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PJ/Case Laws/2011-12/1355

Cenvat Credit on Gardening service

Case: COMMISSIONER OF C. EX., TRICHY versus SRI RAMA VILAS SERVICE LTD.
 
Citation: 2011 (271) E.L.T. 317 (Tri. - Chennai)
 
Issue:- Cenvat credit on Gardening service availed by manufacturer – Nexus required to be established with the activity of the business of assessee.
 
Brief Facts:- Respondent-assessee are manufacturers of parts of motor vehicles. They availed credit of service tax paid on gardening service from April 2008 to July 2009.
 
Revenue has filed appeal before the Tribunal being aggrieved by the extension of credit of service tax paid by the assessees.
 
Reasoning of Judgment:- The Tribunal held that the assessee has not established as to how gardening has a nexus with the activity of the business of the assesses. It was noted that the Bombay High Court in the case of CCE, Nagpur v. Ultratech Cement Ltd. [2010 (260) E.L.T. 369 (Bom.)] has held that credit is admissible of tax paid on services which have a nexus with the activity of the business of the assessee.
 
Accordingly, for the present case, the Tribunal held that the gardening services have not been established to have any connection or nexus with the activity of the business of the assessees, who are manufacturers of motor vehicle parts.
 
As regards penalty, the Tribunal noted that Revenue has contended that penalty is justified as during the period from April to November 2008, the assessees had not disclosed that they were availing credit from ineligible gardener service in their service tax credit/debit entry register filed along with the monthly ER-I return but wherein it was only mentioned as credit taken on secu­rity services. However, since the period of demand ranges from April 2008 to July 2009 and since the assessees have clearly shown that they are availing CENVAT credit on gardener service from December 2008, penalty is reduced to Rs. 20,000/- (Rupees twenty thousand only).
 
Decision:- Appeal partly allowed. 

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