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2015 (6) TMI 584 - AT - Service TaxWrongful utilization of CENVAT Credit - Renting of immovable property - Held that:- It appears that the property located in Mumbai was never registered under service tax. In Pune the appellant had their manufacturing unit where they were taking credit of input services used in their manufacturing activities as well for providing output services. The correct procedure was to take recourse to centralized registration which they failed to do so. This being an omission no doubt but the center of the dispute lies elsewhere. The prime question to be addressed by us is whether CENVAT Credit on various input services which are used by the appellant in the course of their manufacturing activity and output services may be utilized for the payment of service tax liability on the service of renting of immovable property. If the factory itself is located in a rented premises, then perhaps the nexus could be there but in the present case we are of the view that input credit cannot be utilized for paying service tax liability on the renting of immovable property service provided in Mumbai. Ld AR has correctly placed reliance on the Larger bench decision in the case of Telco Equipment (supra) holding that there must be semblance integral connection between the input service and the manufacturing/output service. If some information is available in various reports and returns which are to be formulated in compliance to other statutes it does not lead to a conclusion that the utilization of credit for the activity of renting is known to the department. The department is not supposed to know each and every declaration made outside the Central Excise and Service Tax law. Even if the financial report is available to the audit, the same is meaningless in the sense that it does not indicate that input service tax credit is utilized to pay the tax liability on such renting of property. If the credit is not available for paying service tax liability on the renting of property service, there is no bar on utilizing the same credit for manufacturing/other output services at Pune. As the appellant have already paid the amount of ₹ 54,44,777/- which is due to the department, they are allowed to take re-credit of the same amount. In the circumstances, there is reasonable cause to waive penalty under Section 80. - Decided in favour of assessee.
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