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TRANSCRIPT
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iiiciur 31-813-4rdrc - 380 015. OFFICE OF THE ASSISTANT COMMISSIONER, CENTRAL EXCISE,
DIVISION - II, AHMEDABAD- I . THIRD FLOOR, CENTRAL EXCISE BHAVAN, NEAR POLYTECHNIC,
AMBAWADI, AHMEDABAD -380 015.
?rant gra* 3TW VRT / By R.P.A.D.
t5T.TE.V/16 -22/SCN -Cadmac/12 - 13 . 311t3i *21' artmr / Date of Order: 23.12.2014
chic]) aftR3I / Date of Issue : 23.12.2014
Caw tifitaiPassed by : Ms.Ruchi Bisht / Assistant Commissioner
9t affair TT. / Order-in-Original No :- AC / 15 /Div -IF 2014- 15
D-4T Fazit) ail 4-6 wit al t an cfl t, .5i4/504, ftAt cRitTr*Th -Q- 'an I
This copy is granted free of charge for private use of the person(s) to whom it is sent.
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Any person deeming himself aggrieved by this order may appeal against this order in Form E.A.1 to
Commissioner (Appeals), Central Excise, Central Excise Bhavan, Ambawadi, Ahmedabad - 380 015
within sixty days from the date of its communication. The appeal should bear a court fee stamp of Rs.2/- only.
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The Appeal should be filed in Form No. E.A.1 in duplicate. It should be signed by the appellant in
accordance with the provisions of Rule 3 of Central Excise (Appeals) Rules, 2001. It should be
accompanied with the following :-
(i) ictrl 3141Eg dl wit Copy of accompanied Appeal.
(ii)PkAti Sr cite arccar D--fr 3i-rtsr ra--tarcrIWtrritt, 601 • It T;:r T T71-
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Copies of the decision or, one of which at least shall be certified copy, the order appealed against or
the other order which must bear a court fee stamp of Rs.2.00/-.
TH. 3f1t31- ftY,K 3T9Wa (3141W), *-01- u 6c4 le, torch, 3c414 tl rot 3Ta7", 311-4MTer,
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An appeal agaisnt this order shall lie before the Commissioner(Appeals), Central Excise, Central
Excise Bhavan, Ambawadi, Ahmedabad -380 015 on payment of 7.5% of the duty demanded where
duty or duty and penalty are in dispute, or penalty, where penalty alone is in dispute".
Sub: Show Cause Notice No. V/16-22/SCN Cadmac/12-13 dated 06.02.2013 issued M/s.
Cadmach Machinery Co. Pvt. Ltd., 3604/05, Phase IV, GIDC, Vatva, Ahmedabad 382445 -matter reg.
2
BRIEF FACTS OF THE CASE:
M/s. Cadmach Machinery Co. Pvt. Ltd., 3604/05, Phase IV, GIDC, Vatva,
Ahmedabad 382445 (herein after referred to as "the assessee"), having Central Excise
Registration No AAACC 6242 XM001, is engaged in the manufacture and sale of
Pharmaceutical Machinery & its Spares falling under CH.No.84, 85 & 90 of the Central Excise Tariff Act, 1985.
2. During the scrutiny of the records of the assessee, it was revealed that the
said assessee had availed Cenvat Credit of Service Tax paid on various services. Hence,
Superintendent, AR-I, Div-II, Ahmedabad-I vide letter F. No. AR-I/SCN-Cadmach/2012-13
dated 02.01.2013 has called for the details of the same and in reply, the assessee submitted
the details of input Service Tax credit vide their letter dated 16.01.2013. It appeared that
the said assessee had wrongly availed the Cenvat Credit on input services of Air Travel
Agency, Chartered Accountant Service, Insurance, Photography Services (hereinafter
referred to as the "said services") as detailed in Annexure —A to Show Cause Notice which
were not input services as per Cenvat Credit Rules, 2004. The said assessee had wrongly
availed the input service tax credit on the said services on the basis of bills raised by the
service providers during the period from January '12 to September '12 amounting to Rs.
3,40,338/. (ST Rs. 3,30,446/- + Education Cess Rs. 6,612/- + SHE Cess Rs. 3,280/-) as per
Annexure —A attached to the Show Cause Notice.
3. As per the definition of the Input Service under Rule 2(I) (iii) of the Cenvat
Credit Rules, 2004, Input service means any service,
"used by the manufacturer, whether directly or indirectly, in or in relation to the
manufacture of final products and clearance of final products from the place of removal and
includes services used in relation to setting up, modernization, renovation or repairs of a
factory premises of provider of output service or an office relating to such factory or
premises, advertisement or sale promotion, market research, storage up to the place of
removal procurement of inputs, activities relating to business, such as accounting, auditing,
financing, recruitment and quality control, coaching, and training, computer networking,
credit rating, share registry, and security inward transportation of inputs or capital goods
and outward transportation up to the place of removal"
In present case, it appeared that the Input Service Tax Credit under the
category of Air Travel Agency amounting to Rs. 11,941/- (ST Rs. 11,613/- + Ed. Cess Rs. 234/-
+ SH. Cess Rs. 94/-), Chartered Accountant Service amounting to Rs. 2,81,706/- (ST Rs.
2,73,503/- + Ed. Cess Rs. 5,471/- + SH. Cess Rs. 2,732/-), Insurance services amounting to to
Rs. 43,514/- (ST Rs. 42,246/- + Ed. Cess Rs. 845/- + SH. Cess Rs. 423/-) and Photography
services amounting to Rs. 3,177/- (ST Rs. 3,084/- + Ed. Cess Rs. 62/- + SH. Cess Rs. 31/-), is
not admissible as these services are not used in or in relation to the manufacture of final
3
product and clearance of final product from the place of removal & as such it appeared that
the services are not covered under the ambit of "Input Services". Hence, it appeared that
the Credit of the said services taken by the assessee is not admissible.
5. As the above said services were not used in or in relation to the manufacture of
final products and clearance of final products up to the place of removal and as such, it
appeared that the above said services do not fall under the definition/purview of 'input
services'. Further, it appeared that they also do not fall within the inclusive part of the
definition of 'input service'. Accordingly, it appeared that Cenvat Credit of input services
taken by the assessee are not correct and proper and not admissible as 'input services' in
terms of the provisions of Cenvat Credit Rules, 2004.
6. Further, the said assessee had not disclosed in their ER-I returns that they
had taken Credit of Service Tax paid on various services. As per the provisions of Rule 9(6) of
the Cenvat Credit Rules, 2004, the burden of proof regarding the admissibility of the
CENVAT Credit shall lie upon the manufacturer or provider of output service taking such
credit. Thus, it appeared that assessee was required to ascertain the admissibility of the
credit. However, the assessee failed to do so and not disclosed to the department either in
their ER - I returns or in any other manner that they have taken credit on the above said
various services. Thus, it appeared that the said assessee have contravened the provisions
of Rule 2 and 9 of Cenvat Credit Rules, 2004 with an intent to evade payment of duty in as
much as they have resorted to taking Cenvat Credit whiCh was inadmissible to them.
7. All these acts of contravention on the part of the said assessee, appeared to
have been committed with an intention to evade payment of Central Excise duty and
therefore the total Credit during the period from January '12 to September '12, amounting
to Rs. 3,40,338/- ( ST Rs. 3,30,446/- + Education Cess Rs. 6,612/- + SHE Cess Rs. 3,280/-) as
per Annexure — "A" attached to the Show Cause Notice are wrongly taken on the aforesaid
input services and are required to be demanded and recovered from them along with
interest in terms of Section 11A(1) & 11AA of the Central Excise Act, 1944 read with Rule 14
of the Cenvat Credit Rules, 2004. Further, it also appeared that all these acts of
contraventions appear to constitute offences of the nature and type as described in Rule
15(1) of Cenvat Credit Rules, 2004, which rendered them liable for penalty.
8. Therefore, a Show Cause Notice from F.No. V/16-22/SCN-\cadmach/12-13 dated
06.02.20134 was issued to the assessee asking them that as to why :-
(i) Cenvat Credit amounting to Rs. 3,40,338/- (ST Rs. 3,30,446/- +
Education Cess Rs. 6,612/- + SHE Cess Rs. 3,280/-) should not be
disallowed and recovered in terms of provisions of Rule 14 of the
Cenvat Credit Rules, 2004 readwith Section 11A (1) of the Central
Excise Act, 1944.
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(ii) Penalty should not be imposed on them in terms of provisions of Rule
15(1) of the Cenvat Credit rules, 2004.
(iii) Interest at the prescribed rate should not be charged and recovered in
terms of provisions of Rule14 of the Cenvat Credit Rules 2004
readwith Section 11 AA of the Central Excise Act, 1944
They were also directed in the said show cause notice to produce at the time of
showing cause all the evidence upon which they intend to rely in support of their defense
and also directed to indicate in their written explanations to whether they desire to be
heard in person before the case is adjudicated.
WRITTEN SUBMISSIONS :-
9. The notice deny all the allegations/observations raised in the Show Cause
Notice and state that the Show Cause Notice is not sustainable on the basis of submissions
made below which are independent and without prejudice to each other.
(i) Whether Cenvat Credit availed for the Air Travel agency service amounting to Rs. 11,941/-, photography service amounting to Rs. 3,177/-, Insurance
service amounting to Rs. 43,514/- and Chartered Accountant Service amounting to Rs. 2,81,706/- were allowable as input or not
(ii)Cenvat Credit of Service tax not mention in ER -1 return is procedural lacuna
or not.
(iii) Whether when there is issue interpretation involved, penalty under Rule
15(1) of the Cenvat Credit Rules, 2004 has to be imposed or not.
9.1 Regarding Cenvat availed for the Air Travel agency service amounting to Rs. 11,941/-
photography service amounting to Rs. 3,177/-, Insurance service amounting to Rs. 43,514/-
and Chartered Accountant Service amounting to Rs. 2,81,706/- were allowable as input or not.
Noticee has working across the India has availed service credit rightly, which were
used in or in relation to the manufacture of the final product and clearance of final product
from the place of removal.
9.1.1 Noticee want to draw your attention towards the basic provision of Cenvat Credit
Rules, 2004 as under H
Input service defined under Cenvat Credit Rules, 2004
(I) "input service" means any service, —
used by a provider of taxable service for providing an output service;
or
onlifela0400* it I
I 5
(ii) used by a manufacturer, whether directly or indirectly, in or in
relation to the manufacture of final products and [clearance of final products
upto the place of remova]l,
and includes services used in relation to setting up, modernization, renovation or repairs of
a factory, premises of provider of output service or an office relating to such factory or
premises, advertisement or sales promotion, market research, storage up to the place of
removal, procurement of inputs, activities relating to business such as accounting, auditing,
financing, recruitment and quality control, coaching and training, computer networking,
credit rating, share registry and security, inward transportation of inputs or capital goods
and outward transportation up to the place of removal; "
9.1.2 From the abdve it is clear that under the present scheme of Cenvat credit rules,
Cenvat Credit has been allowed for the service tax paid on setting up of office, factory
premises and more particularly service tax paid on commercial or industrial construction
service. This is also clarified by the Board F.No. 137/203/2007-CX.4 dated 01.10.2007 has
clarified that service tax paid on construction of an office of service provider is an input
service and there is no restriction on taking of credit.
9.1.3 Even under Rule 6(5) of the Cenvat Credit Rules, 2004 produce here under :-
"(5) Notwithstanding anything contained in sub-rule 91), (2) and (3), credit of the
whole of service tax paid on taxable service as specified in sub-clause (g), (p), (q), (r), (v),
(w), (za), (zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) of clause (105) of
Section 65 of the Finance Act, 1994 shall be allowed unless such service is used for
exclusively in or in relation to the manufacture of exempted goods or providing exempted
services."
So from the above it is clear that notice has utilized input service in or in relation to
the manufacture of final product and clearance of final product from the place of removal 7
has claimed rightly.
9.1.4 Your honour, notice have availed credit of input service, i.e. Chartered Accountant
Service and Air Travel Agency Service. All the above were necessary and related to the
functioning of "business & activities," so all of the service availed by us falls under input
service definition & eligible for credit & refund in support of our contention.
9.1.5 Noticee also rely in support of our claim clarification issued by the Board Circular No.
120/01/2010-ST dated January 19, 2010
"3. The matter has been examined. At the outset it is necessary to understand that the
entire purpose of Notification No. 52/2006-CX (NT) is to refund the accumulated input
credit to exporters and zero-rate the exports. Accumulated credit and delayed sanction of
refund causes cash flow problems for the exporters. Therefore, the sanctioning authorities
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are directed to dispose of the refund claims expeditiously based on the following
clarifications to the issues raised in paragraph 2 above.
10.1 use of different phrases in rules and notification [para 2(a)]:
10.1.1 The primary objection indicated by the field formations is that the language
of Notification no. 5/2006-CX (NT)
permits refund only for such services that are used in providing output service. In other
words, the view being taken is that to be eligible for refund,
input services should be directly used in the output service exported. As regards the
extent of nexus between the inputs/input services and the export goods/services, it must
be borne in mind that the purpose is to refund the credit that has already been taken. There cannot be different yardsticks for
establishing the nexus for taking of credit and for refund
of credit. Even if different phrases are used under different rules of Cenvat Credit Rules,
they have to be construed in a harmonious manner. To elaborate, the definition of input
services for manufacturer of goods, as given in Rule 2 (I) (ii) of Cenvat Credit Rules, 2004,
includes within its ambit all services used "in or in relation to the manufacture the final
products" and includes service used "directly or indirectly". Similarly Rule 2 (0(i) of Cenvat
Credit Rules also gives wide scope to the input services for provider of output services by
including in its ambit services "used for providing and output service."
10.1.2 Therefore, the phrase, "used in" mentioned in Notification No. 5/2006-CX (NT) to
show the nexus also needs to be interpreted in a harmonious manner. The following test
can be used to see whether sufficient nexus exists. In case the absence of such input/input
service adversely impacts the quality and deficiency of the provision of service exported, it should be considered as eligible input or input service. In the case of BP0s/call centers, the services directly relatable to
their export business are renting of premises; right to use
software; maintenance and repair of equipment; telecommunication facilities; etc. Further,
in the instant example, service like outdoor catering or rent-a-cab for pick-up and dropping of its employees to
office would also be eligible for credit on account of the fact that these offices run
on 24x7 basis and transportation and provision of food to the employees are
necessary pre-requisites which the employer has to provide to its employees to ensure that
output service is provided efficiently. Similarly, since RPOs/call centers require a large
manpower, service tax paid on manpower recruitment agency would also be eligible both
for taking the credit and the refund thereof. On the other hand, activities like event
managements, mandap keepers, hydrant sprinkler systems (that is services which can be
called as recreational or used for beautification of premises), rest houses etc. prima facie
would not appear to impact the efficiency in providing the output service, unless adequate
justification is shown regarding their need.
10.2 One-to-one co-relation between inputs and outputs and scrutiny of voluminous
record [para 2(b) & (c) above] :
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10.2.1 Similar problem of co-relation and scrutiny of large number of documents was being
faced in another scheme [notification No. 41/2007-ST dated 06.10.2007] which grants
refund of service tax paid on services used by an exporter after the goods have been
removed from the factory. In Budget 2009, the scheme was simplified by making a provision
of self-certification [Notification No. 17/2009-ST] where under an exporter or his Chartered
Accountant is required to certify the invoices about the co-relation and the nexus between
the inputs/input services and the exports. The exporters also advised to provide a duly
certified list of invoices. The departmental officers are only require to make basic scrutiny of
the documents and, if found in order, sanction the refund within one month. The reports
from the field show that this has improved the process of grant of refund considerably. It
has, therefore, been decided that similar scheme should be followed for refund of Cenvat
Credit under notification No. 5/2006-CE(NT). The procedure prescribed herein should be
followed in all cases including the pending claims with immediate effect."
10.2.3 Further, the notice wants to produce definition of the input service amended
w.e.f 01.04.2011 speak as under ;
[(I) "input service" means any service:-
(i) used by a provider of taxable service for providing an output service;
Or
(h) used by a manufacturer, whether directly or indirectly, in or in
relation to the manufacture of final products and clearance of final products
upto the place of removal,
and includes services used in relation to setting up, modernization, renovation or repairs of
a factory, premises of provider of output service or an office relating to such factory or
premises, advertisement or sales promotion, market research storage up to the place of
removal, procurement of inputs, activities relating to business such as accounting,
auditing, financing, recruitment and quality control, coaching and training, computer
networking, credit rating, share registry and security, inward transportation of inputs or
capital goods and outward transportation up to the place of removal;
[but excluded], -
[(A) service portion in the execution of a works contract and construction services including
service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as
specified services) in so far as they are used for —
(a) Construction or execution of works contract of a building or a civil structure or a part
thereof; or
(b) Laying of foundation or making of structures for support of capital goods,
Except for the provision of one or more of the specified services; or]
8
[(B) [servies provided by way od renting of a motor vehicle], in so far as they relate to a
motor vehicle which is not a capital goods; or]
[(BA) service of general insurance business, servicing, repair and maintenance, in so far as
they relate to a motor vehicle which is not a capital goods, except when used by —
(a) A manufacturer of a motor vehicle in respect of a motor vehicle manufactured by
such person; or
(b) An insurance company in respect of a motor vehicle manufactured by such person,
or]
[(C) such as those provided in relation to outdoor catering, beauty treatment, health
services, cosmetic and plastic surgery, membership of a club, health and fitness centre,
life insurance, health insurance and travel benefits extended to employees on vacation
such as leave or Home Travel Concession, when such services are used primarily for
personal use or consumption of any employee;]
10.2.4 Regarding Cenvat of air travel service, the noticee further wants to submit
that the value of travel stand paid by the notice indicating that the air travel was
undertaken by the employees in connection with the business of noticee. In terms of
provisions of Income Tax law an assessee cannot incur any expenses of any personal nature
on any of its employees/Director. Inasmuch as it is the notice who had paid for said air
travel, it has to be held that the air travel was under taken in connection with the business
of the notice. Further, the notice want s to draw attention towards the fact that in his own
case earlier, the CESTAT has allowed credit taken on Air Travel Agent Service had been
allowed vide Order No. A/1669/2011-WZB/AHD dated 24.08.2011 in Appeal No.
E/1517/2010.
10.2.5 The assesse vide Letter dated nil has further submitted an undertaking "For
the purpose of air travel service, we further would like to submit that in terms of provisions
of Income Tax law an assessee cannot incur any expenses of any personal nature on any of
its employees/Director and as per our organization's policy, we as an organization is not
incurring any air travel/land travel expenses of any employee of the organization, other
than for business/official purpose. Whatever travel expenses are booked in books of
accounts are related to business/official purpose only. It means that the officer of the
organization has traveled by any mode, across the country is only for business/official
purpose of the organization.
10.2.6 Regarding Cenvat of chartered accountant service, the notice wants to
submit that such service has been availed for the various activities like stock verification
lying in the premises of the notice, keeping books of accounts and other finance and costing
related activities which is covered under the supra definition given under Rule 2(I) of Cenvat
Credit Rules, 2004.
9
10.2.7 Regarding Cenvat of insurance service, the notice wants to submit that such
insurance service is not for the personal health employees, rather such insurance is of
workman compensation policy. Workman compensation insurance policy has been taken
for the workers working in the factory premises from where goods are removed. Thus, the
notice has rightly availed the Cenvat credit of insurance service which has been directly or
indirectly, in or in relation to the manufacture of final products and clearance of final
products used for the removal of goods.
10.2.8 Regarding photography service, the notice wants to submit that at the time
of the festival various programmes have been arranged, which involve the sales promotion
and advertising activities for the business of the noticee. For the arranging such
programmes, noticee has been incurring the expenses, on which notice has avail Cenvat
credit, which has direct nexus with the output service i.e. for manufacture and clearance of
final products. Further, the noticee wants to submit that Cenvat of photography service was
taken for various programmes arranged by the notice at the premises of the notice only and
such programmes help the notice in building brand image of the notice. Further, such
programmes are part of marketing and promotional activities for goods manufactured by
the notice. As per input service definition, the services used for building brand image,
marketing and promotion are considered as input service.
10.2.9 So, the notice has rightly availed the Cenvat credit of air travel, insurance
service, photography service and chartered accountant service and the department's
contention that such services were used after the removal of goods was not sustainable.
11 The Noticee also rely on the following case laws :
(i) 2013 (32) STR 123 (Tri-Del) in the CESTAT, Principal bench, New Delhi [Court No. 3]
Ms. Archana Wadhwa, Member (I) Goodluck Steel Tubes Ltd. Vs. Commissioner of C.Ex.,
Noida Final Order No. 750/2012-SM(BR)(PB), dated 01.06.2012 in Appeal No. E/727/2010-
SM(BR)
Cenvat credit of service tax — input service — Air Travel Agent Service — Air travel
performed for company business — Service tax paid is admissible as credit — Rule 2 of
Cenvat Credit Rules, 2004 [Pra 2] - Appeal allowed
(ii) 2009 (16) STR 701 (Tri-Ahmd) in the CESTAT, West Zonal Bench, Ahmedabad (Court
No. II) Shri B.S.V. Murthy, Member(T) Commissioner of C.Ex., Ahmedabad Vs. Fine Care
Biosystems Final Order no. A/1337/2009-WZB/AHD dated 3.7.2009 in Appeal No.
E/162/2009
Cenvat Credit of Service Tax — Outward freight — Credit of Service Tax admissible in
respect of Service tax paid on goods transportation charges for outward freight for export of
goods — Rule 2(1) of Cenvat Credit Rules, 2004. [2009 (15) STR 23 (Tribunal-LB) followed.]
1 0
Cenvat Credit of Service tax —
performed for purpose of company
Rule 20) of Cenvat Credit Rules, 2004.
Input Service — Air Ticket service charges — Air travel
business — Credit on impugned charges admissible -
- ealipat
(iii) 2013 (31) STR 33 (Tri-Ahmd) in the Cestat, WZB, Ahmedabad Shri B.S.V. Murthy,
Member (T) Cadmach machinery Co (P) Ltd. vs. Commissioner of C.Ex. Final Order No. A/ 1669
/2011-WZB/AHD dated 24.8.2011 in Appeal No. E/1517/2010
Cenvat Credit — Input Service — Admissibility to credit of outdoor catering service,
valuation of immovable property, consulting Engineer Service, Travel Agent Service etc. —
Held : Perfetti Van Melle India Pvt. Ltd. [2010 (254) ELT 620 (p & H) inapplicable as issue
therein not relating to input service — Commissioner's observation of services not inputs,
totally irrelevant to issue relating to whether services to be considered input services —
Tribunal's decision in KBACE Tech. Pvt. Ltd. [2010 (18) STR 281 (Tri-bang.)] and Supreme
Court's decision in Maruti Suzuki Ltd. [2009 (240) ELT 641 (SC)] relied on for rejection of
claim on ground of inclusive part of definition beyond scope of rule making power cannot be followed in view of High
Court's decisions in Ultratech Cement Ltd.[2010 (20) STR 577
(Bom.)], ABB Ltd. [2011 (23) STR 97 (Kar.)] and Parth Poly Woven Pvt. Ltd. [2012 (25) STR 4
(guj.)] — Also, High Court's decision in Coca Cola India Pvt. Ltd. [2009 (15) STR 657 (Bom)1,
not considered — Therefore, Cenvat Credit admissible on services related to manufacture —
Assessee succeeds on merits — No question of imposition of penalty — Rule 2 (I) and 14 of
Cenvat Credit Rules, 2004. [Paras 4, 7, 8]
Cenvat Credit — Input Service — Denial of credit for non-utilization of services directly
of indirectly in manufacture of final product — Commissioner(Appeals) view that inclusive
part of definition is part of main definition therefore services mentioned in inclusive part to
satisfy parameters laid down in definitions' main part — Held : High Court's decision in
Ultratech Cement ltd. [2010 (20) STR 577 (Bom.)] followed — input service definition
includes services integrally connected with business of manufacture of final product
Nothing in impugned definition suggesting legislature's intention of restricting definition to
particular class of category of services — Therefore expression 'such as only illustrative not
exhaustive- Rule 21) and 14 of cenvat Credit Rules, 2004 [Paras 4, 5 , 6]
Cenvat Credit — input service — Outdoor Catering service — issue covered by
Ferromatic Milacron India Ltd. [2011 (21) STR 8 (Guj.)] — Canteen service provided as
required under factories Act, 1948 — Food provided at concession rates — Amount paid by
worker/staff to Assessee to be treated exclusive of Service tax and after deducting amount
and balance amount of service tax paid available as credit — Rule 20) and 14 of Cenvat
Credit Rules, 2004 [para 9]
11
Cenvat Credit — Input Service — Valuation of property — Valuation report required for
depreciation purposes to know life of factory and machine in order to avoid casualty —
evaluation in industrial practice therefore relatable to business of manufacture therefore
admissible — Rule 20) and 14 of Cenvat Credit Rules, 2004 [para 10.1]
Cenvat Credit — Input Service — Air Travel Services, Motor Car repair services and services by
authorized service station — Issue of admissibility squarely covered by Division Bench
decision in Dr. Reddy's Laboratories Ltd. [2010 (19) STR 71 (Tri.- Bang.)] — Credit admissible -
Rule 2(I) and 14 of Cenvat Credit Rules, 2004 [para 10.3]
Cenvat Credit — Input service — Tour Operator service — Selling of gods and providing
transport facilities to client to be treated as relatable to manufacture — Id goods not sold no
purpose in manufacturing same — Cenvat credit admissible - Rule 2(1) and 14 of Cenvat
Credit Rules, 2004 [para 10.4]
Cenvat Credit — Input Service — Business Exhibition service — Sending final goods for display,
explaining function and purpose of machine in relation to promotion of sale integral part of
manufacture — restriction of admissibility of credit up to stage of removal applicable only to
use of Goods Transport Agency Service — ABB Ltd. [2011 923) STr 97 (Kar.)] and Ultratech
Cement Ltd [2010 (20) STR 577 (Bom.)] followed — cenvat Credit admissible — Rule 2(d) and
14 of Cenvat Credit Rules, 2004 [para 10.5]
Cenvat Credit — Input Service — repair charges — relation to manufacture cannot be disputed
Credit admissible - Rule 2(I) and 14 of Cenvat Credit Rules, 2004 [para 10.6]
Cenvat Credit — Input Service — Photographic service — Promotion of sales therefore directly
relatable to manufacture - Credit admissible - Rule 2(I) and 14 of Cenvat Credit Rules, 2004
[para 10.7]
Cenvat Credit — Labour charges — Job worker for job working goods and receiving back for
use in manufacturing activity relatable to manufacture — Credit admissible - Rule 2(I) and 14
of Cenvat Credit Rules, 2004 [para 10.8]
Appeal allowed
(iv) 2009 (15) STR 657 (Born.) in the High Court of Judicature at Bombay Ferdino I.
Rebello and J.H.Bhatia, J.J.Coco Cola India Pvt. Ltd. Vs. Commissioner of C.ex., Pune — Ill
Central Excise Appeal No. 118 of 2007, decided on 26.08.2009
Cenvat Credit of Service Tax input service — Credit admissibility of Service tax to
concentrate manufacturer on advertising service used for marketing of soft drink removed
12
by bottlers — All and any activity relating to business covered under input service provided
there is relation between manufacture of concentrate and such activity —Service tax is
destination based consumption tax and is a value added tax with tax burden on ultimate
consumer and not manufacturer of service provider — Credit availed on advertisements,
sales promotion and market research admissible as credit for payment of excise duty on
concentrate particularly when such expenses from part of price of final product on which
excise duty is paid — Rule 200, 3 and 14of Cenvat Credit Rules, 2004 — Credit is availed on
the tax paid on the input service which is advertisement and not on the contents of the
advertisement. Thus, it is not necessary that the contents of the advertisement must be
that of final product manufactured by the person advertising, as long as the manufactures
can demonstrate that the advertisement service availed have an effect of or the
manufacture of the final product and establish the relationship between the input service
and the manufacture of the final product. Once the cost incurred by the
service has to be added to the cost and is also assessed, it is a recognition by Revenue of the advertisement
services having a connection with the manufacture of the final product [paras 2, 25, 27,
34,36, 37, 38,43, 44]
Cenvat Credit of Service tax — input service definition — interpretation of — definition of
input service using terms "means", "includes" and "such as' — Expression "means" and
"includes' exhaustive — Services which may otherwise not within ambit of definition clause
included by use of "includes" and these are made exhaustively word 'means" — words 'such
as" illustrative and not exhaustive and refer to service related to business in the context of
business - Rule 2(1) and 14 of Cenvat Credit Rules, 2004 [para 23, 24]
Cenvat Credit of service tax — Input service definition — interpretation of term "business' —
Expression "business" is an integrated/continuous activity and not confined or restricted to
mere manufacture of product — Activities in relation to business can cover all activities
related to functioning of a business — term "business" cannot be given restricted definition
to say that business of manufacturer is to manufacture final products only — "Business"
of wide import in fiscal statute - Rule 2(I) of Cenvat Credit Rules, 2004 [para 25]
Cenvat Credit of Service tax — Input Service — Burden of service tax borne by ultimate
consumer and not manufacturer or service provider —Cenvat Credit on input stage goods
and service admissible as long as connection between such goods and services is
established — Any input service that forms part of value of final product should be eligible
for Cenvat Credit - Rule 2(I) of Cenvat Credit Rules, 2004 [para 34]
Cenvat Credit of service tax — Input service — definition of input service containing five
categories of limbs — Credit admissible if any one of the limbs satisfied even if other limbs
are not satisfied - Rule 2(I) of Cenvat Credit Rules, 2004 - To illustrate input services used in
relation to setting up, modernization, renovation or repairs of a factory will be allowed as
rwMOMINOW114$0 I
13
credit, even if they are assumed as not an activity relating to business as long as they are
associated directly or indirectly in relation to manufacture of final products and
transportation of final products upto the place of removal [para 39]
Interpretation of statute — Cenvat Credit of Service tax — input service definition — Scope of
phrase "activity relating to business" widened by words "relating to' — Expression "relating
to" widen scope of definition — use of word "activities" signifies wide import of phrase
"activities relating to business" — Qualifying words like "main activities" or "essential
activities" not employed in the rule — All and any activity relating to business covered under
input service subject to relation between manufacture of final product and the activity -
Rule 2(I) of Cenvat Credit Rules, 2004 [para 26, 27]
Value Added tax — Legislative intention — Name of excise duty rechristened as Cenvat
from2.05.2000 and amendment thereto indicating object of legislature to levy and collect
excise duty as value Added Tax [para 32, 33]
Interpretation of statutes — general v. specific provision — principle that specific provision
will override general provision not applicable to provision in the nature of concessions or
exemptions [para 41]
Appeal allowed.
(v) 2011 (271)ELT 314 (Tri.-Del.) in the Cestat, principal Bench, New Delhi [Court No. Ill]
Ms. Archana Wadhwa, Member(J) Commissioner of C.Ex., Meerut — II Vs. Hindustan Coco
Cola beverages Ltd. Final Order Nos. 159-160 and 160-A/SM(BR)(PB), dated 24.03.2011 in
Appeal No. E/954, 956 and 1036/2009.
Cenvat Credit of Service Tax — Input Services — Services of Practicing Chartered Accountant
availed for verification of stock of final products lying with distributors — Credit denied
submitting that's services could be got done by any person of their unit who may not be CA
— held: Service availment not disputed — revenue not to decide whether particular job could
have been done by own employee — Assessee decided to hire CA and paid Service tax,
entitled to credit - Rule 2(I) of Cenvat Credit Rules, 2004 [para 3]
Cenvat Credit of Service tax — Input Service — Security services used for security of godown
storing sugar outside factory premises, security of sales at Noida and security of GM's
residence — Security of main raw material i.e. sugar covered within terms of activities
relating to business — Security to individuals of company not related to business activity —
Credit admissible for services availed at godown only and not at sales office or GM's
residence - Rule 2(I) of Cenvat Credit Rules, 2004 [para 4]
14
Cenvat Credit of Service tax — Input Service — Outdoor catering service — Larger Bench in
GTC Inds. Ltd. [2008 (12) STR 468 (Tribunal —LB)] holding in favour of assessee — Revenue's
case that larger bench order not attained finality as challenged before Bombay High Court —
Larger bench order not stayed by High Court, same required to be followed - Rule 2(I) of Cenvat Credit Rules, 2004 [para 2]
Appeal allowed.
(vi) 2012 (277) ELT 194 (Tri.-Del) in the Cestat, principal bench, New Delhi [Court No.
IV] Shri Rakesh Kumar, Member (T)
Commissioner of C.Ex., jaipur - H Vs. J.K.Cement Works Fin& Order Nos. 81-83 /2009-M(BR)(PB) dated 16.01.2009 in Appeal No. E/1270-1272/2007-5M
Cenvat Credit of Service tax — Input service- repair of car and motor vehicles and
photography service — management, maintenance of repair service availed for fleet of cars
and motor vehicles owned by company — Vehicles meant for officer's use for company work
— Claim that Photography service used in relation to manufacturing activity not
controverted by Revenue — Impugned services used in or in relation to manufacture or in
relation to business activities and covered as input services — Credit admissible - Rule 2(I)
and 14 of Cenvat Credit Rules, 2004 [para 3.3, 4]
Cenvat Credit of Service tax — Input service — Rent-a-cab service — Use of hired taxis
explained as in relation to manufacture of cement — No evidence produced by Revenue to show taxis used for activities not related to manufacture — Credit on rent-a-cab service
admissible - Rule 2(I) and 14 of Cenvat Credit Rules, 2004 [para 3.2, 4]
Cenvat credit of service tax — Input service — Telephone service — Mobile phone — tribunal
decisions holding credit of service tax on mobile phones admissible — Plea that mobile
phones given to staff for company work, not disputed by Revenue — Credit admissible - Rule 2(I) and 14 of Cenvat Credit Rules, 2004 [para 3.1, 4]
Appeal dismissed.
(vii) 2011 924) STR 645 (kar.) In the High Court of Karnataka at Banglore N. Kumar and
Ravi malimath, J1 Toyoto kirloskar Motor Pvt. Ltd. Vs. Commissioner of C.Ex, Banglore, C.E.A No. 47 of 2007 c/w C.E.A No. 100 of 2008, decided on 28.03.2011
Cenvat Credit of Service Tax — Input service — Celebration of Karnataka Rajyosthava day —
Common experience indicating that if it was not celebrated, there would be trouble both
inside and outside factory, with government acting only after damage was done — In that
view best way was to extend financial help to employees celebrating the function —
Expenses on shamiana, food/snacks, taking of photographs and entertainment, found to be
7
15
in relation to security of establishment and welfare of employees — It could not be
separated from business of manufacture of final product — It was input service on which
Cenvat credit could be taken - Rule 2(1) of Cenvat Credit Rules, 2004 [paras 8, 9, 11]
Cenvat Credit of Service tax — Input service — definition in Rule 2(1) of Cenvat Credit Rules,
2004 — Its clauses (i) and (ii) are exhaustive, as it uses word 'means' — thereafter, it is
extensive as it uses word 'includes', and enlarges scope by stating all activities relating to
business constitutes input service — real test in nexus/integral connection with manufacture
of final product and business. [Paras 8, 11]
Cenvat Credit of Service tax — Input service — Security of establishment — It includes
preventing unruly incident - Rule 2(1) of Cenvat Credit Rules, 2004 [para 8]
Assessee's appeal allowed/department's appeal dismissed.
(viii) 2010 (20) STR 577 (Born.) in the High Court of Judicature at Bombay [Nagpur Bench]
J.P.Devdhar and A.B. Chaudhari, JJ. Commissioner of C.Ex., Nagpur vs. Ultratech cement
Ltd., Central Excise Appeal No. 7 of 2010, dated 25.10.2010.
Cenvat Credit of Service tax — Input Service — Outdoor Catering service — Credit of Service
tax paid on Outdoor catering service used in canteen for employees whether admissible and
utilizable for paying excise duty on cement — ratio of Supreme Court ruling in Maruti Suzuki
case 12009 9240) ELT 641 (SC)] in the context of 'input' applicable for interpretation of
expression "activities relating to business" in definition of input service — Providing canteen
facilities to workers mandatory to assessee engaged in business of manufacture of cement
and failure entails penal consequence — Outdoor caterer services engaged to comply with
Factories Act, 1948 — use of Outdoor Caterer's services having nexus or integral connection
with manufacture of final product in the facts of present case — Credit of Service tax paid on
outdoor Catering service admissible — Credit not admissible to manufacturer on part of
service tax borne by worker and affidavit filed by assessee on reversal of proportionate
credit embedded in cost of food recovered from employees — Credit reversal to be verified
by authorities - Rule 2(k), 2(1) and 14 of Cenvat Credit Rules, 2004 [paras 24, 31,32,34, 39, 40]
Cenvat Credit of Service tax — Input service — Criterion for coverage — Expression "activities
in relation to business" postulates activities integrally connected with business of assessee —
Activities not integrally connected with business of manufacture of final product not qualify
as input services - Rule 2(1) of Cenvat Credit Rules, 2004 [para 29]
Cenvat Credit of Service tax — Input Service — Scope of definition of input service is very
wide — Input service covers not only services used direCtly or indirectly in or in relation to
16
manufacture of final products but also various services used in relation to business
of manufacture whether prior to manufacture or after manufacture — Definition not restricted
to services used in or in relation to manufacture of final products but extends to all services
having direct nexus or integrally connected with business of manufacturing final product —
definition of input service seeks to cover every conceivable service used in business of manufacture — All
services used in
relation to business of manufacture of final product covered - Rule 2(I) of Cenvat Credit Rules,
2004 [paras 28, 34, 35]
Cenvat Credit of Service tax — Input service - Definition of input service not only covers
services falling in the substantial part of Rule 2(I) of Cenvat Credit Rules, 2004 but also
covers services which are covered under inclusive part — Services covered under inclusive part
are services rendered prior to
commencement of manufacturing activity as well as services rendered after manufacture —
Inclusive part of definition includes services rendered in relation to business — Rule 20) ibid [pan 27]
Cenvat Credit of Service tax — Input service — Interpretation of definition — Categories
enumerated after expression 'such as' in definition of input service not relating to particular class or category of services but to
variety of services used in business of manufacturing final products - Rule 2(1) of Cenvat
Credit Rules, 2004 [para 31]
Cenvat Credit of Service tax — Input vs. input services — Ratio of Supreme Court ruling in
Maruti Suzuki case [2009 (240) ELT 641 (SC)] in the context of definition of 'input' applicable for interpretatio n
of expression "activities relating to business" in definition of input service
— Applicability of said ruling not dependent on fact that definition of
input service wider than definition of input — ration of said ruling applicable in the context of
definition of input alone and entire judgment
not applicable - Rule 2(k), 2(I) of Cenvat Credit Rules, 2004 [paras 31, 34]
Cenvat Credit of Service tax — Legislative intention — Nothing in definition of input service to
suggest that legislature intended to define expression 'such as' restrictively — Expression 'such as' in inclusive part of definition to
be construed as illustrative and not exhaustive in the absence of legislative intention to restrict
definition to particular class of category of services used in business - Rule 2(I)
of Cenvat Credit Rules, 2004 [para 35]
Departmental clarification — Binding nature — CBEC Circular dated 23.08.2007 providing for Cenvat credit of service
tax paid on mobile phone service in specified situations — Definition of input service construes widely
in circular ibid — Argument by Revenue that expression such as' in definition of input service is
restrictive — Revenue cannot argue against stand taken by CBEC — Section 378 of Central
Excise Act, 1944 as applicable to Service tax vide Section 83 of Finance Act, 1994 [para 36]
Appeal rejected.
17
(ix) 2008 (12) STR 498 (Tri.-Bang.) in the Cestat, South Zonal Bench, Banglore dr.
S.L.Peeran, Member (1) and Shri T.K.Jayraman, Member (T) Toyota Kirloskar Motor Pvt. Ltd.
Vs. Commissioner of C.Ex, Banglore Final Order No. 984/2008 dated 5.8.2008 in Appeal No.
E/776/2007
Cenvat Credit of Service Tax — Input Service — Cenvat Credit of Service Tax paid on Pandal or
Shamiana service and photography service — Impugned expenses incurred in holding
Kannada Rajyostav function and inaugural function of police station — Expression ' activities
relating to business' in Rule 2(1) of Cenvat Credit Rules, 2004 amplified by words 'such as'
—Social functions to entertain employees for rajyostava function and inauguration of police
station not covered under 'activities relating to business' as they fide belief and demand hit
bi time-bar —Section 73 of Finance Act, 1994 — Rule 2(1), 3, 14 and 15 ibid [para 3]
Demand (Service Tax) — Limitation — Bona fide belief — Specific allegation in intent to evade
Service tax or willful expression absent in show cause notice — Appellants being large payers
of Central Excise duty and Service Tax, having bona fide belief on admissibility to Cenvat
Credit — demand set aside on limitation — Section 73 of Finance Act, 1994 [para 3]
Appeal allowed.
So, from the above, it is clear that the noticee has rightly availed service tax of Air
Travel agency service, photography service, insurance service and Chartered Accountant
service which were used in or in relation to the manufacture of final product and clearance
of final product from the place of removal.
12. Regarding Cenvat Credit of service tax not mention in ER -1 return is
procedural lacuna or not.
The noticee wants to submit that it is procedural lacuna on the part of the noticee
that Cenvat credit of service tax availed on Chartered Accountant Service and Air Travel
Agent service not shown in ER - 1 returns. On the basis of that only, such Cenvat Credit
cannot be disallowed. Please take lenient view and allow the Cenvat credit.
13. Penalty under Rule 15(1) of Cenvat Credit Rules, 2002 has not been imposed
when there was interpretation difference of notification for calculating aggregating value of
clearance for home consumption.
It was submitted that when the issue involves interpretation of exemption
notification, allegation of intend to evade of duty, imposition of extended period of
limitation or penalty under Rule 15(1) of Cenvat Credit Rules, 2004 is not justified. The
following judgments were relied on :
18
(i)2007 (210) ELT 84 (Tri-Ahd.) — White Silco Pvt. Ltd. Vs. CCE
(ii)2007 (207) ELT 241 (Tri.-Born.) — Ircon Intl. Ltd. Vs. CCE
(iii)2005 (187) ELT 119 (Tribunal) = 2005 (71) RLT 325 (Cestat —Del.) — Anand
metal Industries Vs. CCE
14. Without prejudice to the aforesaid contention, it is submitted that proceeding for
imposing penalty is a proceeding which is quasi-criminal in nature. The question of
imposition of penalty in ordinary course came for scrutiny before Hon'ble Supreme Court in
the case of Hindustan Steel vs. State of Orissa reported in AIR 1970 SC 253. The Hon'ble
Supreme Court observed that penalty should not be imposed in ordinary course unless the
party acted in deliberately in defiance of law. Penalty will not also be imposed merely
because it is lawful to do so. Applying the ratio, of the above decision in the present case, it
would be seen there is no allegation of deliberate defiance on us as such, no penalty may be
imposed and the proceeding initiated vide the subject notice may be dropped.
PERSONAL HEARING :-
15 Accordingly, this case is taken up for adjudication. Personal hearing was fixed
on 27.11.2014. Shri Ashish Khandhar, Authorised representative, duly authorized by the
assessee appeared for the personal hearing. He submitted a letter of authority dated
14.11.2014 along with copy of CESTAT order No. A/1669/WZB/AHD/2011 dated 24.08.2011 in
the case of M/s. Cadmach Machinery Co (P) Ltd. Vs. Commissioner of Central Excise,
Ahmedabad — I; wherein Cenvat Credit of Service tax paid on Air Travel Agent Service and
Photography service was allowed.
DISCUSSION AND FINDING :
16. I have carefully gone through the case records and submission made in
written vide their letter dated 14.11.2014 as well as before me at the time of personal
hearing. From the case records, I find that the issue on hand is to decide the admissibility of
Cenvat Credit taken by the said assessee on Service Tax paid on Air Travel Agency Services,
Chartered Accountant services, Insurance services and photography services.
17. I find that the allegation leveled against the assessee are that they had wrongly
availed Cenvat Credit of Rs. 3,40,338/- for the period from January, 2012 to September,
2012 on various input services viz. Air Travel Agency Services, Chartered Accountant
services, Insurance services and photography services and Cenvat Credit is denied mainly on
the ground that the service provided them to by their Air Travel Agent, Chartered
Accountant, Insurance company and photographer which does not fall within the ambit of
definition of "input service" as provided under Rule 2(1) of the Cenvat Credit Rules, 2004.
19
18. I would like to discuss the issue service-wise i.e. Service Tax paid on Air Travel
Agency Services, Chartered Accountant services, Insurance services and photography
services.
18.1 I find that the assessee had paid the Service tax and availed Cenvat Credit on Air
Travel Agency Services amounting to Rs. 11,941/- during the period from January, 2012 to
September, 2012. Further, I find that Hon'ble CESTAT, WZB, Ahmedabad in the said
assessee's case allowed credit on the Air Travel Agency services vide Order No.
A/1669/WZB/AHD/2011 dated 24.08.2011 and observed at Para 10.3 as under :
"10.3 As regards Air Travel Services, it is squarely covered by the decision of
Tribunal in the case of Dr. Reddy's Lab Ltd. Vs. CCE, Hyderabad reported at 2010 (19) STr 71
(71 (Tri-Bang.). Since it is a Division Bench decision and covers very same service, I
respectfully follow the decision and hold that CENVAT Credit is admissible."
I also rely upon case laws reported at
(i) 2013 (32) STR 123 (Tri-Del) in the matter of Goodluck Steel Tubes Ltd. Vs.
Commissioner of C.Ex., Noida
" Cenvat credit of service tax — input service — Air Travel Agent Service — Air travel
performed for company business — Service tax paid is admissible as credit — Rule 2 of
Cenvat Credit Rules, 2004 [Pra 2] - Appeal allowed"
(ii) 2009 (016) STR 0707 (Tri-Del) in the matter of Jaypee Rewa Plant Vs.
Commissioner of C.Ex., Bhopal
" Cenvat credit of service tax — input service — Air Travel Agent Service — Air travel
performed for company business — Service tax paid is admissible as credit — Rule 2 of
Cenvat Credit Rules, 2004 - Appeal allowed"
Further, the assessee vide their letter dated nil has submitted an under taking to
the effect that as per our organization's policy, we as an organization is not incurring any
air travel/land travel expenses of any employee of the organization, other than for
business/official purpose. Whatever travel expenses are booked in books of accounts are
related to business/official purpose only. It means that the officer of the organization has
traveled by any mode, across the country is only for business/official purpose of the
organization.
From the above, discussion I find that air travel services used by the assessee have a
nexus with the manufacture of the final product and clearance of the final product from the
place of removal. Therefore, the assessee is eligible for Cenvat Credit of Rs. 11,941/- availed
20
on Air Travel Agency Services during the period from January, 2012 to September, 2012.
Hence, I allow the said Credit.
18.2 I find that the assessee had paid the Service tax and availed Cenvat Credit on
Chartered Accountant Services amounting to Rs. 2,81,706/- during the period from January,
2012 to September, 2012. In this regard I find that services of Chartered Accountant for
providing transfer pricing advisory services for certifying and verifying details and
information for EPCG authorization, for carrying out of statutory audit under the provisions
of Companies Act, under Income Tax Act, for auditing of financial records, excise records,
marketing records, service tax records, VAT audit fees etc. is an actively related to business.
Further, I find that Chartered accountant services used by the assessee have a nexus with
the manufacture of the final product and clearance of the final product from the place of
removal. Therefore, the assessee is eligible for Cenvat Credit of Rs. 2,81,706/- availed on
chartered accountant services during the period from January, 2012 to September, 2012.
Therefore, Cenvat Credit amounting to Rs. 2,81,706/. availed on these invoices issued by
Chartered Accountant is admissible to them. Hence, I allow the said Credit.
18.3 I find that the assessee had paid the Service tax and availed Cenvat Credit on
Insurance Services amounting to Rs. 43,514/- during the period from January, 2012 to
September, 2012. Further, I find the assessee in their defence reply stated that such
insurance service is not for the personal health employees; rather such insurance is of
workman compensation policy. Workman compensation insurance policy has been taken
for the workers working in the factory premises from where goods are removed.
Further, I would like to see the provisions of the Cenvat Credit Rules, 2004 which is reproduced here in below :-
"Rule 2 (I) "Input service" means any service, -
used by a provider of taxable 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 from the place or removal
and includes services used in relation to setting up, modernization, renovation or repairs of a
factory, premises of provider of output service or an office relating to such factory or
premises, advertisement or sales promotion, market research, storage upto the place of
removal, procurement of inputs, activities relating to business such as accounting, auditing,
financing, recruitment and quality control, coaching and training, computer networking,
credit rating, share registry, and security, inward transportation of inputs or capital goods
and outward transportation up to the place of removal;
[but excludeq-
21
[(A) .....
(B)
(BA) ......
(C) such as those provided in relation to outdoor catering, beauty treatment health
services cosmetic and plastic surgery, membership of a club, health and fitness centre, life
insurance, health insurance and travel benefits extended to employee on vacation such as
leave or Home Travel concession, when such services are used primarily for personal use or
consumption of any employee;]
Moreover, I find that the assessee is silent on the credit taken on insurance services
as they have not placed reliance on any decision in their written submission. Moreover, at
the time of personal hearing, they have not produced any evidence to substantiate the
details of workman compensation policy, its terms or its relevance and nexus with the
manufacture of the final product and clearance of the final product from the place of
removal.
In view of the above discussion, I find that the credit availed on insurance services by
the assessee has no nexus with the manufacture and clearance of the final product from the place of removal. Also, the said service has been excluded from the definition of 'input
service'. Therefore, the assessee is not eligible for Cenvat Credit of Rs. 43,514/- availed on
insurance services (workman compensation policy) during the period from January, 2012 to
September, 2012. Therefore, Cenvat Credit amounting to Rs. 43,514/- availed on these
invoices issued by the service provider is not admissible to them. Hence, I disallow the said
Credit.
18.4 I find that the assessee had paid the Service tax and availed Cenvat Credit on
Photography Services amounting to Rs. 3,177/- during the period from January, 2012 to
September, 2012. Moreover, I find that the assessee has placed reliance on the decision
reported at 2011(24) STR 645 (Kar.) in the High Court of Karnataka at Bangalore regarding
celebration of Karnataka Rajyotsava Day which is not relevant in this case. Also, they have not produced any evidence with the written submissions or before me at the time of
personal hearing awarded to them which shows that there is nexus with the manufacture of
the final product and clearance of the final product from the place of removal.
In view of the above discussion, I find that the credit availed on the photography
service by the assessee has no nexus with the manufacture of the final product and clearance of the final product from the place of removal. Thus, I find that the credit availed
on photography services does not fall in the category of input service as defined under the
Cenvat Credit Rules, 2004. Therefore, Cenvat Credit amounting to Rs. 3,177/- availed on
these invoices issued by the service provider is not admissible to them. Hence, I disallow the
said Credit.
22
19. Accordingly, I pass the following order:-
ORDER
Out of total demand of Rs. 3,40,338/-
( ) I drop the demand to the tune of Rs. 2,93,647- (Rupees Two Lakhs Ninety Three
Thousand Six Hundred and Forty Seven only) in respect of Cenvat Credit availed by
them on Air travel Agency Service and Chartered Accountant Services as discussed in
Para 18.1 to 18.2 under the proviso to Section 11A(1) of the Central Excise Act, 1944
read with Rule 14 of the Cenvat Credit Rules, 2004.
(ii) I disallow the Cenvat Credit amounting to Rs. 46,691/- (Rupees Forty Six Thousand
Six Hundred and Ninety One only) ) in respect of Cenvat Credit availed by them on
Insurance services and photography services as discussed in Para 18.3 to 18.4 for the
period from January-2012 to September-2012 and order to be recovered from M/s.
Cadmac Machinery Co. Pvt. Ltd, Ahmedabad in terms of the provisions of Rule 14 of
Cenvat Credit Rules, 2004 read with Section 11A (1) of the Central Excise Act, 1944. (iii)
I order to recover interest at the prescribed rates from M/s. Cadmac Machinery Co.
Pvt. Ltd, Ahmedabad on the said wrongly availed Cenvat Credit in terms of the
provisions of Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AA of the
Central Excise Act, 1944.
(iv)I impose penalty of Rs.12,000/ (Rupees twelve thousand Only) upon M/s. Cadmac
Machinery Co. Pvt. Ltd, Ahmedabad under the provision of Rule 15(1) of the
Cenvat Credit Rules, 2004.
20. The Show Cause Notice issued M/s. Cadmac Machinery Co. Pvt. Ltd., Ahmedabad -
382 445 vide F. No. V./16-22/SCN-Cadmach/12-13 dated 06,02.2013 by the Deputy
Commissioner, Central Excise, Division — it, Ahmedabad — I stands disposed of in the above manner.
LL 1
(Ruchi Bisht) Assistant Commissioner,
Central Excise, Division-II,
Ahmedabad-I
F. No. V/16-22/SCN-Cadmach/12-13
To,
M/s. Cadmach Machinery Co. Pvt. Ltd., 3904/5, Phase IV, GIDC, Vatva, Ahmedabad
Copy to:-
Date: 23.12.2014.
(1) The Commissioner, Central Excise, Ahmedabad-1 (Through Dy/Asstt.
xy(lCommissioner (RRA), Central Excise, Ahmedabad-1.
) The Dy./Asstt. Commissioner (Systems), Central Excise, Ahmedabad-1 (3)
The Superintendent, AR-I, Div-II, Central Excise, Ahmedabad-I. (4) Guard file.
1 1.101•11•144•11i