By TIOL News Service

MUMBAI, JULY 11, 2017: THE appellant is the head office of various manufacturing units located at Kandivali, Nashik, Igatpuri, Zaheerbad and Haridwar. The appellants have distributed the input service to their units except Haridwar .

The case of the department is that since the Haridwar unit is exempted from payment of excise duty, therefore, the credit attributed to the Haridwar unit is not admissible.

Demand was raised u/r 14of CCR from the appellant, who is the Input service distributor.

The CST, Mumbai confirmed the demands and, therefore, the appellant is before the CESTAT.

In the matter of Stay applications filed by the appellant, the Tribunal had held thus -

We reported this order as 2014-TIOL-2921-CESTAT-MUM .

The appeal was heard recently.

It is submitted that the appellant is only an input service distributor in terms of Rule 7 of CCR; that they are neither availing CENVATcredit nor discharging any excise duty; therefore, the recovery of wrong availment of credit, if any, cannot be made against the appellant.

Reliance is placed on -

++ Godrej & Boyce Mfg. Co Ltd. - 2014-TIOL-1188-CESTAT-MUM

++ Indian Oil Corporation Ltd. Final Order Nos. ST/A/51010-51011/2014-CU(DB) in appeal ST/58357-58358/2013

++ Board letterF.No. 137/68/2013-ST dated 10.03.2014 clarifying that recovery under Rule 14 can be only from the manufacturer or service provider and there is no provision for issuing a show-cause notice to input service distributor.

The AR reiterated the findings of the impugned order.

After extracting rule 14 of the CCR, 2004, the Bench observed -

+ On a plain reading of the above rule, it is seen that the recovery of CENVAT credit can only be made when the CENVATcredit has been taken or utilised wrongly.

+ In the present case, the input service distributors have not taken any credit whereas they have already distributed the input service credit. The credit was taken by various manufacturing units. Therefore, rule 14 can be made applicable only on the person who avails the CENVAT credit wrongly or utilised the same. Therefore the appellant being an input service distributor cannot be issued any show-cause notice.

The Bench also reproduced the Board letter dated 10.03.2014 wherein it is categorically clarified that no show-cause notice can be issued to the input service distributor for recovery of cenvat credit.

Concluding that (in the light of the above) the demand raised on the appellant, being an input service distributor, is not sustainable in law, the impugned order was set aside and the Appeals were allowed.

(See 2017-TIOL-2364-CESTAT-MUM)