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2015 (6) TMI 584 - CESTAT MUMBAI

2015 (6) TMI 584 - CESTAT MUMBAI - 2015 (40) S.T.R. 275 (Tri. - Mumbai) - Wrongful 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 t .....

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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 formul .....

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> 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. - Application No. ST/MA (ors) 9 .....

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11-12, ordering recovery of interest, imposing equivalent penalty. Miscellaneous application is also filed by the appellant praying for permission to re-credit Cenvat of ₹ 54,44,777/- which was deposited by them in cash as ordered by the Tribunal in stay order No. S/1560/14/CSTB/C-I dated 19.08.2014. 2. During audit it was noticed that the appellants who are a manufacturer based in Pune availed credit of input services such as Repairs & Maintenance, Manpower, CHA, Sales promotion, Acco .....

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s mentioned in para 1 above. 3. Heard both sides. 4. Learned Counsel for the appellant submits that they are a manufacturer and a service provider and availed CENVAT Credit on input service correctly in terms of Rule 3 of Cenvat Credit Rules, 2004. He emphasized that Rule 3(4) under which credit is utilized does not require establishing nexus between the input service and output service. He relies on the Tribunal's judgement in the case of CCE Coimbatore v. Lakshmi Technology & Engineeri .....

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e goods and for use for providing services'. He also relies on the case of Jyoti Structures Ltd. - 2012 (285) E.L.T. 356 (Tri. - Mumbai) holding that there is no provision in Cenvat Credit Rules, 2004 for segregation of input service utilized in manufacture or to provide output services. 4.1 The next contention of the learned Counsel is that the demand is barred by limitation as the fact of the transaction of renting of immovable property was disclosed in the financial statement as "oth .....

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gards the service tax payable for renting of immovable property for 2011-12, the same amount has already been included in the total amount of ₹ 54,44,777/- and that the service tax liability has arisen in respect of immovable property located at Worli, Mumbai which is beyond the jurisdiction of Pune Commissionerate. 5. Learned A.R. reiterates the findings of the Commissioner. He stated that any credit taken or utilized wrongly can be recovered under Rule 14 of the Rules ibid. He submits th .....

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heir 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 .....

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hat there is no requirement of maintaining separate accounts for input services to be used for manufacturing and output services, our considered view is that the basic requirement of nexus between input and output services, as a condition flowing from the Cenvat Credit Rules, must be met. The learned Counsel repeatedly stressed that under Rule 3(4), which provides for utilization of credit, there is no bar on utilization. We may therefore look at the Rule. Rule 3(4) states that- (4) The CENVAT c .....

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lip;………………." On reading the above it is seen that credit may be utilized for payment of service tax on any output service in terms of Clause (e) above. Therefore as far as output service is concerned, there has to be a nexus between the two. That is, a nexus between the input service and the output service. Appellant has cited various judgments such as the judgement of the Hon'ble High Court in the case of Coca Cola India Pvt. Ltd. - 2009 (15) S .....

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with the service of renting of property. Therefore, there is no logic in the argument that credit on such input services can be used for paying the service tax liability on the renting of property in Mumbai. The reliance placed on other judgements such as Lakshmi Technology & Engg. Ind. Ltd. (supra) are in a different context. We can understand 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 c .....

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n does not arise and the demand of ₹ 54,44,777/- has been rightly confirmed by the Commissioner (along with interest) though the appellant had not taken centralized registration. 7.2 Appellant have referred to para 18 of the impugned order in which the Commissioner has refrained from demanding amount for 2011-2012 being service tax payable on the renting of property in Mumbai. We find nothing amiss in this order. The Commissioner has rightly confirmed only the amount or Cenvat credit utili .....

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