Dabur India Ltd. v. CCE & ST - Taxpublishers.in

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The Tax Publishers 2017 TaxPub(ST) 1205 (All-HC) Dabur India Ltd. v. CCE & ST CENVAT CREDIT RULES, 2004 --Cenvat credit --Input tax credit of services used in common for both units producing exempted and dutiable goodsApplicability of clause (d) of rule 7--Not existed during material period --Where demand was confirmed on assessee contending that Cenvat credit of service tax attributable to unit involved in manufacture of exempted goods was liable for recovery relying on clause (d) of rule7, said confirmation of demand was not sustainable, as clause (d) of rule 7 did not exist on statute during the material period, hence, the same could not be relied. Further, clause (b) of rule 7, which existed during material time, also could not be relied on, as show-cause notice nowhere established that the Cenvat credit was used in a unit exclusively engaged in manufacture of exempted goods.--Assessee, input service distributor, had availed Cenvat credit of tax paid on input services and distributed the said credit to its units engaged in manufacturing dutiable goods. A show-cause notice was issued on the ground that assessee had distributed the credit attributable to units engaged in manufacture of exempted goods, to the units producing dutiable goods, therefore, the said credit was liable for recovery as per clause (d) of rule 7 and thus, confirmed demand. However, assessee contended that said clause was introduced subsequent to period of show-cause notice; therefore, confirmation of demand was not sustainable. Further, clause (b) of rule 7 restricts the distribution of credit exclusively attributable to exempted goods, but the services were commonly used for entire group of manufacturing organization.Held: Since clause (d) of rule 7 did not exist on statute during the material period; said clause could not be relied on for confirmation of demand. Further, show-cause notice nowhere established that the Cenvat credit proposed to be recovered, was used in a unit exclusively engaged in manufacture of exempted goods, therefore, clause (b) of rule 7, which existed during material time, also could not be relied. Hence, impugned order confirming demand was set aside. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers 2017 TaxPub(ST) 1205 (All-HC)

Dabur India Ltd. v. CCE & ST

CENVAT CREDIT RULES, 2004

--Cenvat credit --Input tax credit of services used in common for both units producing exempted and dutiable goodsApplicability of clause (d) of rule 7--Not existed during material period --Where demand was confirmed on assessee contending that Cenvat credit of service tax attributable to unit involved in manufacture of exempted goods was liable for recovery relying on clause (d) of rule7, said confirmation of demand was not sustainable, as clause (d) of rule 7 did not exist on statute during the material period, hence, the same could not be relied. Further, clause (b) of rule 7, which existed during material time, also could not be relied on, as show-cause notice nowhere established that the Cenvat credit was used in a unit exclusively engaged in manufacture of exempted goods.--Assessee, input service distributor, had availed Cenvat credit of tax paid on input services and distributed the said credit to its units engaged in manufacturing dutiable goods. A show-cause notice was issued on the ground that assessee had distributed the credit attributable to units engaged in manufacture of exempted goods, to the units producing dutiable goods, therefore, the said credit was liable for recovery as per clause (d) of rule 7 and thus, confirmed demand. However, assessee contended that said clause was introduced subsequent to period of show-cause notice; therefore, confirmation of demand was not sustainable. Further, clause (b) of rule 7 restricts the distribution of credit exclusively attributable to exempted goods, but the services were commonly used for entire group of manufacturing organization.Held: Since clause (d) of rule 7 did not exist on statute during the material period; said clause could not be relied on for confirmation of demand. Further, show-cause notice nowhere established that the Cenvat credit proposed to be recovered, was used in a unit exclusively engaged in manufacture of exempted goods, therefore, clause (b) of rule 7, which existed during material time, also could not be relied. Hence, impugned order confirming demand was set aside.