Relief to Dabur India: CESTAT deletes Disallowance of Cenvat Credit on Advertisement and Sales Promotion Services [Read Order]

As a relief to Dabur India, the Ahmedabad bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) deletes the disallowance of Cenvat Credit on Advertisement and sales promotion service.

The appellants have manufacturing units in other states of India. The Units located in Baddi and Rudrapur were clearing goods under area-based exemption Notification No. 50/2003CE 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) for distributing the Cenvat Credit of input services received at the corporate office in relation to the goods manufactured at various unit across India.

According to Revenue 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.

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.

A Coram comprising of Mr Ramesh Nair, Member (Judicial) and Mr Raju, (Member Technical) held the entire Cenvat Credit availed by the ISD on disputed input services as eligible, including the credit sought to be denied in the impugned orders from the Appellants.

It was observed that “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.”

While allowing the appeal of the assessee, the Tribunal set aside the impugned orders. Shri B.L. Narasimhan, Shri Jigar Shah, Shri Amber Kumawat (Advocates) appeared on behalf of the for the Appellant and Shri Ghanasyam Soni, Joint Commissioner appeared on behalf of the Respondent

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