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2017 (7) TMI 396

CENVAT credit - duty paying invoices - job-work - department took the view that no service was rendered by BIL, hence, availment of credit of service tax component reflected in those invoices was incorrect - Held that: - the activity performed by BIL for monitoring of production activities of the appellants cannot by any stretch of imagination be considered as an input service in or in relation to the manufacture of final products of the appellants. At the most, the billing made by BIL to the ap .....

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td., (hereinafter referred to as BIL) engaged in the manufacture of rubber and non-threaded articles. During the course of verification of records by the department, it appeared that the appellants wrongly availed input service credit on Multi Protocol Label Switching (MPLS) service based on invoices issued by BIL, during the period 2010-11 to 2013-14. It emerged that BIL had received MPLS service from M/s. BSNL and M/s. Reliance Communications Ltd., and that the server was situated at the premi .....

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nce, availment of credit of service tax component reflected in those invoices was incorrect. 2.3 Appellant M/s. Freins Metal Ltd., are job workers to BIL engaged in the manufacture of Parts and Accessories of Motor vehicle viz., Carbon Brushes. During the course of verification of records by the Internal Audit Wing of the department, it appeared that BIL had availed input service tax credit on Consulting Engineer Service and raised invoices to the appellant towards reimbursement of the MPLS char .....

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d M/s. Wichitra Auto Ltd., the Ld. Counsel Shri M. Kannan submits that BIL had facilitated the use of MPLS service and had in turn billed the appellants towards the proportionate usage made by the latter. He submits a sample invoice dated 28.12.2013 of BIL along with connected bills from BSNL and Reliance to show that only the proportionate quantum of service utilized by the appellants was charged by BIL to the latter. Ld. Counsel contends that this activity on the part of BIL has to be consider .....

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IL to the appellants, in fact, the server is utilized to monitor the production and other related activities of the appellants by BIL (b) The MPLS, SAP usage by the appellants through the server of BIL cannot be considered as beneficial service utilized in or in relation to the manufacturing activities or in furtherance of their business. (c) MPLS, SAP services are not utilized by the appellants but only by BIL and only a proportionate cost which is paid by BIL to the actual service providers is .....

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at page-34 the appellants therein have conceded that BIL are retrieving data relating to them from the server and are further processing the same for their end use (emphasis added). Similar admission has been made in the reply dated 29.05.2015 of M/s. Freins Metal Ltd., to the SCN. 6.2 In the circumstances, I find that the activity performed by BIL for monitoring of production activities of the appellants cannot by any stretch of imagination be considered as an input service in or in relation t .....

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