Custom, Excise & Service Tax Tribunal
Nestle India Ltd vs Commissioner Of Customs & Central ... on 26 October, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/1259/07 (Arising out of Order-in-Appeal No. GOA/CEX/SB/47/2007 dt. 20.4.2007 passed by the Commissioner (Appeals) Central Excise & Customs, Goa) For approval and signature: Hon'ble Shri Ramesh Nair, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the 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 : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Nestle India Ltd.
:
Appellant VS Commissioner of Customs & Central Excise, Goa.
:
Respondent Appearance Shri Rajesh Ostwal, Advocate for Appellant Shri Ashutosh Nath, Asstt.Commr. (A.R) for respondent CORAM:
Hon'ble Shri Ramesh Nair, Member (Judicial) Date of hearing : 26/10/2016 Date of decision: 26/10/2016 ORDER NO....................................................
The issue involved in the case is that the appellant have availed the Cenvat credit in respect of service distributed by their Head Office under a cover of invoice whereas the service was attributed to the product manufactured in different factories that is Nescafe and Maggie Noodles. The appellant is manufacturing sugar confectionery and chocolates. The department raised the dispute that the service tax paid on advertising, event management etc. which is not related to the product namely sugar confectionery, chocolates manufactured in the appellant's factory, therefore they are not entitled for the Cenvat credit. The adjudicating authority has confirmed the demand of Cenvat credit. The Commissioner (Appeals) has upheld the original order, therefore the appellant is before me.
2. Shri Rajesh Ostwal, the Ld. Counsel for the appellant submits that the service was distributed by their Head Office which is permissible though the services are not related to the factory but it is related to the product manufactured in different factory of the same appellants company as per the Cenvat Credit Rules. There is no restriction for distribution of the credit to a factory where the services are not related. There is no one to one correlation provided under the law. There is no dispute that the services are tax paid and received by the Head Office. Therefore, the credit should not have been denied by the lower authority. He submits that the identical issue has been settled by the Hon'ble Karnataka high court in the case of Commissioner of C. Ex., Bangalore-I Vs. Ecof Industries Pvt. Ltd. 2012 (277) ELT 317 (Kar.). He also placed reliance on the following Judgments:
(i) Commissioner of C.Ex., Bangalore-I Vs. Ecof Industries Pvt. Ltd.
2011 (271) E.L.T. 58 (Kar.)
(ii) Doshion Ltd.Vs. Commissioner of Central Excise, Ahmedabad 2013 (288) E.L.T. 291 (Tri.-Ahmd.)
(iii) Commissioner of Central Excise Vs. Dashion Ltd.
2016 (41) S.T.R. 884 (Guj.)
(iv) Commissioner of C.Ex., Nagpur Vs. Ultratech Cement Ltd.
2010 (20) STR 577 (Bom.)
(v) Coca Cola India Pvt. Ltd. Vs. Commissioner of C. Ex., Pune-III 2009 (15) STR 657 (Bom.)
(vi) Hardik Founders and Engineers Pvt. Ltd.
2016-TIOL-925-Cestat-Mum.
3. On the other hand, Shri Ashutosh Nath, Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that as per the definition of impugned service provided under Rule 2 (l) of Cenvat Credit Rules 2004, credit can be availed on the input service which is used in the same factory for manufacture of the final product. In the present case, the input service is related to the product Nescafe and Maggie Noodles which are not manufactured in the appellants factory but in different factory situated at different location, therefore there is a clear violation of the provisions of Rule 2 (l)(ii). He further submits that as per Rule 3 of Cenvat Credit Rules, the Cenvat Credit can be availed in respect of input service used in the manufacture of final product. He placed reliance on the following judgments:
(i) Nitco Limited Vs. Commissioner of C.Ex., Raigad 2014 (35) S.T.R. 475 (Bom.)
(ii) Nitco Ltd. Vs. Commissioner of Central Excise, Raigad 2014 (34) S.T.R. 835 (Tri.-Mumbai)
(iii) Clariant Chemcials (I) Ltd.Vs. Commissioner of Central Excise, Raigad.
4. I have carefully considered the submissions made by both the sides, I find that the fact is not under dispute that though input service on which the credit was disputed was not used in the factory of the appellant but it is related to the product Nescafe and Maggie Noodles which are manufactured in the appellant company's different factory. As regard the provision for distribution of the credit, there is no condition of one to one correlation between the credit distributed and the quantum of service received and used by a particular factory. Though the service is related to the product which is manufactured in the appellants company in other factories. But all the factories belonging to one company and in the absence of any provision of one to one correlation the credit can be distributed to any factory of one company. This issue has been considered by the Hon"ble Karnataka High Court in the case of Ecof Industries Pvt. Ltd (Supra) wherein it was held as under.
4. The assessee had availed the Service tax credit based on the invoices issued by the Chennai office indicating that the Service tax are taken by their unit at Malur. That the Service tax paid by the Chennai unit pertains to advertisement of their product 'Sabena Dish Wash Bar' which was manufactured by their Cuttack Unit and not by the unit at Malur. Therefore, the assessee was dealing with the very same product. Rule 7 of the Cenvat Credit Rules governs procedure/manner of distribution of credit by input service distributor by imposing two conditions therein, which are as follows :
"a. Credit distributed under the invoice of ISD does not exceed the amount of Service tax paid. b. Credit of Service exclusively used for exempted goods or exempt service is not distributed."
5. Therefore, the assessee is entitled to distribute the Cenvat credit on the input services on its manufacturing unit or other units providing the output services. The view taken in the order in appeal that the distribution of credit is for the advertisement of the product, which is not at all manufactured at Malur Unit, therefore, cannot be accepted. The finding recorded by the Appellate Authority that the assessee is entitled to take credit only in the unit where the product is manufactured is therefore not the mandate of Rule 7 of the Cenvat Credit Rules.
6. Under these circumstances, we confirm the view taken by the Tribunal. We do not see any substantial question of law that arises for consideration in this appeal. Accordingly, the appeal being devoid of merits is dismissed. In view of the above judgment even though the service is not used in the appellant factory, but received and used in different factory of the same company, credit cannot be denied. Following the ratio of the above decision and the discussion made hereinabove, I am of the considered view that the appellant is legally entitled for the Cenvat Credit. The impugned order is set aside, the appeal is allowed.
(Pronounced & Dictated in court) (Ramesh Nair) Member (Judicial) SM.
6Appeal No. E/1259/07