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2018 (1) TMI 299 - AT - Central ExciseCENVAT credit - Wrong distribution and utilisation of Cenvat credit by ISD - Held that - as per the Rule 7, there is no bar for distribution of credit for the period prior to 01.04.2012, hence, I hold that the Cenvat credit cannot be denied. Wrong availment of Cenvat credit of office situated in Mumbai renting services - Held that - the said office in Mumbai is doing marketing for the appellant and the activity of marketing is directly connected to the activity of manufacturing as without marketing, sale or purchase of input or finished goods cannot take place - for the office for which is on rent and service tax has been paid, the appellant is entitled to avail Cenvat credit. Wrong availment of Cenvat credit of construction, works contract services for repair and maintenance - Held that - it is a fact on record that these services are for repairs and maintenance of old factory building of the appellant and the inclusive part of rule 2(l) provides Cenvat credit to renovation, repair and maintenance of factory - appellant has correctly availed the Cenvat credit of ₹ 4,00,744/- Wrong availment of Cenvat credit of repair and maintenance services of wind mills situated at a distant place - Held that - As per rule 2(l) of Cenvat Credit Rules, 2004 the place has not been defined whether outside the factory or otherwise - credit cannot be denied. Credit allowed - appeal allowed - decided in favor of appellant.
Issues:
- Denial of input service credit for the period August 2010 to June 2015. Analysis: 1. Wrong distribution and utilization of Cenvat credit by ISD: The appellant contested the denial of Cenvat credit based on the distribution and utilization by the Input Service Distributor (ISD). The appellant argued that prior to 01.10.2012, Rule 7 of Cenvat Credit Rules, 2004 did not restrict the distribution of credit to units, even if they did not utilize the services. The Tribunal referred to a previous case, Vishnu Chemicals Limited Vs. CCE, and concluded that post 01.07.2012, pro rata distribution of credit was allowed. Relying on this decision, the Tribunal held that the appellant was entitled to avail Cenvat credit, allowing a credit of &8377; 26,80,974. 2. Wrong availment of Cenvat credit of office situated in Mumbai - renting services: The denial of Cenvat credit for the office in Mumbai was challenged by the appellant. The Tribunal noted that the Mumbai office was engaged in marketing activities directly linked to manufacturing. Marketing activities are essential for the sale and purchase of goods, justifying the availment of Cenvat credit on renting services. Consequently, the appellant was deemed correct in availing the credit of &8377; 10,35,385. 3. Wrong availment of Cenvat credit of construction, works contract services for repair and maintenance: The denial of Cenvat credit post 01.04.2011 for construction services was disputed by the appellant. The Tribunal found that the services were for repair and maintenance of the factory building, falling under the inclusive part of Rule 2(l) allowing Cenvat credit for such activities. Therefore, the appellant rightfully availed the credit of &8377; 4,00,744. 4. Wrong availment of Cenvat credit of repair and maintenance services of wind mills situated at a distant place: The denial of Cenvat credit for services availed outside the factory premises was contested by the appellant, citing a Bombay High Court decision. The Tribunal held that Rule 2(l) did not specify the location for availing credit, thus entitling the appellant to claim the credit of &8377; 7,17,347. In conclusion, the Tribunal found that the appellant correctly availed the Cenvat credit on the disputed services, setting aside the impugned order and allowing the appeal.
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