Refund or Input service tax eligilibility

[Asked by Guest]

Factory having Andhra Pradesh and corporate office having in Chennai. We are paying service tax along with monthly office rent to ST registered vendor. We are taking service tax portion as a input tax and adjusting with excise liability. Recently Excise department observed and not eligible for input tax due to office rent is not relevant to product manufacturing.

We not providing any service related activities. we are only product manufacturing only. This service tax portion also not revenue expenditure. In this case can I get refund or Can I accumulated in ER1 return.?. Kindly suggest further how can I proceed.

AI Summary

Nexus of head office services to manufacturing determines eligibility for input credit and ISD distribution under Cenvat rules.
Whether service tax paid on corporate office rent is available as Cenvat credit for discharge of excise duty depends on demonstrating a nexus between the head office service and manufacturing, and on correct distribution through the Input Service Distributor mechanism under Rule 7; absent such attribution the department's objection that the rent is not relevant to production will sustain and credit may be disallowed.