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TMI Blog2018 (4) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... als or the joint venture with Zaidun Leeng and hence the credit is inadmissible - Held that: - Credit can be allowed only in the circumstances where the cost of the service has been borne by the claimant as only in those circumstances it will form part of the taxable value - In these circumstances credit in respect of insurance expenses cannot be allowed in absence of evidence that the cost of such insurance is borne by the appellant - matter remanded for fresh adjudication. Hire charges - denial on the ground that the invoices were issued in the name of Zaidun Leeng Sdn Bhd and not in the name of the appellant - Held that: - Joint Venture is a separate entity and any service used by such joint venture does not automatically become the service used by the appellants. In such circumstances credit cannot be allowed. However if the cost of such services is borne by the appellants the credit would be admissible - matter remanded for fresh adjudication. Telephone bills, installed in the name of an employee/director - denial on the ground that in terms of Rule 9 of Cenvat Credit Rules, 2004 the Invoice/telephone should be in the name of the appellant to enable them to claim the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CHNICAL) Appearance: Shri. V Sridharan, Advocate with Shri Jay Chedda, Advocate for appellant Shri. M.K. Sarangi, Jt. Comm. (AR) for respondent Per: Raju 1. This appeal has been filed by M/s.Artefact Projects Ltd. against confirmation of demand of service tax, denial of Cenvat Credit, demand of interest and imposition of penalties. 2. Ld. Counsel for the appellant argued that they are engaged in providing Management Consultancy Service on their entire value is taxable. The appellant were denied credit of service tax paid on the following services: a) Insurance b) Vehicle repair maintenance c) Taxi Hire charges d) Telephone Charges e) Construction Services f) Work Contract Ld Counsel argued that the credit on these services has wrongly been denied as these services are used in relation to provision of output services. He further argued that all these expenditure wholly exclusively for the purpose of business. Ld. Counsel argued that service tax paid on insurance, maintenance and repairs of vehicles is in respect of their own motor vehicles, which are used by its management personnel. Thus, credit on the same cannot be den ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether called Suspense account or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise . Further, Explanation to Rule 6 of the Service Tax Rules, 1994 provides for payment of service tax with regards to any transaction with associate enterprise. The relevant portion of Rule 6 is re-produced as under: Explanation For the removal of doubts, it is hereby declared that where the transaction of taxable service is with any associated enterprise, any payment received towards the value of taxable service, in such case shall include any amount credited or debited as the case may be, to any account, whether called Suspense account or by any other name, in the books of account of a person liable to pay service tax . He argued that Revenue has held that the service tax becomes payable since the accounting entry is made in the accounts of the appellant in respect of transaction with the associate enterprises. He argued that said explanation is added with a limited purpose of treating any payment received by or made to the associated enterprise and accounted for in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the definition of input service in Rule 2(l)(ii), the service must be used by the manufacturer. The use of the service whether direct or indirect must be by the manufacturer/assessee, who claims the CENVAT credit. Further, the use by such manufacturer, i.e. the assessee, whether direct or indirect, must be in or in relation to the manufacture of the final product. Moreover, this final product must be of the manufacturer concerned i.e. the assessee. Further still, the clearance of such final product must be from the place of removal. The place of removal is the place in relation to the assessee. Thus, the service must be used by the manufacturer/assessee in or in relation to the manufacture of the assessee s final product and clearance of the final product from the place of removal. 3.1 In view of the above, the Ld. AR argued that the decision of Tribunal in the case of Sai Sahmita Storages (P) Ltd. 2011 (23) STR 341 (AP) cannot be applied to the instant case as those cases related to the Cenvat Credit on inputs and not to input service. On these grounds he argued that decision of the Tribunal in the case of Navaratna S.G. Highway Prop. Pvt. Ltd. 2012 (28) STR 166 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned, the non-registration of the vehicles in the name of the appellant is not relevant in the case. It has been argued that they have claimed Cenvat Credit of insurance, maintenance and repair of vehicles and not of the duty paid on the motor vehicles. We find that the argument that input service credit in respect of services used in respect of vehicles is not admissible because Capital Goods credit on vehicles is not admissible, is misplaced. There is no such restriction in law. The credit of service tax paid on the cars rented by the appellant for business is not denied. We do not find any merit in the argument that input service credit can be denied in respect of services used in respect of items on which Capital Goods credit is not admissible. However it is seen from the appeal memorandum that there is no evidence to substantiate that the payment for the said policy/repair has been made by the appellant. In absence of the same it cannot be ascertained in the services were availed in personal capacity of the employee or for the business. One of the ground of denial of credit is lack of evidence regarding the ownership of the vehicles and use of same for business purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n telephone bills, installed in the name of an employee/director is concerned the credit was denied on the ground that in terms of Rule 9 of Cenvat Credit Rules, 2004 the Invoice/telephone should be in the name of the appellantto enable them to claim the credit. In the absence of the same there cannot be any presumption regarding use of said service for the purpose of business. While it is correct that the service of telephone is an input service for the purpose of providing output service, however the onus of establishing the use is on the person claiming the credit in terms of Rule 9 the Cenvat Credit Rules. The Commissioner has denied the credit on the ground that the appellants have failed to prove the nexus. Ordinarily if the payment is made by the person claiming the credit, then there may not be a necessity of further evidence under Rule 9 the Cenvat Credit Rules, 2004. However in the instant case, the Commissioner has sought evidence and the appellants have not provided any evidence of the said use in terms of Rule 9 of the Cenvat Credit Rules. In these circumstances credit of the same cannot be allowed. 4.5 In so far as the Cenvat Credit in respect of construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod prior to 2011, when the said definition was in effect. 4.6 In so far as the issue relating to the transactions with the associate enterprises is concerned, it is noticed that the following changes were made in the term gross amount charged at the material time: Pre 10.05.2008 Gross amount charged includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment . Post 10.5.2008 Gross amount charge includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited, as the case may be, to any account, whether called Suspense account or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise . The appellants have claimed that these amendments do not affect the point of time when the liability to pay tax arises in respect of transaction with the associate enterprises. The appellants have argued that Rule 6 (1) of the Service Tax Rules has merely clari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax therefore, extended period of limitation could not have been invoked. It has been argued that no evidence has been brought on record of appellants having suppressed any facts from the revenue. It has been claimed that they have furnished all information required, as and when sought by the department. Reliance has been placed on the decision of the Tribunal in the case of NRC Ltd 2007 (5) STR 308. We find that the decision in the case of NRC Ltd. it was held that the dispute was a matter involving legal interpretation. It has been argued that since they had paid the said tax before issuance of show-cause notice, benefit of Section 73 (3) of the Finance Act, 1994 should have been extended to them and no show-cause notice should have been issued. The appellant has raised this specifically in their defense before the Commissioner, which has been recorded in para 23.3 of the impugned order. It is noticed that no findings in respect of the said plea has been given in the impugned order. In the instant case the appellants were paying the tax and not evading. The dispute only relates to the time of payment of tax. Thus it would not be correct to say that they had an int ..... 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