Dabur India Limited Vs C.C.E & S.T. (CESTAT Ahmedabad)
Appeal No. E/10573/2015 is filed by appellant – M/s. Dabur India Limited (Unit-1) against Order-in-Original No. VAP-EXCUS-000-COM-014-14-15 dated 30.12.2014 and Appeal No. E/10574/2015 is filed by appellants-M/s. Dabur India Limited (Unit-2) against Order-in-Original No. VAP-EXCUS-000-COM-015-14-15 dated 30.12.2014. The issue in both these appeals is common. Therefore, they are taken up together for disposal.
02. The brief facts of the case are that the appellants also have manufacturing units in other states of India i.e. Baddi in Himachal Pradesh, Rudrapur in Uttarakhand, Sahibabad in Uttar Pradesh, Alwar in Rajasthan and Pithmapur in Madhya Pradesh. The Units located in Baddi and Rudrapur were clearing goods under area based exemption Notification No. 50/2003-CE dated 10.06.2003 whereas the other units of the Appellants, including the units in impugned appeals, were clearing goods on payment of Central Excise Duty at the applicable rate. The Appellants also have a corporate head office at Kaushumbi, Ghaziabad which were registered with the Central Excise & Service Tax department as Input Service Distributors (ISD in short) for distributing the Cenvat Credit of input services received at the corporate office in relation to the goods manufactured at various unit across India. Baddi Unit and Rudrapur Units of M/s. Dabur India Limited were availing area based exemption underNotification No. 50/2003-CE dated 10.06.2003. It appeared to Revenue that credit of Service Tax attributable to service used in a Unit exclusively engaged in the manufacture of exempted goods was distributed by Input Service distributor, to Units which were manufacturing dutiable goods. It appeared to Revenue that under Clause (b) of Rule 7 of the Cenvat Credit Rules, 2004 M/s. Dabur India Limited (Corporate head office) was not entitled to distribute such Input Service Tax credit which was attributable to Services used in a Unit exclusively engaged in manufacture of exempted goods. Therefore, investigations were carried out and on the basis of investigation a show cause notice dated 21-10-2011 was issued to M/s. Dabur India Limited (Input Service Distributor – Ghaziabad). It was alleged in the said show cause notice that Advertisement Service & Sales Promotion Services received by Input Service Distributor which was attributable to exempted goods and traded goods were distributed to the Units which were manufacturing dutiable final product. It appeared to Revenue that Cenvat credit on account of exempted goods and traded goods were inadmissible for distribution since the said credit was in respect of input services which were attributable to exempted goods. Therefore, Appellants were called upon to show cause Notices as to why Cenvat credit attributable to exempted goods and trading goods should not be disallowed. The said show cause notices was adjudicated through the above impugned Orders-in-Original. Aggrieved by the said impugned orders, appellants are before this Tribunal.
03. Shri B.L.Narsimhan, learned counsel appearing for the Appellant submits that dispute regarding the eligibility of credit by the ISD unit & Sahibabad unit of M/s Dabur India has been settled by the Hon’ble Tribunal vide Final Order No. A/70452-53/2017 dated 13.04.2017. The Hon’ble CESTAT has set aside the entire demand raised against the ISD unit. Thus, the entire Cenvat Credit availed by the ISD on disputed input services has held to be eligible, including the credit sought to be denied in the impugned orders from the Appellants. Once the availment and distribution of credit by the ISD is held to be proper, there is no question of denying the same credit at the hands of the recipient units on the same grounds and for the same period. In the same Order dated 13.04.2017 the Hon’ble CESTAT, has also set aside the demand for denial of Credit raised against the Sahibabad unit of the Appellants on identical grounds as the show cause notice in the present case.
3.1 He also submits that in pursuance of the Judgment dated 13.04.2017 of the Hon’ble CESTAT, Allahabad, the Hon’ble CESTAT, Delhi vide order dated 24.07.2017 has set aside the demand for denial of credit raised against the Alwar Unit and demand for denial of credit raised against the Pithampur unit.
3.2 He further submits that for the same Units (Silvassa) for the subsequent period from April 2011 to December 2011, the appeals filed by Appellants against the denial of Cenvat Credit availed on distributed by ISD office on advertisement and sale promotion services were decided by the this CESTAT vide Order reported at 2018(2) TMI 618-CESTAT- Ahmedabad in favour of appellants. The Hon’ble Tribunal has settled the issue in the Appellant’s favour vide the above mentioned decisions and therefore, on this ground alone the present demands confirmed against the Appellant’s units are also liable to be set aside.
3.3 Without prejudice, he also submits that Appellant are entitled to avail CENVAT credit distributed to it by the ISD. The Rule 7 as applicable during the period in dispute it contained only two conditions for distribution of Credit by ISD and dispute is only restricted to applicability of condition as contained in Rule 7(b) of Credit Rules. Moreover, the word used in this Rule are “used in a unit” which means if the services were used exclusively in that unit in manufacture of the exempted goods or providing of the exempted output services, the same shall not be distributed. It is undisputed facts the credit which was relating to service “ used in” the exempted units was not availed by the Appellants. In other words, the services in question have not been used exclusively in exempted unit. It has also been used by the Appellants in respect of goods produced in duty paying unit. Such service is not restricted to be used in manufacturing process of the goods, therefore such service falls under inclusive part of the definition of the input services. Further, such advertisement services are not specific to its use, as these are general in nature and used by a manufacturer after manufacturing process is over.
3.4 He also submits that the Ld. Commissioner has held that cenvat credit of service tax paid on advertisement services used in relation to the final products which have been traded is not available as trading activity is neither manufacturing activity nor a taxable service and is beyond the application of Cenvat Credit Rules, 2004. However, the said finding is contrary to the clarification issued by the Board vide Circular No. F.No. 334/3/2011-TRU dated 28.02.2011 and Circular No. 943/4/2011-CX dated 29.04.2011 wherein trading has been considered an exempted service.
3.5 Without prejudice to above, he further submits that trading activity was neither exempted goods nor exempted services prior to 01.04.2011, as trading activity was included in the definition of exempted service only after the amendment of Rule 2 (e) of Cenvat Credit rules, 2004 w.e.f. 01.04.2011 by Notification No. 03/2011-CE(NT) dated 01.03.2011. Thus Ld. Commissioner has grossly erred in concluding that the credit availed in relation to traded goods prior to 01.04.2011 is required to be reversed. In order to substantive above submission he placed reliance on the following decisions:-
