Distribution of Credit can only be Questioned at the ISD End and not at the End of the Recipient: CESTAT Decides on Exide CENVAT Credit case [Read Order]
CESTAT allows Exide Industries’ appeal, holding that the recipient of credit cannot be questioned on distribution of credit.
![Distribution of Credit can only be Questioned at the ISD End and not at the End of the Recipient: CESTAT Decides on Exide CENVAT Credit case [Read Order]](https://images.taxscan.in/h-upload/2026/03/16/2129364-cenvat-credit-site-imagejpg.webp "Distribution of Credit can only be Questioned at the ISD End and not at the End of the Recipient: CESTAT Decides on Exide CENVAT Credit case [Read Order]")
The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Chandigarh, held that distribution of credit can only be questioned at the Input Service Distributor (ISD) end and not at the end of the recipient. The appellant, M/s Exide Industries Ltd, is engaged in the manufacturing of batteries for automobiles and other products falling under Chapter 86 of the First Schedule to...
The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Chandigarh, held that distribution of credit can only be questioned at the Input Service Distributor (ISD) end and not at the end of the recipient.
The appellant, M/s Exide Industries Ltd, is engaged in the manufacturing of batteries for automobiles and other products falling under Chapter 86 of the First Schedule to the Central Excise Tariff Act, 1985.
The facts state that the audit observed that CENVAT Credit on service tax has been disproportionately distributed. The adjudicating authority confirmed the demand on the basis that the credit on input services pertaining to more than one unit should be distributed proportionately under Rule 7 of Cenvat Credit Rules.
The counsel for the appellant submitted that the order has been passed without properly appreciating the facts, the law and binding judicial precedents. It was also submitted that the seven conditions under Rule 7 for distribution of credit were discretionary and not compulsory. Reliance was placed on several cases.
The departmental representative submitted that the case may be remanded back to verify whether the appellant has availed such services. The tribunal observed that during the period involved in the present case, the conditions for distribution of credit were discretionary and not mandatory.
The CESTAT referred to the decisions in Commissioner of Central Excise Pune - II v. SS Engineers and Rosmerta Technologies Ltd. v. Commissioner of Central Excise and considering the CA certificates, held that credit has been rightly distributed by the appellant.
The two member bench of S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) reiterated the settled principle that distribution of credit can only be questioned at the ISD end and not at the end of the recipient. Therefore, questioning the same at the end of the appellant is not sustainable in law. The appeal has accordingly been allowed.
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