Date of order: 20.10.2022

Key Pointers:

• The Appellants, M. B. Industries Pvt. Limited,  are engaged in manufacture of Biscuits falling under Heading 1905.
• Appellants as a ISD unit submitted that in terms of the provisions of Rule 2(m) and Rule 7 of the CENVAT Rules, prior to 01.04.2016, the Appellants could distribute CENVAT credit in respect of the service tax paid on inputs services to its manufacturing units, including a job workers. Without prejudice, Rule 7 of CCR was substituted w.e.f. 1.4.2016, wherein a specific provision was made for an ISD to distribute the credit of input services even to outsource manufacturers/job-workers/contract manufacturers. This amendment by “substitution” of Rule 7 of CCR was made only to correct the possible mistake/lacuna in the earlier Rule and, hence, the same would have retrospective effect from the inception of CCR, 2004.
• The issue is whether issuance of Input Service Distributors‟ invoice by Appellant to its contract manufacturing unit is legal and correct? 
• The authorities observed that issue herein is squarely covered in favour of the appellant by the 
• Larger Bench ruling of this Tribunal in the case of Krishna Food Products wherein it was held that in terms of the provisions of Rule 2(m) and Rule 7 of the CENVAT Rules, as they stood prior to 01.04.2016, the assessee (appellant) company can distribute CENVAT credit in respect of the service tax paid on inputs services to its manufacturing units, including a job worker. Further, amended provisions of rule 2(m) and rule 7 of the CENVAT Rules, after the 01.04.2016, merely seek to rectify the lacuna in the unamended rules and, therefore, would have effect from the inception of the rules.
• In view of the aforementioned, the Tribunal allowed the appeals and set aside the impugned orders.