2018 (6) TMI 185 – CESTAT HYDERABAD – TMI – CENVAT credit – various input services – works contract service – renting of immovable property service – security services – cleaning service – internet service – business auxiliary service – time limitation – Penalty – Held that: – Post 01.04.2011 the definition of input services specifically excludes credit of tax paid on works contract services, if they are rendered from setting up factory – credit rightly denied.
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Other input services – Held that:- These services are rendered by the service providers at the Mumbai premises which was used by the appellant for the sales related activity, marketing and research of the few products – R & D activity was undertaken at Mumbai as there cannot be any dispute that it is in interest of the business, research and development is a primary requirement – the appellant is eligible to avail CENVAT credit of service tax for the Renting of Immovable Property, Security Services, Cleaning, Internet, Wo
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This appeal is directed against Order-in-Appeal No. HYDEXCUS- MD-AP2-041-17-18 dated 30.08.2017. 2. Relevant facts that arise for consideration are the appellants are the manufacturers of Fragrances and Flavoring Essences. They registered with the Central Excise Department vide CER No. AACCM1243JXM001. They are availing credit of duty paid on inputs and input services under the provisions of CENVAT Credit Rules, 2004 and utilizing the same for payment of duty on final products. Their accounts were audited by the Central Excise staff during January, 2015, covering the period from April, 2013 to September, 2014 and observed that the appellants has – a) Irregularly availed CENVAT credit of ₹ 28,75,157/- on the input services which were utilized exclusively in R & D unit located at Mumbai. b) Irregularly availed CENVAT credit of ₹ 9,393/- on ineligible input service. 2.1 On being pointed out by the audit, the appellant has paid part amount of ₹ 11,26,813/- pertaining
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al Excise Act, 1994. The notice was adjudicated in the impugned order, culminating in the instant appeal, wherein the proposals were confirmed as follows: a) Confirmed the demand of ₹ 28,75,157/- being the irregular CENVAT credit availed under Rule 14 of CENVAT Credit Rules read with Section 11A(10) of Central Excise Act, 1944. b) Appropriated ₹ 11,26,813/- already paid by them against above demand. c) Confirmed the interest applicable under Rule 14 of CENVAT Credit Rules read with Section 11AA of Central Excise Act. d) Confirmed the demand of interest on the above amounts under Section 75 of Finance Act, 1994. e) Imposed penalty of ₹ 28,75,157/- under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act. Aggrieved by such an order, an appeal was preferred before the First Appellate Authority. The First Appellate Authority, after following due process of law, rejected the appeal on merits as well as on limitation. 3. Learned Consultant
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paid on works contract service, it is his submission that the work contracts service which is awarded for modernization of the office premises. He is draws my attention, works order nothing but modernization and the CENVAT credit of service tax is correctly availed as the modernization of the office is not excluded eligibility to avail CENVAT credit. He relied upon the judgment of the Tribunal in the case of Ahmednagar Forgings Ltd., [2017 (6) G.S.T.L. 54] and Heidelberg, Cement India Ltd., [2017 (6) G.S.T.L. (473)] for the proposition that CENVAT credit can be availed for the services rendered at Hyderabad office. 4. Learned Departmental Representative on the other hand submits that, the premises at Mumbai are used only for R&D wing activity. It is his submission that R& D activity in itself the CENVAT credit on services rendered to such premises cannot be availed by the appellant. There is nothing on record to show that the products which were researched were commercially pro
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aruthi Suzuki India Ltd., [2016 (336) ELT 266] for the proposition that nothing used in R&D activity, CENVAT credit cannot be availed as R&D activity it is excluded itself. 5. On careful consideration of the submissions made by both sides and perused the records. On perusal of records, as correctly put forth by both sides, the issue is regarding eligibility to avail CENVAT credit of the service tax paid on renting of immovable property service, security services, cleaning service, internet service and business auxiliary service has also works contract service which was rendered to appellant s premises situated in Mumbai. 6. As regards the works contract service, I find that the appellant is not eligible to avail CENVAT credit of the service tax paid on works contract services. On perusal of works order issued, I find the works order has been issued to service provider for setting up of entire facility of R&D, sales division along with administration in order to start functi
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cturing activity, were not commercially produced. In my view these findings are acceptance of fact that seems R & D activity was undertaken at Mumbai as there cannot be any dispute that it is in interest of the business, research and development is a primary requirement. I find that the lower authorities have stated in the orders that if the appellant should have obtained registration under input service distributor, which would indicate that services rendered at Mumbai, were in relation to the activity of manufacturing done at Hyderabad. In my view, the plea of the appellant they have centralized accounting at Hyderabad and entire payment to the service providers either in Hyderabad or Mumbai is done from Hyderabad, was not appreciated by the Lower Authorities in its correct perspective. If centralized accounting is done at Hyderabad, in my view getting an ISD registration in Mumbai may not be of any relevance, further there is nothing on record to show that the appellant had unit
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