Tribunal allows credit for ISD invoices denied due to ineligible R&D unit &D

The Tribunal overturned the department's disallowance of credit for Input Service Distribution (ISD) invoices mentioning the Research and Development (R&D) unit as ineligible for credit. It was found that the R&D building was used for administrative purposes only, not for R&D activities. The Tribunal concluded that the denial of credit was baseless as no R&D activities were conducted in the building, and administrative works were connected to output services. The appellant's appeal was allowed, and the impugned order was set aside with consequential reliefs.

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Issues: Disallowance of credit for ISD invoices mentioning R&D unit as ineligible for credit.

Analysis:
1. The appellant, registered under various service categories, availed credit on ISD-Mumbai Office invoices mentioning 'CMC Ltd-Hyderabad, R&D'. The department disallowed credit, stating R&D unit did not provide output service.
2. Appellant argued the entire premises should be considered one unit, as per registration, and R&D building was used for administrative purposes only, not R&D activities. Rule 7 of CENVAT Credit Rules was cited for credit distribution.
3. The department contended R&D unit did not provide output services, hence credit inadmissible. Appellant's Mumbai Office distributed credit mentioning separate buildings, including R&D. The Tribunal noted the lay out plan, affirming no R&D activities in the building, only administrative and accounting works connected to output services.
4. The Tribunal found the denial of credit baseless, as R&D activities were not carried out in the building, and administrative works were connected to output services. The department's contention lacked merit, and the appellant's affidavit supported the absence of R&D activities. The impugned order was set aside, and the appeal allowed with consequential reliefs.

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