Custom, Excise & Service Tax Tribunal
M/S. Trident Powercraft Pvt Ltd vs The Commissioner Of Central Excise, ... on 21 April, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/850/2009-SM [Arising out of Order-in-Appeal No. 66/2009-Commr.LTU dated 22/07/2009 passed by the Commissioner of Central Excise & Service Tax, Large Taxpayer Unit, Bangalore.] M/s. TRIDENT POWERCRAFT PVT LTD NO.45, NAGARUR, HUSKUR ROAD, OFF TUMKUR ROAD,BANGALORE Appellant(s) Versus The Commissioner of Central Excise, Customs and Service Tax BANGALORE-LTU 100 FT RING ROAD JSS TOWERS, BANASHANKARI-III STAGE, BANGALORE 560 085. KARNATAKA Respondent(s)
Appearance:
Mr. D. Kannan, Consultant HIRAGANGE & ASSOCIATES #1010, 1st floor(Above Corp.Bank) 26th Main, 4th T Block, Jayanagar, BANGALORE - 560041 KARNATAKA For the Appellant Dr. Ezhilmathi, AR For the Respondent Date of Hearing: 21/04/2017 Date of Decision: 21/04/2017 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20505 / 2017 Per : S.S GARG The present appeal is directed against the impugned order dated 22.7.2009 passed by the Commissioner of Central Excise, Large Taxpayers Unit, Bangalore whereby the Commissioner has allowed the credit of Rs.65,47,708/- pertaining to the input services received at Bangalore Branch under CENVAT Credit Rules (CCR), 2004 and disallowed the proportionate CENVAT credit of Rs.12,60,368/- pertaining to input services received at Hubli plant and demanded recovery of the same under Rule 14 of CCR read with Section 11A of the Central Excise Act, 1944 along with interest.
2. Briefly the facts of the case are that the appellant is engaged in the manufacture of alternators falling under Chapter 85 of the First Schedule of the Central Excise Tariff Act, 1985. They availed CENVAT credit under CCR, 2004. During the course of audit of records of the assesse, the LTU audit observed that Bangalore Unit had availed credit of service tax paid on overriding commission/sales commission paid to M/s. Kirloskar Oil Engines Ltd., Pune (for short KOEL) for combined sales turnover of Bangalore and Hubli plant without obtaining the registration as Input Service Distributor (ISD). On these allegations, a show-cause notice was issued on 8.4.2009 to the appellant proposing to recover the CENVAT credit irregularly availed. After due process of law, the said show-cause notice stands adjudicated by the Commissioner denying the CENVAT credit of Rs.12,60,368/- along with interest under Rule 14 of CCR.
3. Heard both the parties and perused the records.
4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without appreciating the provisions of the statute and also passed contrary to the binding judicial precedents. The facts are not disputed inasmuch as the services of KOEL were availed in respect of combined sales turnover of Bangalore and Hubli plants. However, it is the contention of the appellant that being a LTU, they could have transferred credit from one unit to another. As such, even if credit which could have been taken separately by Hubli plant, they could have transferred the credit to Bangalore plant. Alternatively, the Bangalore plant could have taken registration as input service tax credit distributor and could have distributed the credit so availed. Learned counsel further submitted that in appellants own case for the earlier period, this Tribunal vide its Final Order No.21531/2015 dated 10.7.2015 in appeal No. E/617/2009 has allowed the appeal of the appellant.
5. On the other hand, the learned AR reiterated the findings of the impugned order.
6. After considering the submissions of both the parties, I find that this Tribunal vide its Final Order dated 10.7.2015 in the appellants own case has allowed the appeal on merit. The relevant para 4-6 of the Tribunals decision are reproduced herein below:
4. As seen from the above, the receipt of the services and the fact of service tax paid on the same is not disputed. The only dispute is availment of credit by the Bangalore unit, without obtaining the ISD registration. I find that the Tribunal in number of decisions has held that such obtaining of ISD registration is only a procedural condition, which cannot lead to denial of the substantive benefit, otherwise available. In the case of Doshion Ltd. Vs. CCE, Ahmedabad [2013(288) ELT 291 (Tri. Ahmd.)], it was held that in the absence of any restriction for utilization of CENVAT credit of input services without allocating proportionately to various units, the omission to take registration as ISD can at best be considered as procedural irregularity, which is required to be ignored. The Honble Karnataka High Court in the case of CCE, Bangalore-I Vs. Ecof Industries Pvt. Ltd. [2011(23) STR 337 (Kar.)] has held that credit of service tax can be distributed even to the units, who have not actually received the services. In the case of Demosha Chemicals Pvt. Ltd. Vs. CCE&ST, Daman [2014(34) STR 758 (Tri. Ahmd.)], it was held that the distribution of credit of head office without taking registration as ISD is not to lead to the denial of the credit to a particular unit especially when prior to 17/05/2012, there was no provision for distribution of CENVAT credit availed by the head office proportionately to various units.
5. Admittedly both the units at Bangalore as well as at Hubli are the units of the same appellant and the credit availed by one unit could have been distributed to the other unit even though the services were not actually availed at that unit. This leads to the conclusion that either of the two units could have availed the entire credit. As such, I am of the view that denial of credit to the Bangalore unit is not justified.
6. Otherwise also, I find that the appellants unit is registered as LTU inasmuch as it is exercising administrative control as per the provisions of Rule 12A of the CENVAT Credit Rules 2004, the CENVAT credit lying at one unit can be transferred to the other unit. As such even if the credit was required to be taken at Hubli plant, the same could have been transferred to the Bangalore unit in terms of the said rule. As such, I find no justification for denial of the credit to the appellant. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief to the appellant. 6.1 Following the ratio of the said decision, I hereby allow the appeal of the appellant by setting aside the impugned order with consequential relief, if any.
(Operative portion of the Order was pronounced in Open Court on 21/04/2017.) S.S GARG JUDICIAL MEMBER rv 5