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2016 (8) TMI 719 - CESTAT HYDERABAD

2016 (8) TMI 719 - CESTAT HYDERABAD - 2016 (43) S.T.R. 601 (Tri. - Hyd.) - Cenvat Credit - eligible input services - recovery of common shared expenses from the group company - A show cause notice was served on appellants raising the allegation that the transactions in the invoices were mere commercial transactions to share common expenditure between the group companies and proposing to deny credit availed on the input services and demanding recovery of the same along with interest and proposing .....

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it cannot be denied at the service recipients end, alleging that no service has been provided. - Decided in favor of assessee. - Appeal No. E/26835 to 26837/2013 - ORDER No. A/30178-30180/2016 - Dated:- 16-2-2016 - Ms. Sulekha Beevi, C.S. Member(Judicial). Ms. Kamana Srikanth, Advocate for the Appellant. Shri Deepak, AR for the Respondent. ORDER: 1. The appellant, M/s Amara Raja Electronics Ltd (AREL) is engaged in the manufacture of Home UPS/Trickle charge/modules and the appellant M/s Amara Ra .....

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voices issued by M/s Amararaja Batteries Ltd.(ARBL). The department entertained a view that the appellants were having an understanding with M/s ARBL for sharing of common expenses incurred at the common branch offices and the invoices appear to be raised by M/s ARBL merely to collect expenses shared by them. That no service is rendered by ARBL and that no service was received by appellants herein. That there is no relationship of service provider and service recipient between ARBL and appellant .....

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ty confirmed the demand along with interest and imposed equal amount of penalty. The appellants carried the issue in appeal and vide order impugned herein the Commissioner (Appeals) upheld the demand, interest and penalty. Being aggrieved, the appellants have filed the present appeal. 3. On behalf of the appellant, the learned counsel Ms Kamana Srikanth explained that the services were received by appellants from ARBL and M/s Mangal Precision Products Ltd.(MPPL) at their branch offices in Chenna .....

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. The department has denied the credit alleging that these services provided by ARBL and MPPL do not have a nexus with the manufacture of finished products, and that these transactions are only in the nature of sharing of common expenses. She laid thrust on the purchase orders and argued that these documents would reveal the nexus between the services availed at branch and the factory. The learned counsel placed reliance on the judgment laid in CCE Bangalore, III, Vs Standzen Toyotetsu India(P)L .....

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provided by ARBL and MPPL to the appellants. The transactions are only commercial transactions in which some common expenditure between the group companies are being shared and these transactions did not qualify as input service as defined under Rule 2(l) of Cenvat Credit Rules, 2004. He pointed out that in the invoices, though the service tax is paid, under the category of Business Auxiliary Services it can be seen that the expenses for electricity charges, e-mail expenses marketing and sale pr .....

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s incurred by the group companies. But ARBL or MPPL have not raised the invoices under the provisions of registered Input Service Distributor. From the invoices, it is seen that ARBL and MPPL have extended their financial support to appellants to meet their expenses. That there is no element of service is involved, as there is no relationship of service provider and service recipient; That appellants are not entitled to claim the credit upon the invoices. 5. I have heard the rival submissions an .....

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ey were filing ST-3 returns in this regard and no objection has been raised by the department against such payment of service tax. Without raising any objection at the end of service provider, and after having accepted the tax, as well as the returns, the allegation is now raised at the end of the service recipient that credit cannot be taken since there is no rendering of services at all. In this regard it would be appropriate to mention it would be appropriate to mention, the observations made .....

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xus to the appellants activities and therefore have to be considered as input services. The department proposes to deny the credit only on the ground that the arrangement is of expense sharing. In our opinion, this cannot be the ground for denying the credit. The ground should be the one that neither service has not been provided or services received are not input services. Therefore, we find that appellant has been able to make a prima facie case on merits for waiver of pre-deposit and stay aga .....

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s submitted by the learned Counsel that ARBL and MPPL are separate legal entities incorporated under the Companies Act ,1956 and they are separately assessed to Income Tax. M/s ARBL and M/s MPPL being independent legal entities, such money collected from appellants for the services provided to them and also expenses recovered to compensate the cost of sourcing the services, would be taxable under BSS/BAS. There is no evidence to establish that there is no intention to provide service and it was .....

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