Kirloskar Toyota Textile Machinery Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Bangalore)
The appeal before the Tribunal concerned the eligibility of the appellant to avail CENVAT credit on common input services used across multiple units, including a Domestic Tariff Area (DTA) unit, a 100% Export Oriented Unit (EOU), and a trading unit, all located within the same premises. The Department alleged that the appellant had wrongly availed credit on input services invoiced to the DTA unit but used commonly for all units, and issued show cause notices covering the period from 2008–09 to 2013. The adjudicating authority disallowed the credit, confirmed duty demand, and imposed penalties, leading to the present appeal.
The appellant contended that it had adopted a centralized billing and accounting system and had obtained centralized service tax registration under the applicable rules. It had also informed the Department about consolidation and utilization of CENVAT credit across units. Relying on Rule 7 of the CENVAT Credit Rules, 2004 and judicial precedents, including the decision in ECOF Industries upheld by the Karnataka High Court, it was argued that credit distribution is permissible across units subject only to two restrictions: that the credit should not exceed the service tax paid and should not relate to exempted goods or services. The appellant also disputed the invocation of the extended period, asserting that there was no suppression as the Department had been informed of the centralized system.
