2015 (11) TMI 1586 - AT - Central Excise

Denial of CENVAT credit - repair and maintenance of residential colony - input service - whether denial justified on the ground that the said service has no nexus with the final product manufacture by the appellant? - Held that - the appellant had made specific submissions before the authorities below that the cost towards repair and maintenance of residential colony including the service tax component thereon have been considered in arriving at the assessable value for determination of the Central Excise duty liability. For the period April 2010 to 31st March, 2011, the appellant should be eligible for cenvat benefit on the service tax paid on repair and maintenance of residential colony in view of the un-amended definition of input service , where the phrase activity relating to business was finding a place for the purpose of getting the cenvat benefit. Extended period of limitation - Held that - the show cause notice was issued beyond the normal period of limitation of one year, which is barred by the limitation of time, in as much as, there is no element of suppression, fraud, wilful mis-statement etc., wherein Cenvat credit was allowed on input service used for construction of residential colony near the factory. The certificate issued to the appellant clearly states that cenvat credit can be taken on the disputed invoice. Since the service tax has been paid on the disputed service and the same has been taken by the appellant and there is no specific allegation that cenvat benefit on account of the said invoice has been fraudulently taken by the other unit, denial of cenvat credit especially upon regularization of the matter by the Jurisdictional Central Excise Authorities, will not be detrimental to the interest of the appellant. The embargo created in Rule 9 of the Cenvat Credit Rules should not be applicable for denial of the cenvat benefit. CENAVT credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Disallowance of cenvat credit on repair and maintenance of residential colony
2. Denial of cenvat credit on an invoice due to recipient address discrepancy
3. Denial of cenvat benefit due to service tax payment after Audit objection

Analysis:
1. The Commissioner (Appeals) disallowed cenvat credit on repair and maintenance of a residential colony, citing no nexus with the final product manufacture. The appellant argued that these expenses were considered in the books for calculating Central Excise Duty liability, meeting the definition of 'input service.' The Tribunal agreed, allowing cenvat benefit for the period before an amendment to the definition of 'input service.'

2. Cenvat credit was denied on an invoice mentioning a different location of the appellant. The appellant clarified that the issue was regularized by the Service Tax Authorities of the other unit, supporting their claim with a letter from the Asstt. Commissioner of Central Excise. The Tribunal found no fraud or misuse, permitting cenvat credit on the disputed invoice.

3. The denial of cenvat benefit due to the service tax payment post-Audit objection was contested by the appellant. They argued that since the payment was made before the show cause notice, Rule 9 of the Cenvat Credit Rules should not apply. The Tribunal agreed, stating that without allegations of suppression or fraud, the embargo under Rule 9 should not hinder cenvat benefit. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.