DOSHION LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD

JUDGEMENT

(1.) THE appellant is engaged in the manufacture of Water Treatment Plant/Parts, Water Treatment Chemicals, Resins etc. The appellant also avails benefit of Cenvat credit of duty paid on inputs, capital goods and input services as provided under Cenvat Credit Rules, 2004 (CCR). During scrutiny of the records of the unit by the officers it was noticed that the assessee was availing as well as utilizing credit of service tax paid for services such as telephone, security, insurance etc. rendered at its other manufacturing unit at Kathwada for payment of Central Excise duty of the clearances made at their main Vatva unit. It was sought by the officers that in view of the definition of input service under the Cenvat Credit Rules, the same is not permissible and is required to be recovered. The registered office/administrative office at Vatva where accounts are maintained, orders placed and payments are made for inputs, capital goods and input services received by all manufacturing units and output service providing unit. The manufacturing unit at Vatva is situated at Plot No. 25 -26, GIDC Vatva and the Central Excise Registration has been taken from Plot Nos. 24, 25 & 26, GIDC, Vatva. The appellant is providing output services and is liable to pay service tax and also eligible to take credit of input services received by them till Sept. 2004. Cenvat Credit Rules, 2004 allowed the credit in respect of service tax paid on input service used by the manufacturer in relation to the manufacture of final product with effect from 10 -9 -2004. Since Oct., 2004, the assessee had started maintaining record of input service credit in Excel Sheet in computer.

(2.) PROCEEDINGS were initiated on the ground that Cenvat credit of service of Rs. 1,51,51,730/ - availed during the period March 2005 to August 2007 is not admissible and is liable to be recovered from the appellant with interest and proposing to impose penalty also which has culminated into impugned order wherein, the demand for wrongly availed Cenvat credit of Rs. 1,07,07,142/ - has been confirmed with interest and penalty equal to this amount under Section 11AC has also been imposed. In addition, in the impugned order, recovery of service tax credit amounting to Rs. 43,159/ - availed before Sept. 2004 for payment of Central Excise duty by the manufacturing unit has also been disallowed and penalty equal to this amount has been imposed under Section 11AC of Central Excise Act, 1944. Besides the penalty on the appellant Company, penalties have also been imposed on other appellants comprising of Director, Authorised signatory, General Manager etc.

(3.) LEARNED advocate on behalf of the appellants submitted that appellant has two units in Kathwada and Vatva. The Vatva unit also has administrative office and registered office in the adjacent plot. The dispute has arisen because the appellant did not take registration as Input Service Distributor in respect of their head office and instead has simply utilised credit in their Vatva Unit. Finding that the appellant was availing Cenvat credit as well as utilising credit of service tax paid for services such as telephone, insurance, security etc. rendered at their other manufacturing unit at Kathwada for payment of Central Excise duty for clearance at Vatva unit, proceedings have been initiated. It can be seen that only objection of the department was that credit should have been distributed by the Head Office and not utilised in Vatva unit alone. He submits that during the relevant period, the Kathwada unit had made payment of excise duty from PLA which would show that by utilising credit at Vatva unit appellant has not availed any undue benefit. During the year 2005 -06, appellant had paid about Rs. 1.75 Crores from PLA in Kathwada unit, in 2006 -07 paid about Rs. 41.76 Lakhs and in 2007 -08 paid about Rs. 62 Lakhs from PLA. The total amount paid by Kathwada unit from PLA is much more than the total Cenvat credit availed by the appellants. He relies upon the decision of the Tribunal in the case of Samita Conductors Limited - 2012 (278) E.L.T. 492 (Tri. -Ahmd.) to submit that input service Input Service Distributor need not be registered and documents also need not be exactly in the format and maintains necessary details itself is sufficient. He also relied upon the decision of the Honble High Court of Karnataka in the case of ECOF Industries Pvt. Limited - 2011 (23) S.T.R. 337 (Kar.) = 2011 (271) E.L.T. 58 (Kar.) to submit that head office could have passed on the entire Cenvat credit to any of the units and there was no need to pass on proportionate credit for services received or final products manufacturer etc. Further, he also relied upon the Circular issued by the Board vide F.No. 381/23/2010 -862 dated 30 -3 -2010 to submit that the amount of Cenvat credit taken on inputs, capital goods and input services which are used for manufacture of goods or provisioning of services is available in a common pool and can be used for payment of excise duty and or service tax.