2024 (7) TMI 683

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ations Division at New Delhi. These were called by the appellant as "Cost Centres", which had obtained Input Service Distributor for distributing the input service credit. The appellant had availed credit of service tax on the invoices issued by these Cost Centres (ISD invoices). The department was of the view that the services availed by the appellant on the invoices distributed by the ISD do not have any nexus with the manufacturing activity of the appellant, and therefore is not eligible for credit. The various input services under dispute are as under: - 3. Maintenance or Repair Service, Advertising Agency Service, Telecommunication Service, Professional Charges for Patents, Renting of Immovable Property, Man Power Recruitment / Supply Agency services, Technical Testing Service, Air Travel Agent Service, Courier Service, Software Development, Goods Transport Agent Service, Legal Consultancy Service, Information Technology Software Service, Packaging Service, Erection, Commissioning or Installation Service, Security Agency Service, Business Auxiliary Service, Scientific or Technical Consultancy Service, Commercial Training Coaching or Technical Service, Consultancy Services, Fa....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....es. After due process of law, the original authority disallowed the credit and confirmed the demand along with interest and imposed penalty of Rs.20,00,000/- under Rule 15 (1) of Cenvat Credit Rule 2004. Aggrieved by such order, the appellant is now before the Tribunal. 7. The Ld. Counsel Ms. S. Sridevi, appeared and argued for the appellant. It is submitted that the period involved is from September 2013 to July 2014 which is the period after the major amendment to the definition of Input Services. The Ld. Counsel referred to the definition of input service under rule 2 (l) of Cenvat Credit Rules 2004 for the disputed period which reads as under:- As per Rule 2(1) of CENVAT Credit Rules, 2004 RULE 2(1): Input Services "Input Service" means any service,- (i) used by a provider of output service for providing an output service; or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, up to the place of removal, and Includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....credit only through the invoices issued by these input service distributors. The provision for registering as an input service distributor is to facilitate procurement of credit on services centrally and for distribution to various units. These units use the services directly or indirectly with the manufacturing activity or for providing taxable output service. All the services received has a nexus with the manufacture and clearance of final products of the manufacturing units and erection divisions. The payments for procuring the input services which were commonly utilized by all the units were maintained by the Cost Centres registered as an ISD. These Cost Centres having registered as ISD has distributed the credit which qualifies as an input service in terms of Rule 2 (l) of Cenvat Credit Rules 2004, these Cost Centres are subject to verification and audit by their jurisdictional officers. These ISDs are also liable to file periodical returns which are subject to the scrutiny by their jurisdictional officers. The correctness of the credit taken and the manner of distribution of the credit are therefore subject to the verification of the department. So far, no adverse inference h....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the credit is eligible and dropped the entire proceedings in respect of show cause notice C. No. IV/16/102/2013- Adj. dated 24.09.2013. similarly, the proceedings initiated vide show cause notice dated 17.04.2006 on issue of availing credit on certain input services was dropped by original authority vide O-I-O No.29/2022 dated 03.06.2022 (period is March 2005). 15. It is submitted by the Ld. Counsel that the disallowance of the credit is without any legal or factual basis. It is prayed that the appeal may be allowed. 16. The Ld. AR Shri. N. Satyanarayanan, appeared and argued for the department. It is argued that the appellant has to establish that the services are used directly or indirectly for manufacturing activity. The credit has been correctly disallowed by the adjudicating authority. It is prayed that the appeal may be dismissed. 17. Heard both sides. 18. The only allegation raised in the show cause notice to disallow input service credit is that the appellant has not established that these services have been used directly or indirectly or in relation to the manufacturing of final products. The Ld. Counsel for appellant has given a tabulation with regard to the various ....