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2013 (12) TMI 923 - AT - Service TaxDenial of Cenvat credit Services can be treated as input services under Rule 2(l) of CENVAT Credit Rules, 2004 OR not - Nexus between services rendered in Corporate Office and RDCs with the manufacturing activity - Waiver of Pre-deposit Held that - The services were rendered at the applicant s Corporate Office as RDCs - ECOF industries Pvt. Ltd Vs Commissioner of Central Excise, Bangalore 2009 (10) TMI 171 - CESTAT, BANGALORE - Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law - The contention of the ineligibility of credit on the input service credit on transportation from depot to retail outlets by the revenue holds ground Appellant directed to submit Rupees Fifteen Lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.
Issues: Application for waiver of pre-deposit of CENVAT and penalty under CENVAT Credit Rules, 2004.
In this judgment by the Appellate Tribunal CESTAT CHENNAI, the applicant, a manufacturer of footwear, filed an application seeking waiver of pre-deposit of CENVAT of Rs.2,72,53,011 and a penalty of Rs.6,000 under the CENVAT Credit Rules, 2004. The dispute arose from the applicant availing CENVAT credit on various services such as transport, courier, car hire, telecom, maintenance, and repair, among others, which were provided by their Corporate Office and Regional Distribution Centres (RDCs). The contention was that these services were not directly related to the manufacturing activity and hence, the applicant was ineligible to claim credit under the definition of 'input services'. The Commissioner held that the services availed had no nexus with the manufacturing activity of the applicant. The applicant argued that the definition of 'input services' includes all services received by the distribution center and its corporate office, citing a relevant case law upheld by the Hon'ble High Court of Karnataka. On the other hand, the Revenue's representative contended that the services in question did not have a connection with the manufacturing activity of the applicant, emphasizing the transport service between the depot and retail outlets, franchisee commission, life insurance policies, and other services not falling under the 'input services' definition. The Tribunal, after examining the records, found that the services were indeed rendered at the Corporate Office and RDCs, and disagreed with the denial of credit based on the lack of nexus with manufacturing activity. Citing a circular by the Board and a High Court judgment, the Tribunal concluded that the denial of credit for transportation from depot to retail outlets was justified. Ultimately, the Tribunal directed the applicant to pre-deposit a sum of Rs.15 lakhs within six weeks, with the balance amount of dues waived and recovery stayed pending the appeal. The compliance was to be reported by a specified date. The judgment provides a detailed analysis of the eligibility of CENVAT credit on various services and the application of relevant rules and case law to determine the outcome of the appeal.
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