Cenvat credit on ser tax 2 units - reg

[venkat eswaran]

Dear all

We have two units one is in own premises and Main unit another is leased premises and second unit.

For leased unit-2 we are paying lease chrgs for land and machineries. That service tax credit we availing in unit-1 since bill is in the unit-1 (Main) address and pmt is made from unit-1 only.

Now the Excise audit has come in unit-1 and disallowed that service tax on lease chrges and they said we have to take credit in unit-2 only not in unit-1 asked to reverse the credit with interest.

What the audtitors said is ok? There is no revenue loss to government. unit -2 is separate range and division.

Auditors also said u can pay the the total ser tax whatever availed in unit-1 and take credit in unit-2 now.

Unfortunately we have closed that unit-2 three months back and shifted to other place that is another range. So we cannot take credit in unit-2 now that RC surrendered already

What we can do for this? Whether audit point is ok or we can contest this?

Please give your expert suggestions on this

Thanks in advance

Venkat

AI Summary

Service tax credit misallocation: reversal required when credit taken in the wrong unit and closed unit prevents re availment.
Cenvat credit on lease service tax for unit II was availed in unit I; audit required reversal with interest on grounds that credit must be taken in the unit where the service was consumed. Advisers concur the audit position is credible and, because unit II has been closed and its registration surrendered, the reversed credit is likely to lapse. Options are limited: accept reversal if immaterial, or pursue legal challenge or a refund claim if the amount is substantial, recognising procedural obstacles due to the unit's closure.