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<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> Customs, Excise and Service Tax Appellate Tribunal Substantial benefits cannot be denied because of procedural irregularity MANU/CN/0075/2018 - (20 Jul 2018) </td> </tr> <tr> <td align="left" valign="top">Laxminarain Visambharnath (Unit-III) Vs. Commissioner of Central Excise & Service Tax, Kanpur</td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE">In facts of present case, the Appellant, who is engaged in the manufacture of Textile Chemicals & Oil has two units that is unit number-III and unit number-II. Proceedings were initiated against the Appellant by way of Show Cause Notice on the ground that, a part of the service were also utilised by their unit number-II and as such the credit should have been proportionately distributed between unit number-III and unit number-II. Accordingly, notice proposed denial of Cenvat Credit as also for imposition of penalties. 
The Original Adjudicating Authority confirmed the demand and imposed penalties. On an appeal filed against the said order Commissioner (Appeals) upheld the impugned order. However, Appellant authority set aside the demand of around Rs. 84,383.00 raised and confirmed by denying the Cenvat credit of service tax paid on the outward freight during the period from April 2010 to March 2014. Issue, which survives in the present appeal, is as to whether the Appellant could have taken the Cenvat credit of service tax paid on the services which were also utilised by their unit number-II. 
It is a fact that, if the Appellant was registered as ISD, they could have distributed the credit to any of their units irrespective of the fact as whether the unit has utilized the services or not. Merely because the Appellant was not registered as ISD and only obtained the Centralise Registration, cannot result in denial of substantive benefit to the asseessee. 
An identical issue was considered by the Tribunal in the case of Dynamic Cables Pvt. Ltd. V/s. CGST & CE, Jaipur, and reference was made to the Tribunal's decision in the case of Doshion Ltd. V/s. CCE, Ahmedabad, where in it was held that, distribution of the credit without taking registration as input service distributer cannot be held to be as irregular. The said decision stands confirmed by the Gujarat High Court. As per board's circular number 1063/2/2018-CX : <manuid>MANU/EXCR/0002/2018</manuid> dated 16th of February, 2018, the said decision of the Gujarat High Court stands accepted by the board. In terms of the said decision, it was held that the substantial benefits cannot be denied because of procedural irregularity and the Cenvat credit availed by one unit whereas a part of a common services were utilised by the other unit cannot be defaulted. 
Even as per the revenue the credit was available to unit number-II, who has discharged duty in cash during the relevant period. If the credit would have been availed by unit number-II, they could have utilised the same for payment of duty on their final product instead of paying the duty through PLA. As such the entire exercise is revenue neutral thus not resulting in any loss to the Revenue. There is no justifiable reason to deny the credit to the Appellant. Accordingly, the demand is set aside along with setting aside of penalty and the appeal is allowed.</td> </tr> <tr> <td align="left" valign="top" >Relevant : Doshion Ltd. vs. Commissioner of Central Excise <manuid>MANU/SC/0335/2012</manuid></td> </tr> <tr> <td align="left" valign="top" >Tags : Cenvat credit, Demand, Validity</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr>  <td align="left" valign="top">Source : newsroom.manupatra.com</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> </table> </div> </body> </html>