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2017 (4) TMI 946 - CESTAT HYDERABAD

2017 (4) TMI 946 - CESTAT HYDERABAD - TMI - CENVAT credit - ISD invoices are not proper - The department entertained a view that since the invoice is issued to the appellants R&D unit, the same is not eligible for credit on the ground that R&D unit is not providing any output service - Held that: - The credit is solely denied for the reason that R&D cannot be considered as output services or input services, because such services do not have nexus with services exported - The Ld. Counsel also arg .....

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d against the disallowance of credit for the reason that ISD invoices are not proper. 2. The appellant M/s. CMC Limited, Gachibowli, Hyerabad is registered with service tax department under the category of Maintenance or Repair service, Information Technology Software, Renting of Immovable property, Manpower Recruitment Agency service and Business Auxiliary service. They are registered as STPI unit and are filing service tax returns. The appellants are availing CENVAT credit on input services. D .....

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the demand alongwith interest and imposed penalty of ₹ 11,42,086/- with option to pay the reduced penalty of 25% if the amount alongwith interest and reduced penalty is paid within 30 days from the date of communication of the order. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal. 3. On behalf of the appellant, Ld. Counsel Shri S. Thirumalai submitted that the appellant M/s CMC Ltd, Gachibowli, Hyderabad has obtained service tax registration for their office situ .....

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C Ltd, R&D'. The department is of the view that the R&D unit is a separate unit and that no taxable output services are provided by the R&D unit and therefore the credit cannot be allowed as they do not use input services. The Ld. Counsel submitted that there is no R&D activity carried out in the said building and the building is used for accounting and administrative activities only. The appellant had furnished an affidavit before the Commissioner (Appeals) stating the above .....

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not be distributed. That the R&D building is only a part of the appellants unit and the same cannot be taken as a single one to deny the credit stating that there are no services provided by the R&D unit. The Ld. Counsel also relied upon the decision in the case of CC&CE, Indore Vs M/s. Vikram Cement 2016-TIOL-2206-CESTAT-DEL. That even if it is assumed that R&D activities are carried out in the said building, such activities (R&D) would qualify as input services. The Ld. Cou .....

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ed the credit. The invoices were distributed by the appellants Mumbai Office by mentioning the building separately in the invoices. In that manner, some invoices were distributed to the appellants R&D building also. R&D cannot be considered as output services. That the said unit is therefore not providing any output service and therefore appellant is not eligible to take credit. 5. I have heard the submissions made before me. The Mumbai Office of the appellant is registered as input serv .....

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