By TIOL News Service

MUMBAI, MAY 01, 2015: THE appellant has two units, one at Udhna in Gujarat and one in Mumbai. Gujarat Marketing Agency has provided the services of Business Auxiliary Services for the products manufactured in Gujarat as well as in Mumbai. It is also not disputed that the goods were being manufactured and cleared from Udhna, Gujarat as well as Mumbai.

The issue involved in this case is regarding eligibility of CENVAT credit of service tax paid by the Marketing Agency. It is the case of the Revenue that service tax paid on the services rendered for the marketing of the product in Gujarat needs to be denied proportionately.

Both the lower authorities recorded their findings that the appellant could not have utilized CENVAT credit at Mumbai for the products manufactured and cleared from Gujarat. The lower authorities have also held that marketing services are not interconnected with the manufacturing of the goods.

Before the CESTAT, the appellant submitted that the issue is covered by the decision of the Division Bench in the case of Doshion Ltd. - 2013-TIOL-395-CESTAT-AHM.

The AR reiterated the findings recorded by the lower authorities and inter alia relied upon the decision in Market Creators Ltd. - 2014-TIOL-2021-CESTAT-AHM and submitted that as per the provisions of Rule 7 of Service Tax Rules, 1994 the appellant should have registered and distributed the service tax credit availed as ISD.

The Bench observed -

"6. …I find that as to CENVAT Credit availed on the service tax paid by the service provider is not in dispute and the services were rendered to the appellant. The only dispute is that whether the service rendered by the service provider for the products manufactured in Gujarat and invoices raised can be availed as CENVAT Credit at Mumbai. I find that when there is no dispute as regards the services received by the appellant for the activity and service tax liability having been discharged by the service provider, omission to take registration as an Input Service Distributor is to be considered as procedure irregularity. The ratio of decision taken by the Bench in the case of Doshion Ltd. (supra) which is in para 5 is reproduced:-

x x x

7. I find that both the decisions in the cases of Mangalore Refinery and Petrochemicals (supra) Market Creators Ltd. (supra) relied on by learned A.R. have rendered by the Single Member Bench. The judicial discipline, Division bench decision needs to be followed giving precedence over decision of Single Member Bench. Accordingly, the decision in the case of Doshion Ltd. (supra) of Division Bench is binding on me and following the same I find that the impugned order is liable to be set aside and I do so."

The order was set aside and the appeal was allowed.

(See 2015-TIOL-766-CESTAT-MUM)