Moser Baer India Ltd.(the Appellant) is the manufacturer of CDR, CD Rom, DVDR and DVD Rom, falling under Chapter Heading 85 of the Central Excise Tariff Act, 1985, at their factory situated at Noida. The Head Office of the Appellant, located at Okhla, Delhi is registered as an Input Service Distributer (ISD) in terms of Rule 2(m) of the Cenvat Credit Rules, 2004 (the Credit Rules). The Head Office was discharging Service tax liability under Reverse Charge for the various services received by them from foreign country. The Service tax so paid by themwas distributed by the Head Office to the Appellant’s factory at Noida, which was utilized by the Appellant in their factory located at Noida.
The Department contended that in as much as the Service tax was being paid by the Head Office, which was neither engaged in the manufacture of any excisable goods nor providing any output services, they were not entitled to avail the said credit and in turn not entitled to pass on the said credit to the Appellant’s factory located at Noida.
Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Delhi.
The Hon’ble CESTAT, Delhi after analysing Rule 2(m) and Rule 7 of the Credit Rules held that:
Therefore, the Hon’ble Tribunal allowed the Cenvat credit to the Appellant transferred from their Head Office.