Commissioner, Central Excise & Service ... vs M/S Claris Lifesciences Ltd

Appeal No.E/356/2012 [Arising out of OIA No.71/2012(Ahd-II)CE/MM/Commr(A)/Ahd, dt.14.03.2012, passed by Commissioner (Appeals) Central Excise & Service Tax, Ahmedabad]

Commissioner, Central Excise & Service Tax, Ahmedabad-II Appellant

Vs

M/s Claris Lifesciences Ltd Respondent

Represented by:

For Appellant: Shri Alok Srivastava, Authorised Representative For Respondent: None

For approval and signature:

Honble Mr. P.K. Das, Member (Judicial)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of Seen the order?

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. P.K. DAS, MEMBER (JUDICIAL)

Date of Hearing/Decision:27.05.2015

Order No. A/10689 / 2015, dt.27.05.2015

Per: P.K. Das

None appears on behalf of the Respondents. There is no application for adjournment. The issue involved in this case is as to whether the ISD may distribute the CENVAT Credit to any other units equally to all the units, in any proportion to all the units or proportionate to the input service consumed by the unit.

2. The learned Authorised Representative for the Revenue submits that the issue in this case is the Respondents has availed the CENVAT Credit of Service Tax paid on the services which were not utilized by the Respondent unit. The learned Authorised Representative for the Revenue reiterates the grounds of appeal.

3. I find that the Commissioner (Appeals), following the decision of the Tribunal in the case of ECOF Industries Pvt.Ltd. Vs CCE Bangalore  2010 (17) STR 515 (Tri-Bang) decided the issue in favour of the Respondent. It is seen that the Revenue has challenged the decision of the Tribunal before Hon'ble High Court, which was rejected. For proper appreciation of the case, the findings of the Commissioner (Appeals) are reproduced below:-

9. The combined reading of the Rule 7 and the clarificatory Circular dt.23.08.2007 clearly shows that there are only two restrictions regarding the distribution of the credit. The first restriction is that the 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 Appellant unit on the ground that the services were used in respect of all the Units finds no mention in the relevant rules. As such, restricting the distribution of Service Tax credit in a manner as has been done in the impugned order of the lower authority finds no merits. 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.

10. I find that the provision of ISD has been made in the Service Tax Rules, 1994 as well as Central Excise Rules, 2002 to avail and distribute the CENVAT Credit of the Service Tax paid on the various services like advertisement, telephone, security services, insurance, traveling expenses, advertising, market research, courier, photocopier maintenance, utility services, bank charges, AMC, professional charges etc received at the office as well as at the factory premises which are also meant for the products manufactured by their units located at other places. If the argument of the Adjudicating authority is considered then the CENVAT Credit on the various services referred above cannot be distributed. I find that no provisions in the Service Tax Rules, 1994 as well as in the Central Excise Rules, 2002 for any method for distribution of the CENVAT Credit availed by the ISD.

11. I further find that the Appellant has relied upon a case of ECOF Industries Pvt.Ltd. Vs CCE Bangalore reported in 2010 (17) STR 515 (Tri-Bang) in which a similar issue was decided in favour of the assessee. Department has challenged the CESTAT Order in the Hon'ble High Court of Karnataka. Hon'ble High Court of Karnataka has rejected the Departments appeal vide Order CEA No.53/2010, dt.03.02.2011. The Order of Hon'ble High Court of Karnataka has been accepted by the Department, which has been informed by the Assistant Commissioner (Legal), Bengaluru-I Commissionerate vide Letter C.No.IV/16/05/2010 L-1, dt.30.11.2011.

4. After considering the submissions of the learned Authorised Representative, I do not find any reason to interfere the order of the Commissioner (Appeals). Accordingly, the appeal filed by the Revenue is rejected. (Dictated & Pronounced in Court)

(P.K. Das) Member (Judicial)

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