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Commissioner of Central Excise Versus SKF India Ltd.

2017 (12) TMI 384 - CESTAT MUMBAI

CENVAT credit - input services - renting of immovable property - telephone service - case of Revenue is that Renting of immovable property service and telephone services can be exclusively identified as used wholly by one unit. In these circumstances, it may attract the mischief of Rule 7 (c) of the CCR - Held that: - It is an admitted fact that the respondents apart from conducting manufacturing and provisions of services are also engaged in trading activity. Thus the credit of entire duty woul .....

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no evidence of Revenue neutrality has been produced. Since the appellants are, inter alia engaged in the trading activity also, there is no revenue neutrality as part of the credit attributable to the trading activity is not available to the appellants. - Appeal dismissed - decided against Revenue. - Appeal No. E/86809/17 & E/86810/17 Appln. No. E/CO/91131/17 & E/CO/91132/17 - Dated:- 5-12-2017 - Mr. Raju, Member (Technical) Shri.V.K. Agarwal, Addl. Comm. (AR) for appellant Shri.Archit Agar .....

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ributed in terms of Rule 7 of the Cenvat Credit Rules, which prescribes the manner of distribution of credit by input service distributor. He argued that sub-rule (c) of Rule 7 stipulates that credit of service tax attributable to service used wholly in a unit shall be distributed only to that unit . He argued that the 19 services in respect of which the credit has been taken were utilized at various branches/depots/business units and in terms of Rule 7 (c). Credit of services exclusively used t .....

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nput service. He argued that services of renting of premises and telephone are commonly used for overall business, i.e. manufacturing units and service units of the respondent and credit has been rightly distributed by the ISD in terms of the provisions of sub-rule 7 (d) of the Cenvat Credit Rules, 2004. He pointed out that the respondents have wide spread business operation across the country. They have various manufacturing units as well as business units are carrying on business of the respon .....

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urther argued that since the Revenue has not challenged the admissibility or otherwise, the entire situation is Revenue neutral. 4. I have gone through the rival submissions. I find that the Commissioner (Appeals) has dropped the demand on two counts: (i) The appellants are availing and transferring the credit of 19 different services on the basis of turnover and no objection with respect to such transfer has been raised by the Revenue and therefore, no objection in respect of renting of immovab .....

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ces, the challenge of revenue to two services, viz, renting of immovable property and telephone service, cannot be dismissed. Renting of immovable property service and telephone services can be exclusively identified as used wholly by one unit. In these circumstances, it may attract the mischief of Rule 7 (c) of the Cenvat Credit Rules. A perusal of other services on which no objection has been raised would show that none of them can not be identified as exclusively used by one unit and therefor .....

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ellip;. (b)…. (c) Credit of service tax attributable to service used wholly by a unit shall be distributed only to that unit. (d) Input Service Distributor (ISD) to distribute the Cenvat Credit of all such services which are attributable to more than one unit, (i.e. which are commonly used for more than one unit) pro-rata on the basis of the turnover. 5.1 I find that the Commissioner (Appeals) has not given any reasoning as to why the provisions of Rule 7 (c) are not attracted. To that ex .....

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dmissible but also on other ground as decided by the Larger Bench in the case of Jay Yushin Ltd. (supra). The four categories, laid down in the Jay Yushin Ltd. are as follows: (a) Revenue neutrality being a question of fact, the same is to be established in the facts of each case and not merely by showing the availability of an alternate scheme; (b) Where the scheme opted for by the assessee is found to have been misused (in contradistinction to mere deviation or failure to observe all the condi .....

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