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2021 (2) TMI 870 - Commissioner - Central ExciseCENVAT Credit - denial of credit mainly on the ground that there was no service rendered by ABMCPL to the appellant which could be defined as input service for them as the arrangement between ABMCPL and its member companies (including appellant) was merely sharing of common expenses and there was no concrete proof that these expenses were made for such services provided by ABMCPL which were used by the appellant in manufacture of their final product - HELD THAT:- The confirmation of the demand has been made on the pretext of having no nexus, direct or indirect, between the impugned services and the manufacturing activities of the Appellant. The Adjudicating Authority has observed that the impugned bills/ invoices have been issued on the basis of performances of previous years of the user companies and not on the basis of actual services rendered by the service provider and hence the nexus of input services being used by the manufacturer breaks. The bills/ invoices being issued on the basis of previous years performances, the same may still be issued by the service provider when the user company does not avail or utilise any service. The Adjudicating Authority has further observed that there is no provision in the CCR to avail credit on notional input service and such services cannot be stated to be services used by the manufacturing company - the observation of the Adjudicating authority is neither supported by law nor even is followed in actual prevalent practices. It is a general prevalent practice that the service recipients enter into an annual maintenance contract with their service providers. In such cases the service recipients may or may not have the situation to utilise the services of the service provider but have co pay the contracted sum. If any service tax is paid by the service provider in such cases and is realised from the service recipient, no bar can be put on the availment of Cenvat credit. CESTAT in the case of M/S AMARA RAJA POWER SYSTEMS LTD. & ANOTHER. & M/S AMARA RAJA ELECTRONICS LTD. VERSUS THE COMMISSIONER C&C. E, TIRUPATHI [2015 (12) TMI 1558 - CESTAT HYDERABAD] has answered the identical issue in favour of the appellants assessee taking plea that when the department has accepted the tax on the services provided by sister concern to appellants, then they cannot deny credit alleging that no services were rendered - Now in the instant case it is submitted by the appellant that ABMCPL are separate legal entities incorporated under the Companies Act, 1956 and they are separately assessed to Income tax. ABMCPL, being independent legal entities, such money collected from appellant for the services provided to them and also expenses recovered to compensate the cost of sourcing the services, would be taxable under BSS. There is no evidence to establish that there is no intention to provide service and it was mere understanding with the sister companies for sharing of common expenses. The demand of irregular availment of cenvat credit on input services which were utilized by the appellant in production of their final product is unjustified - appeal allowed - decided in favor of appellant.
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