2026-VIL-258-CESTAT-CHD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Cenvat Credit on the input services distributed by the head office as an input service distributor (ISD) - Appellant availed Cenvat credit on input services of 'advertisement agency services' provided by its head office. However, the expenditure for such services was not booked in the books of account of the appellant's branch but in the books of the head office. The Revenue denied the Cenvat credit on the ground that it was not booked in the appellant's books - Whether the Cenvat credit on the input services distributed by the head office as an ISD can be denied to the appellant's branch on the ground that the expenditure was not booked in its books of account – HELD - The eligibility of Cenvat credit should be checked at the ISD level and not at the level of the manufacturing unit. The Cenvat credit cannot be denied to the recipient unit which has merely availed the credit based on the invoices issued by the ISD. The CBEC had clarified that the ISD can distribute the Cenvat credit to its manufacturing units or units providing output service, and it is left to the assessee to decide the manner of distribution, ensuring that the total credit allowed does not exceed the eligible credit amount - The provisions of Rule 7 of the Cenvat Credit Rules, which prescribe the manner of distribution by the ISD, did not require the expenses to be booked in the books of account of the recipient unit during the relevant period. Accordingly, the Cenvat credit on the input services distributed by the head office as an ISD cannot be denied to the appellant's branch on the ground that the expenditure was not booked in its books of account - The impugned order is set aside and the appeals are allowed
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