The Department denied the said Cenvat credit to the Appellant on the ground that the Appellant is not entitled to take Cenvat credit on services received prior to Service tax registration and that the Housekeeping and Hotel services charges are not related to Appellant’s business of manufacturing as these services have been availed outside the factory premises.
Thereafter, the matter was adjudicated and demand was confirmed against the Appellant along with interest and penalties. Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Delhi.
The Appellant relying upon the decision in the case of MPortal India Wireless Solutions Pvt. Ltd Vs.CST [2011 (9) TMI 450 – KARNATAKA HIGH COURT] (MPortal India case)which was followed bythe Hon’ble Tribunal in the case of Reliance Ports & Terminals Ltd. Vs. C.C.E. [2013-TIOL-388-CESTAT-Mum], submitted that Cenvat credit cannot be denied for the invoices received prior to Service tax registration.
Further in respect of Cenvat credit availed on the Housekeeping charges, the Appellant submitted that the same is governed by the decision in the case of LO real India Pvt. Ltd Vs. C.C.E. [Pune 2011 (22) STR 89]. However, for Hotel charges, the Appellant fairly conceded that they are not entitled to take Cenvat credit for the same but submitted that the demand is time barred as the facts of availment of Cenvat credit came to the knowledge of the Department at the time of audit.
On the other hand, the Department placed reliance on the decision in the case of Showa India (P) Ltd. Vs. C.C.E. Faridabad[2012 (25) S.T.R. 152 (Tri-Del)]and submitted that prior to Service tax registration, the Appellant is not entitled to take Cenvat credit. Whereas in respect of services of Housekeeping and Hotel charges, it was submitted that these services are availed by individual in residential colony. Therefore, the Appellant is not entitled to take Cenvat credit of the same. On ground of limitation, the Department submitted that as the fact of availment of Cenvat credit came to the knowledge of the Department during the course of the audit and the Appellant has not taken any positive steps to pay inadmissible Cenvat credit within time, therefore, extended period of limitation is rightly invoked.
The Hon’ble CESTAT, Delhi relying upon the decision in the MPortal India case, held that the matter is squarely covered in aforesaid decision and therefore, the Appellant is entitled to take Cenvat credit on the invoices received prior to Service tax registration. As regards the issue of inadmissible Cenvat credit, the allegations of the Department were upheld and the corresponding demand was confirmed along with interest.