2015 (9) TMI 1578 - AT - Central Excise

CENVAT credit - Co-ordination Fee - Management Fee - denial on account of nexus - Held that - Adjudicating authority made an exercise to analyze the agreement and the law. But he has not tested the evidence in accordance with law. Therefore, limited direction is issued to that authority to examine the relevancy of the concerned input services, if any, and also test whether the invoices issued are genuine and the service in question were used for the purpose of output service or manufacture. If integral connection and nexus is established, Cenvat credit should be allowed - appeal allowed by way of remand.

Summary

Issues:
1. Disallowance of service tax paid on Co-ordination Fee and Management Fee
2. Nexus between input services and output services for Cenvat credit
3. Examination of relevancy of input services and genuineness of invoices

Analysis:
The judgment addresses three main disputes, focusing on the disallowance of service tax on Co-ordination Fee and Management Fee. The learned counsel argues that Cenvat credit should be allowed for the rental aspect, as the tax collected has already been submitted to the treasury. However, the department contends that without establishing a clear nexus between the input and output services, disallowance of the service tax credit is justified. The Adjudicating authority is directed to examine the relevancy of the input services, verify the genuineness of invoices, and determine if the services were used for output services or manufacturing. If an integral connection and nexus are established, Cenvat credit should be permitted. The judgment emphasizes that the mere submission of tax to the treasury should not be the sole reason for disallowing the credit, and the Revenue must prove any claims made contrary to the law. The appellant is entitled to a fair hearing before any order is passed, ensuring due process is followed.