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April 2016

[2016-TIOL-337-CESTAT-BANG] M/s Gem Motors vs. Commissioner of Central Excise & Service Tax, Coimbatore

By Puloma Dalal
Jayesh Gogri
Mandar Telang Chartered Accountants
Reading Time 1 mins
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Rule 6(3) of the CENVAT Credit Rules, 2004 applies only when there is use of the common input without maintenance of separate accounts. When an area is allocated to be used for provision of taxable service CENVAT credit attributable thereto is available in full.

Facts
The Appellant uses an earmarked space for providing taxable services and the lease deed provides the sq. ft. area used for that purpose. Service tax paid on the rent for such area is availed as CENVAT credit. The department contended that the formula prescribed by Rule 6(3) of the CENVAT Credit Rules, 2004 should be applied to determine the eligible CENVAT credit.

Held
On verifying the lease deed, the Tribunal observed that the document provided the area attributable to the provision of service. Therefore, it was held that in absence of any physical inspection report showing anything contrary, CENVAT credit of service tax paid on rent paid in respect of that space used was allowed.

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