2026-VIL-427-CESTAT-CHD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Cenvat Credit Distribution by ISD based on turnover - The appellant has five regional offices registered as Input Service Distributors (ISDs) which distribute the service tax credit among the appellant's eight manufacturing units. During an audit, the Department observed that the appellant had claimed disproportionate distribution of Cenvat credit on input services - Whether the appellant had correctly distributed the Cenvat credit as per the provisions of Rule 7 of the Cenvat Credit Rules, which allowed discretionary distribution of credit during the relevant period - HELD - As per Rule 7 prevailing during the relevant period from May 2013 to October 2015, the ISD had the discretion to distribute the Cenvat credit among the manufacturing units, and the conditions for proportionate distribution based on turnover were not mandatory. The appellant had produced CA certificates showing the distribution of credit among the units based on their turnover. The appellate authority in the appellant’s own case for the previous and subsequent period has allowed the Cenvat credit distributed by ISD to the appellant on the basis of the CA certificates and the said decisions in favour of the appellant have not appealed against by the Revenue and the said orders have attained finality. As per the settled law, the department cannot take contrary stand on the same issue for the same assesse - Further, the department has not disputed the eligibility or admissibility of the credit. It is a settled principle that the distribution of credit can only be questioned at the ISD's end and not at the recipient's end. Accordingly, the impugned order is set aside and the appeal is allowed
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