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TMI Blog2015 (12) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of mPortal India Wireless Solutions Pvt. Ltd., there is no provision in the Cenvat Credit Rules which imposes a restriction on availment of credit on input services procured before registration is taken. On the apprehension raised of Revenue as to how the verification could have been done in respect of services procured during the previous five years, we find that the appellant had submitted all documents including invoices before issue of show cause notice which enabled the department to make such verification. We may further go on to say that in the show cause notice no doubt has been expressed regarding the actual receipt of the services. As regards the verification of actual use of the input services, we find that the Annexure "A" to the show cause notice gives details of Cenvat credit availed on inputs and capital goods for the period 1.6.2007 to 31.3.2011 implying that department has conceded that the Cenvat credit was availed for the construction of mall and Renting of Immovable Property Service. Almost the entire credit has been availed on input services which have been used for providing the output service that is Renting of Immoveable Property Service for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the eligibility of credit. A show cause notice was issued proposing to deny the credit on the ground that the appellant is not eligible for credit as input services have resulted in an immovable property which is neither excisable nor any service tax is payable on the same. In adjudication the demand of such service tax credit wrongly availed was confirmed. Appellant are in appeal against his impugned order. 3. The Ld. C.A. appearing on behalf of the appellant contended that the use of input services and capital goods has not been disputed in the show cause notice. He further stated that no credit was availed on the steel/cement used in the construction of the mall. Even the credit taken on tiles was recovered. Although, the show cause notice referred to Rule 10 of the Cenvat Credit Rules alleging that credit cannot be transferred to Pune as the provisions of the Rule have not been followed, the adjudication order does not refer to this allegation at all. The definition of input services prior to 1.4.2011 allowed credit of input services used for setting up of premises of output service provider. He relied on Navratna S.G. Highway Prop. Pvt. Ltd. 2012 (28) S.T.R. 166 (Tri. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok centralized registration in 2011. In the centralized registration the input service as well as the services to be provided were declared. We find that as held by the Hon'ble High Court of Karnataka in the case of mPortal India Wireless Solutions Pvt. Ltd., there is no provision in the Cenvat Credit Rules which imposes a restriction on availment of credit on input services procured before registration is taken. Even though department has filed an appeal against this judgment, we are bound by judicial discipline to honor the judgment of the High Court. 5.1. The next issue for consideration is whether the input service credit is at all admissible for the construction of a mall which is used for providing Renting of Immoveable Property Service. Here again, we are bound to follow the judgments of the Andhra Pradesh High Court in the case of Sai Sahmita Storages (P) Ltd. 2011 (270) ELT 33 (A.P.) as well as the Tribunal judgment in the case of Navratna Highway (supra). In the present case, we find the appellant availed service tax input of ₹ 8.34 Crores on following input services: Air Conditioning Work AMC for Support services Auditor Expenses Banking and Insu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit in relation to input service. Rule 2(k) and (l) of the Rules are relevant and they read as under. 2. Definitions.- (k) input means- (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service; Explanation 1. - The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2. - Input include goods used in the manufacture of capital goods which are further used in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of final product in the substantive/specific part of the definition. In each case it has to be established that inputs mentioned in the inclusive part is used in or in relation to the manufacture of final product . It is the functional utility of the said item which would constitute the relevant consideration. Unless and until the said input is used in or in relation to the manufacture of final product within the factory of production, the said item would not become an eligible input. The said expression used in or in relation to the manufacture have many shades and would cover various situations based on the purpose for which the input is used. However, the specified input would become eligible for credit only when used in or in relation to the manufacture of final product. Hydrogen gas used in the manufacture of sodium cyanide is an eligible input, since it has a significant role to play in the manufacturing process and since the final product cannot emerge without the use of gas. Similarly, Heat Transfer Oil used as a heating medium in the manufacture of LAB is an eligible input since it has a persuasive role in the manufacturing process and without its use it is impossibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including invoices before issue of show cause notice which enabled the department to make such verification. We may further go on to say that in the show cause notice no doubt has been expressed regarding the actual receipt of the services. As regards the verification of actual use of the input services, we find that the Annexure A to the show cause notice gives details of Cenvat credit availed on inputs and capital goods for the period 1.6.2007 to 31.3.2011 implying that department has conceded that the Cenvat credit was availed for the construction of mall and Renting of Immovable Property Service. We have seen the case of Citedal Fine Pharmaceuticals. It was held by the Apex Court that what would be a reasonable period, would depend on the facts of each case it would be open to the assesse to contend that it is bad on the ground of delay No hard and fast rules can be laid down in this regard as the determination of the question will depend on the facts of each case. Ld AR is relying on this judgement apparently to say that in the present case there is too much delay in claiming cenvat credit. We have held that the cenvat on the input services is admissible in principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Secondly, because in that case the input services/inputs were used in construction of towers which were held to be immoveable property and hence not excisable. And credit was sought on structural items such as iron and steel. Similarly even the judgement in case of Vodafone does not help the Revenue. In the present case, we find that almost the entire credit has been availed on input services which have been used for providing the output service that is Renting of Immoveable Property Service for which there was no restriction under the clause (l) of the definition of input service'. The inclusive part of the definition of input service allowed services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service etc. The words setting up were deleted only from 1.4.2011. Therefore the appellant are eligible for the credit in terms of the definition of input service. 8. In view of the above, the credit is held to be admissible and recovery of the same is set aside. Accordingly, interest and penalty are also set aside. 9. Impugned order is set aside and appeal is allowed. ( Pronounced in court on 2/12/2015 ) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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