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TMI Blog2024 (10) TMI 1334X X X X Extracts X X X X X X X X Extracts X X X X ..... c. Whether, in any event, the demand was barred by time and larger period of limitation was not applicable since the issue was revenue neutral and hence there can be no intention to evade duty. 2. Shri J.C Patel, Learned Counsel with Shri Rahul Gajera, Advocate appearing on behalf of the Appellant submits that the cenvat credit was denied to the appellant only on the ground that the same could have been distributed proportionately by the appellant's head office to their all the units located at different places. Therefore, credit more than the proportionate credit attributed to the present appellant was denied. It is his submission that the provision for proportionate distribution of the credit was brought in statute with effect from 01.04.2016 whereas the period involved in the present case is April to June, 2012, therefore, there is no bar prior to 01.04.2016 to distribute the cenvat credit in the proportionate manner or to only one unit. 2.1 He further submits that there is clear revenue neutral situation for the reason that other units to whom the proportionate credit was supposed to be distributed as contended by the revenue, they were paying duty from PLA much more than t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the CESTAT Ahmedabad has taken the similar view and passed the following order:- 4.1 We find that there is no dispute about the payment of Service Tax on the service received by the appellant. Therefore, merely because the ISDinvoice was issued without having registration of the appellant's head office, the fact of the payment of Service Tax will not get extinguished. Hence the credit cannot be disallowed. This issue has been considered by the Hon'ble Jurisdictional Gujarat High Court in the case of M/s. Dashion Ltd (supra), wherein the Hon'ble Court has observed as under : "7. The second objection of the Revenue as noted was with respect of non-registration of the unit as input service distributor. It is true that the Government had framed Rules of 2005 for registration of input service distributors, who would have to make application to the jurisdictional Superintendent of Central Excise in terms of Rule 3 thereof. Sub-rule (2) of Rule 3 further required any provider of taxable service whose aggregate value of taxable service exceeds certain limit to make an application for registration within the time prescribed. However, there is nothing in the said Rules of 2005 or in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue to verify the correctness, the Tribunal, in our opinion, rightly did not disentitle the assessee from the entire Cenvat credit availed for payment of duty. Question No.1 therefore shall have to be answered in favour of the respondent and against the assessee." 9. Considering this judgment, the Department in the Circular dated 16.02.2018, has observed thus: "2.(a) Decision of the Hon'ble High Court of Gujarat dated 08.01.2016 in the matter of Commissioner of Central Excise v. Dashion Ltd in Tax Appeal No. 415 of 2013 & 662 of 2014 [2016-TIOL-111- HC-AHM-ST 2016 (41) S.T.R. 884 (Guj] = (b) Decision of the Hon'ble High Court of Rajasthan dated 08.02.2016 in the matter of Commissioner Central Excise Commissionerate, Jaipur v. National Engineering Industries Ltd CEA No. 3/2016 [2016-TIOL-922-HCRAJ- CX=2016 (42) S.T.R. 945 (Raj.)]. 2.1 Department has accepted the judgments where the Hon'ble High Courts dismissed the Department's appeal inter alia holding that substantial benefit cannot be denied because of procedural irregularity. 2.2 In the case of Dashion Ltd., the assessee was engaged in manufacture of water treatment plant and other connected items an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.02.2018. Therefore, the above questions have to be decided against the Revenue and accordingly decided so." From the above decision, it can be seen that not only the Hon'ble Courts have decided, but the Board also vide Circular No. 1063/2/2018-CX dated 16.02.2018, accepted the orders of the High Court and clarified that the credit in the given circumstances cannot be denied. This Tribunal relying on the Hon'ble Gujarat High Court decision in the case of Doshin Ltd in a case of Demosha Chemicals Pvt Ltd-2014 (34) STR 758 (Tri-Ahmd.), held that not taking ISD registration is at best a procedural irregularity and credit is not deniable on this ground. It is observed that there are many other judgments cited by the appellant which support the case of the appellant on this issue. Therefore, merely because the ISD registration was not obtained the CENVAT Credit cannot be denied. As regard the second issue that the head office of the appellant distributed 100% credit to a single unit i.e appellant, we find that in Rule 7(d) of CENVAT Credit Rules, 2004, existing during the relevant period there was no restrictions for distribution of CENVAT Credit to one particular unit of an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of word "may distribute the CENVAT credit" is found in Rule 7 both prior and also post 2012. Thus, from the reading of the Rules, the option was available to the assessee whether to distribute the CENVAT credit or not. In fact, our attention is invited to Rule 7 of the CENVAT credit Rules, 2004 as substituted w.e.f. 1.4.2016 which has made it mandatory for distribution of input services to the various units providing output services. This is evidence by the use of words "shall distribute the Cenvat Credit" in the substituted Rule 7 as Cenvat Credit Rules 2004 w.e.f. 1.4.2016. Therefore, on plain reading of Rule 7 as existing both pre and post amendment 2012 covering period involved in these proceedings, the respondent assessee was entitled to utilize the CENVAT credit available at its Pune unit. From the reading of the above rule and interpretation made by the Hon'ble Bombay High Court, it is clear that before the amendment was carried out in the year 2016, the assessee was given the option to distribute the CENVAT Credit to one unit or also to other unit, and provision for proportionate credit was brought only post amendment of 2016. Therefore, it is at the option of the head ..... X X X X Extracts X X X X X X X X Extracts X X X X
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