2015 (12) TMI 1106 - AT - Service Tax

Denial of CENVAT credit for the input services viz. advertisement, DVD film production, campaigning in electronic and print media etc. which were used for collecting capital through IPO by the appellant - IPO to collect capital for expansion of manufacturing facilities of their products - Held that - Impugned order, when it has denied the CENVAT credit available to the appellant, has not talked about the new unit or the old unit. The learned advocate for the appellant however says that they would like to claim CENVAT credit in case of the new unit of the appellant company. Considering this averment of the appellant, there cannot be any dispute now whether credit should go to the old unit or the new unit; and if as claimed by the learned AR appearing for the respondent, that old unit is not entitled to claim the CENVAT credit, it is not an issue now when the appellant s pleading to claim CENVAT credit only in respect of new unit. - appellant is entitled to the CENVAT credit which was denied by the impugned order. When the appellant has been found to be entitled to the CENVAT credit, there cannot be any question of imposition of penalty. Consequently, the impugned order is set aside - Decided in favour of assessee.

Summary

Issues: Denial of CENVAT credit for input services used in IPO for capital collection.

The judgment revolves around the denial of CENVAT credit for input services such as advertisement, DVD film production, and campaigning in electronic and print media, utilized for collecting capital through an Initial Public Offering (IPO) by the appellant. The appellant argued that they are entitled to the credit as per the clear definition of "input service" under Rule 2(l) of the CENVAT Credit Rules 2004, which includes services used directly or indirectly in relation to setting up, modernization, renovation, or repairs of a factory. The appellant also cited the decision of the Hon'ble Bombay High Court and a previous decision by the CESTAT in support of their claim.

The respondent contended that the appellant could only claim CENVAT credit in favor of the new unit intended for expanding manufacturing facilities. After considering the arguments from both sides, the Tribunal observed that the definition of "input service" under Rule 2(l) of the CENVAT Credit Rules 2004 is broad and encompasses services used directly or indirectly in or in relation to the manufacture of final products. The Tribunal highlighted that the service tax paid for input services related to manufacturing is admissible for CENVAT credit, as clarified by the Hon'ble Bombay High Court's decision in a relevant case.

The Tribunal noted that the impugned order did not specify whether the credit should go to the old unit or the new unit. The appellant expressed their intention to claim CENVAT credit only for the new unit, removing any dispute regarding credit allocation between the old and new units. Based on the discussion and the precedent set by the Hon'ble Bombay High Court, the Tribunal concluded that the appellant is indeed entitled to the CENVAT credit that was initially denied. Consequently, the impugned order was set aside, and the appeal was allowed, with no penalty imposed. The appeal was disposed of accordingly.