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2018 (7) TMI 422 - AT - Central ExciseCENVAT Credit - input services - advertisement and publicity service - panmasala in retail pouches of various MRPs as also in 100 gram tin packs - whether the advertisement and sales promotion service, received by the appellant for advertisement of 100 gram tin pack of Rajnigandha panmasala, has also promoted the sales of Rajnigandha pan,masala sold in retail packs in respect of which duty is required to be paid under PMPM Rules, 2008 and whether the Cenvat credit in respect of this service is to be disallowed in proportion to the sale of ‘Rajnigandha’ panmasala in retail pouche?. Held that:- Rule 15 of PMPM Rules, 2008 is a non-obstante provision prohibiting taking of Cenvat credit of any Central Excise Duty paid on any input and capital goods or service tax paid on any input service used for manufacture of notified goods and also requiring that the duty on notified goods shall be paid in cash. Thus, while the prohibition in this Rule is only is respect of the ‘input services’ ‘inputs’ or capital goods which have been used for manufacture of the notified goods, the definition of ‘input service’ given in Rule 2 (l) of Cenvat Credit Rules, 2004 not only covers the services used in or in relation to manufacture of final product, upto the place of removal, but also includes the service mentioned in the inclusive portion of the definition, most of which are not the services used in relation to manufacture of final product but are used in relation to business of manufacture. The advertisement and sales promotion services cannot be said to have been used for manufacture of the panmasala. The sales promotion and advertisement services are obviously used in relation to manufacturing business and not directly in manufacture - The prohibition in Rule 15 of PMPM Rules is not in respect of “input service” as defined in Rule 2 (l) of Cenvat Credit Rules, 2004, but is in respect of input services used for manufacture of the notified goods. The Appellant’s plea that advertisement services not being used directly in the manufacture of MRP pouches prohibition of Rule 15 is not applicable in respect of the same, is acceptable. Appeal allowed - decided in favor of appellant.
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