TMI Blog2024 (3) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Hence the services received from M/s. Satnam were services exported. The activity done in India by said M/s. Satnam is definitely a service used by the provider of output service for providing output service. Hence, it is well covered in the definition of input services - Cenvat Credit on services received from M/s. Satnam Construction Co. for Rs.6,86,000/- is held admissible to the appellant. Hence the order of the Commissioner (Appeals) is not sustainable qua this issue. Wrong availment of CENVAT Credit of Rs. 5,15,579/- on 30.06.2017 on challan in respect of RCM liability for the month of June-17 paid in July-2017 in contravention of Rule 4(7) of CCR, 2004 - HELD THAT:- Section 140(5) of the CGST Act, 2017 provides for entitlement to registered person for taking credit of eligible duties and taxes in respect of inputs and input services received on after the appointed date i.e. 30.06.2017 subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day then denying the credit to the appellant when the input services were received prior to 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the department that the goods on which cenvat credit was availed did not satisfy the definition of the capital goods was considered by the larger bench of the Tribunal in the case of BALLARPUR INDUSTRIES LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, BELGAUM [ 1999 (12) TMI 88 - CEGAT, NEW DELHI] wherein the theory of direct participation of the goods eligible for modvat credit had been specifically rejected in the light of its earlier larger bench decision rendered in the case of JAWAHAR MILLS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, COIMBATORE [ 1999 (4) TMI 153 - CEGAT, NEW DELHI] - the findings in Order-in-Appeal on this issue are not sustainable. Non-payment of Service Tax amounting to Rs. 6,64,172/- on Ocean Freight in accordance with the Notification 16/2017- ST dated 13.04.17 - HELD THAT:- Hon'ble Supreme Court has held that the levy of IGST on the amount of Ocean Freight as unconstitutional in the case of UNION OF INDIA ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR [ 2022 (5) TMI 968 - SUPREME COURT] . The adjudicating authority had not considered said judgement on the ground that the same has been passed in GST regime. These findings are therefore liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Channel, HR Coil etc. in violation of Rule 2(a) 2(k) of CCR, 2004; (vi) not paid service tax amounting to Rs.6.64.172/- on Ocean Freight in accordance with Notification No.16/2017-ST dated 13.04.2017 read with Circular No.206/4/2017-ST dated 13.04.2017 and (vii) not paid service tax amounting to 1,07,393/- on the Government Fees under RCM in accordance with Notification No.22/2016-ST dated 13.04 2016. 4. The above credits were used by the appellant to pay the excise duty while clearing the goods manufactured by them. Hence vide Show Cause Notice (SCN) No.2372 dated 02.01.2020 while denying the eligibility for above credit, Central Excise Duty of Rs.16,56,969/- was proposed to be recovered from the appellant along with interest. The appropriate penalties were also proposed to be imposed. 5. The said proposal was confirmed vide order-in-original No.06/2021 dated 31.07.2021. The appeal against the said order has been rejected vide order in appeal No.68/2022 dated 30.12.2022. Being aggrieved, appellant is before this Tribunal. 6. I have heard Mr. Ankit Totuka, ld. Counsel for the appellant and Mr.Arun Sheoran, Authorised Representative for the Revenue. 7. Arguments of both the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly rejected by Commissioner (Appeals). Issue No.2: Wrong availment of CENVAT Credit of Rs. 5,15,579/- on 30.06.2017 on challan in respect of RCM liability for the month of June-17 paid in July-2017 in contravention of Rule 4(7) of CCR, 2004; 10. On this issue it is submitted by the ld. Counsel for appellant that since, the introduction of GST w.e.f 01.07.2017 filing of ST-3 return for the period post June-17 was discontinued. Hence, the appellant had no option but to avail cenvat credit in its ST-3 return filed for the June-17 quarter. The appellant had deposited the service tax for the month of June-17 on or before the due date of payment of tax which is 6th day of the succeeding month. Hence, the appellant had rightly availed the cenvat credit of service tax in its ST-3 return for June-17 quarter. 11. While rebutting arguments of this issue, ld. Departmental Representative submitted that the appellant had deposited their tax due for the month of June on 03.07.2017. They had received payment challan in the month of July 2017. However they had wrongly availed CENVAT credit amounting to Rs.5,15,579/- during the month of June 2017 itself i.e. before the payment of service tax under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d credit lying as on 01.03.2015 would lapse. Hence demand is wrongly confirmed with reference to this issue. 15. While rebutting on this issue ld. D.R. mentioned that the appellant had utilized the credit balance of Ed Cess and Secondary Higher Education Cess on inputs lying as on 28.02.2015 and credit balance of Ed. Cess and Secondary Higher Education Cess on services lying as on 31.05.2015 which were utilized on dated 05.07.2017 and 05.10.2015 respectively for payment of Excise Duty. Thus as per above notifications, Cenvat credit of SHE and Higher secondary cess on input lying before 01.03.2015 and Cenvat credit of SHE and Higher secondary cess on input services lying before 01.06.2015 respectively cannot be utilized by the appellant hence there is no infirmity in the finding in order under challenge. Issue No.5: Wrong availment of CENVAT Credit of Rs. 82,720/- on M.S. Bar, Channel, H.R. Coil etc. in violation of Rule 2(a) 2(k) of Cenvat Credit Rules, 2004 used for support of capital goods. 16. Ld. Counsel for appellant submitted that these goods have not been used in fabricating supporting structure of capital goods rather the same have been used for repair maintenance of Kiln, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. Therefore, appellant being neither service provider nor service recipient cannot be made liable to pay service tax on a transaction which had originated and concluded outside the taxable territory. 21. It is mentioned while rebutting to this issue that Service tax is leviable on all taxable services consumed or rendered in India Vide notification Nos. 15/2017-ST and 16/2017- ST both dated 13th April, 2017, the importer of goods as defined in the Customs Act. 1962 has been made liable for paying service tax in cases of services of transportation of goods by sea provided by a foreign shipping line to a foreign charterer with respect to goods destined for, India. This change came into effect from 23rd April, 2017, hence the contention of the appellant is rightly rejected. The appellant has placed reliance on decision of BRITISH AIRWAYS (supra) case but the same is not squarely applicable in the present case. Issue No. 7: Non-payment of Service Tax of Rs. 1,07,393/- on the Government Fees under RCM in accordance with provisions of Notification No. 22/2016-ST . 22. Ld. Counsel for the appellant submitted that tax liability under RCM arises only when any service is provided or agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice it is evident that all the facts have been derived by department from the records and documents of the appellant and the issues involved in the instant matter is of interpretational in nature. The appellant has acted according to best of its understanding of the legal provisions. The appellant has relied upon the decision in the case of Continental Foundation Jt. Venture Vs. CCE, Chandigarh-1 [2007 (216) ELT-177-SC). 26. Penalty is also not imposable in the light of above discussion. With these submissions on behalf of appellant, the order under challenge is prayed to be set aside and appeal is prayed to be allowed. 27. On the contrary ld. Departmental Representative has reiterated the findings about invoking extended period while issuing Show Cause Notice. However, ld. Departmental Representative in the light of their submissions on respective issue, as mentioned above, have prayed for the appeal to be dismissed. 28. Having heard the rival contention and perusing the records the issue wise findings are as follows: Issue No.1 29. It is observed that very basis of denying CENVAT Credit and utilization thereof for discharge of excise duty is that services as received from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an has held that goods which are necessary for running of plant and up-keeping of the machinery directly involved in the manufacturing and products are eligible to avail Modvat credit. 31. The decision by Hon ble High Court of Chattisgarh in the case of Ambuja Cement Eastern Ltd. reported in 2010 (256) E.L.T. 690, and of Hon ble Karnataka High Court in the case of Commissioner of Central Excise, Bangalore v. Alfred Herbert (India) Ltd. reported in 2010 (257) ELT 29, have followed the aforementioned decision of Rajasthan High Court. I also find that the appeal filed by the Government against said judgment of Hon ble Rajasthan High Court was dismissed by the Apex Court vide judgment reported in 2007 (214) ELT A115. In view of the said settled legal position on this issue. 32. I hold that Cenvat Credit on services received from M/s. Satnam Construction Co. for Rs.6,86,000/- is held admissible to the appellant. Hence the order of the Commissioner (Appeals) is not sustainable qua this issue. Issue No.2 33. Cenvat Credit of Rs.5,15,579/- is denied on the ground of violation of proviso 1 of Rule 4 (7) of CCR, 2004, however I am of the opinion that with the introduction of GST w.e.f. 01.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of duty therefore, it will not make any difference if excess credit is allocated to one unit as it would be a revenue neutral exercise as both the units are of the same company - M/s Gravita India Limited and shifting of such credit would not make any difference for company as a whole more so when both the units are paying excise duty on its clearances. Though appellant has relied upon the decision of Hindustan Zinc vs. CC, Udaipur reported as 2019 (370) ELT 1582 Tri. Del. But I observe that the decisions are for the period prior amendment in Rule 7 of Cenvat Credit Rules, 2004 i.e. for the period prior 01.04.2016. The said amendment has substituted word shall instead of word may . Hence I hold that it was mandatory for the appellant to distribute credit as per the directions of said Rule 7. Apparently and admittedly Rule 7 has not been followed while distributing credit. Hence I hold that the phagi unit is rightly held to have been allocated with excess credit. Issue No.4 38. The contention of the department on this issue is that there is no notification/circular which provides credit of Education Cess and SHE Cess lying as on 01.03.2015 and as on 01.06.2015 in respect of inp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit - Scope of expression used in or in relation to manufacture of final product, whether directly or indirectly and whether contained in final product or not is much larger than expression used in manufacture of in the definition of Input in Rule 2(k) of Cenvat Credit Rules, 2004. 2. Judgments in the case of Ambuja Cements [2010 (256) ELT 690 (Chhattisgarh)], Alfred Herbert (India) Ltd. [2010 (257) ELT 29 (Kar.)] and Hindustan Zinc Ltd. [2008 (228) E.LT. 517 (Raj.)] are relied upon wherein it was held that repair and maintenance activity essential for smooth manufacturing operations without which manufacturing activity not commercially feasible Cenvat credit for inputs used for repair and maintenance admissible. 40. In the light of these decisions, the findings in Order-in-Appeal on this issue are not sustainable. Issue No.6 41. Hon'ble Supreme Court has held that the levy of IGST on the amount of Ocean Freight as unconstitutional in the case of UOI Vs. Mohit Mineral Pvt. Ltd. Ors. vide its order dated 19.05.2022 passed in Civil Appeal No. 1390/2022. The adjudicating authority had not considered said judgement on the ground that the same has been passed in GST regime. These f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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