Whether credit of service tax paid by one unit is admissible to other unit?

PJ/CASE LAW/2016-17/3145

Case:-M/s INDIA TRIMMINGS PVT LTD VS COMMISSIONER OF CENTRAL EXCISE, COIMBATORE

Citation:-2016-TIOL-1294-CESTAT-MAD

Brief Facts:- The brief facts of the case are that the appellant is carried out manufacture in its Unit-I as an EOU and for non-availability of the space therein, another Unit was taken by the appellant called as Unit-III for storage of goods of Unit-I and carry out the manufacturing operation there at. Unit-III and Unit-I were integrally connected to achieve the object of manufacture.

Appellants Contention:- It is submission on behalf of the appellant that it carried out manufacture in its Unit-I as an EOU and for non-availability of the space therein, another Unit was taken by the appellant called as Unit-III for storage of goods of Unit-I and carry out the manufacturing operation there at. Unit-III and Unit-I were integrally connected to achieve the object of manufacture. Such factual aspect was well known to the Development Commissioner as well as Excise authorities through the registration process. The rental of Unit-III was paid by Unit-I. Against such rental service availed, service tax was paid. The service tax so paid was claimed as Cenvat credit by Unit-I. When there is integral connection between the Unit-I and Unit-III, in respect of business/manufacture there cannot be denial of Cenvat credit of service tax paid on rental.

Respondents Contention:-Learned departmental representative on the other hand says that there is no nexus as submitted by the appellant above.

Reasoning Of Judgement:-When the appellant brings out para 5 of its reply to the show-cause notice with the aforesaid proposition, in absence of any negative finding made by grass root level officers as to the non-existence of Unit-III or no integral connection between Unit-I and Unit-III, which were engaged in the manufacturing operation and the rental of Unit-III was paid by Unit-I to achieve the object of manufacture, but dependency and integral connection comes out, there cannot be denial of Cenvat credit of service tax paid by Unit-I for Unit-III. In the result, appeal is allowed.

Decision:-Appeal allowed.

Comment:- The gist of the case is that the Cenvat Credit of Service Tax on Rent paid for premises of Unit III and availed by Unit I is proper since the manufacturing units were found to be integrally connected. Therefore, the Cenvat credit of service tax paid by one unit vis-à-vis other unit was held as admissible.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2016-17/3145

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