TMI Blog2023 (6) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... al product and for the clearance thereof up to the place of removal. But for the factory the final product could not have been manufactured and the factory needed to be constructed on land. The land and the factory are used by the manufacturer in any event indirectly in or in relation to the manufacture of the final product, namely, metal-sheets. The respondents case, therefore, falls within the first part of Rule 2(l) aptly referred to by Mr. Amrinder Singh as the means part. The Tribunal and Hon ble High Courts have been consistently holding that Cenvat credit is eligible for the services used even for the immovable property when the period on dispute is prior to 01.04.2011. In the present case, the period of dispute is from 2006-07 to 31.03.2011. Therefore, respectfully following the above decisions, we hold that the Appellant is eligible for Cenvat credit of Rs.4,18,68,904/-. In respect of input service distributed by the Appellant to their other units, it is found that the Board vide their Circular dt.16.02.2018 have considered in detail the judgments of Hon ble High Court of Gujarat in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD [ 2016 (2) TMI 183 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow Cause Notice was issued to the Appellant on the following grounds: (i) Since the input services have been used in relation to setting up of the factory premises/ expansion of factory premises, the same has resulted in coming into existence of immovable property. Since no Excise Duty or Service Tax is paid on such immovable property, the Appellant is not eligible to take Cenvat Credit. (ii) Input credit of Rs.4,18,68,904/- though was fully pertaining to the services received by them in their Visakhapatnam unit, the same has been distributed to their other units which have absolutely no nexus with the services rendered to the Visakhapatnam unit. The Appellant has not followed any principle of prorata distribution of Cenvat Credit. 2. The Appellant submitted that during the period under dispute, Tribunals and Hon ble High Courts have been consistently holding that the Assessee is eligible for Cenvat Credit for the input services received even if that is ultimately results in the immovable property coming into existence. They also rely on the Departmental Circular dt.29.04.2011 on this issue. After due process, the Adjudicating Authority confirmed the demand. Being aggrieve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit for the input services used in terms of Rule 2(l) was questioned in the OIO passed by the Adjudicating Authority. Therefore, he submits that Appeal is required to be rejected to this extent. 7. Coming to the point of distribution of Service Tax, he submits that only on account of detailed investigation of various receiving units, the Department came to know that though the receiving units had not at all used any of the services in question, still they have received Cenvat credit from their Headquarters by way of ISD Challans. On verification of all the records from their Head Office at Visakhapatnam, it has come to the knowledge of the Department that entire services were received only in Visakhapatnam unit whereas accruing Cenvat credit (which as per Department is ineligible), was distributed to other units without following any formula of proportionate distribution. Therefore, he reiterates the findings of the Adjudicating Authority that they have not properly distributed the input credit to their other units. In view of the foregoing, he submits that Appeal is liable to be rejected. 8. Heard both sides and perused the records. 9. We take up both the issues one by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting up a new manufacturing plant adjacent to the existing plant within the same factory premises. A Show Cause Notice was issued dated 26-4-2012 alleging that the credit for the said services is not eligible for the reason that the services are received in regard to immovable property. After adjudication, the original authority dropped the proceedings observing that appellant is eligible for credit. The department filed appeal before the Commissioner (Appeals) raising the ground that construction activity on immovable property does not qualify as input service and relied upon Board Circular No. 98/1/2008-S.T., dated 4-1-2008. The Commissioner (Appeals) vide order impugned herein allowed the appeal filed by the department and thus disallowed the credit to the tune of Rs. 47,85,701/-. While doing so, the Commissioner (Appeals) observed that the definition of input services w.e.f. from 1-4-2011 has deleted the words setting up of factory and that the said amendment has retrospective application. The appellant is now before the Tribunal against the said order. 3. On behalf of the appellant, the Ld. Counsel Shri. Lalith Mohan Chandana explained that the services was availed p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussions, I am able to conclude that credit has been wrongly disallowed. The impugned order disallowing the credit is set aside. The appeal is allowed with consequential reliefs, if any. [ Emphasis supplied ] 12. Coming to the point raised by the learned AR about the Adjudicating Authority giving his findings on account of eligibility of Cenvat credit in terms of Rule 2(l) it will be useful to go through relevant portion of Rule 2(l) which is extracted below: (l) input service means any service,- (i) used by a provider of taxable service for providing an output service; or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coachin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived the services and hence there is no nexus between the Cenvat taken with the services received there. In fact, by giving such a finding, the Adjudicating Authority concedes that the Appellant Company was not in error in taking the credit in the first place. Their eligibility to take the credit in terms of Rule 2(l) of CCR, 2004 has not been questioned and by the above findings, in fact, it is conceded by the Adjudicating Authority. 15. So far as the point raised by him about the eligibility of Cenvat utilizing unit is concerned, in case the Department had any issue on this account, the proceeding should have been initiated by the jurisdictional Authorities of the Cenvat utilizing unit. Therefore, his findings have no relevance in the present context. 16. From the decisions cited above, it gets clarified that the Tribunal and Hon ble High Courts have been consistently holding that Cenvat credit is eligible for the services used even for the immovable property when the period on dispute is prior to 01.04.2011. In the present case, the period of dispute is from 2006-07 to 31.03.2011. Therefore, respectfully following the above decisions, we hold that the Appellant is eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... butor therefore would not survive in view of no previous restriction of this nature flowing from Rule 7 of the Rules of 2004 . In fact, the Tribunal has seen entire situation as a Revenue neutral, since as pointed out by the assessee, it had availed only 20% of the credit for payment of service tax and the balance was paid in cash. [Emphasis supplied] 18. The relevant portions of National Engineering Industries Ltd are reproduced below: 8. It may be noticed that the term input service distributer has been defined u/R. 2(m) of the Rules, 2004 to mean office of the manufacturer or producer of final products or provider of output service which receives invoices issued u/R. 4A of the Service Tax Rules, 1994 towards purchases of input services and issues invoices, bill or as the case may be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be. 9. Rule 7 pertains to manner of distribution of credit by input service distributer. At the relevant time, this Rule 7 permitted input service distributor to distribute Cenvat Credit in respect of service tax paid on the inp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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