properly distributed even after the amendment made in 2012, i.e. the total credit distributed to all the units remained the same, the only question can be with regard to the correctness of the credit distributed to a particular unit. If credit is sought to be denied at one place, input credit distributor should have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r protest. 2.5 Subsequently in 2010 the appellant filed a refund claim for seeking refund of the amount so debited by them under protest, quoting the judgment of Bangalore bench of the Tribunal in the case of ECOF Industries Pvt. Ltd. [2010 (17) STR 515 (Tri.- Bang.)]. This refund claim has been rejected by the Deputy Commissioner by his order referred in para 2.1 above and appeal against that order has been rejected by the Commissioner (Appeals) by the impugned order. Hence this appeal. 3.1 We have heard Shri Arun Jain, Advocate, for the appellant and Shri Sanjay Hasija, Superintendent, Authorised Representative for the Revenue. 3.2 Arguing for the appellant, learned counsel submits that During the relevant period, there was no condition in the Cenvat Credit Rules which obligated that input credit distributor should distribute credit of input services by taking into account the services in respect of the particular unit, i.e. input service pertained to unit A of the input credit service distributor, then the credit of that service could have been distributed to that unit only and not to any other unit of the same input service credit distributer. This condition w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding of exempted services shall not be distributed; (c) credit of service tax attributable to service used wholly in a unit shall be distributed only to that unit; and (d) credit of service tax attributable to service used in more than one unit shall be distributed pro rata on the basis of the turnover during the relevant period of the concerned unit to the sum total of the turnover of all the units to which the service relates during the same period. Explanation 1. - For the purposes of this rule, unit includes the premises of a provider of output service and the premises of a manufacturer including the factory, whether registered or otherwise. Explanation 2.- For the purposes of this rule, the total turnover shall be determined in the same manner as determined under rule 5. Explanation 3.- (a) The relevant period shall be the month previous to the month during which the CENVAT credit is distributed. (b) In case if any of its unit pays tax or duty on quarterly basis as provided in rule 6 of Service Tax Rules, 1994 or rule 8 of Central Excise Rules, 2002 then the relevant period shall be the quarter previous to the quarter during which the CENVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credit should not exceed the amount of Service Tax paid. The second restriction is that the credit should not be attributable to services used in manufacture of exempted goods or providing of exempted services. There are no other restrictions under the rules. The restrictions sought to be applied by the Department in this case in limiting the distribution of the Service Tax credit made in respect of the Malur Unit on the ground that the services were used in respect of the Cuttack Unit finds no mention in the relevant rules. As such, restricting the distribution of Service Tax credit in a manner as has been done by the impugned order of the lower appellate authority (original authority had approved of such distribution) cannot be upheld. In case the Department wants to place such restriction as is sought to be placed in the case, the rule is required to be amended. 4.5 Further, Hon ble Karnataka High Court upholding the above order has observed as follows:- 8 . It is in this context, the definition of input service distributor makes it clear that a manufacturer or a producer of a final product or a provider of output service may have more than one unit and may be distr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls of input services procured (on which Cenvat credits can be taken) and distributes such credits to its units providing taxable services or manufacturing excisable goods. The distribution of credit is subject to the conditions that - (a) the credit distributed against an eligible document shall not exceed the amount of service tax paid thereon, and (b) credit of service tax attributable to services used in a unit either exclusively manufacturing exempted goods or exclusively providing exempted services shall not be distributed. An input service distributor is required (under Section 69 of the Act, read with Notification No. 26/2005-S.T.) to take a separate registration. 10. Therefore, these are the only two limitations, which are imposed in Rule 7 preventing the manufacturer from utilizing the CENVAT credit, otherwise, he is entitled to the said credit. Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law. It is in this context, the manufacturer is expected to register himself as a input service distributor and thereafter, he is entitled to distribution of credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue seeks to deny the credit distributed by the input credit distributor to amongst more than one office unit, then the credit is sought to be denied in a particular unit. For whatever reason the same credit would be admissible to another unit to whom this credit could have been properly distributed even after the amendment made in 2012, i.e. the total credit distributed to all the units remained the same, the only question can be with regard to the correctness of the credit distributed to a particular unit. If credit is sought to be denied at one place, input credit distributor should have been asked to distribute this credit to the other unit. Since this credit is admissible either to unit or its sister concern we do not find any merits in the argument advanced by the authorized representative on the unjust enrichment. The credit otherwise could not be expunged by any other method other than that provided in Rule 14 of the Cenvat Credit Rules from the books of account. The claim of learned AR that the debit made under protest and the communication of audit should be treated as an appealable order, cannot be acceded to. 5.1 In view of the above, we do not find any merits in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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