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TMI Blog2013 (12) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... ial and preclinical studies. The services are for the various herbal products which are not manufactured by the appellant. The department took a view that the services do not fall within the purview of input services and accordingly a show cause notice was issued which was adjudicated after due process of law and the adjudicating authority confirmed the demand of Rs. 1,92,506/- along with interest and imposed equal penalty vide impugned order-in-original. 3. Aggrieved by such and order appellant filed an appeal before the first appellate authority. The first appellate authority also did not agree with the contentions raised by the appellant and rejected his appeal. Hence this appeal. 4. Ld. counsel appearing on behalf of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the provisions of Rule 14 of the Cenvat Credit Rules, 2004 as was during the relevant period as the appellant had not taken the credit wrongly. It is his submission that penalty could not be imposed on the appellant as the appellant had bona fide belief in availing the Cenvat credit of service tax paid by M/s. Millennium Herbal Care. 5. Ld. D.R. on the other hand would read Rule 3 of the Cenvat Credit Rules, 2004 and submit that eligibility to avail Cenvat credit is if it is utilised in the manufacturing of final product. It is also his submission that the provisions of Rule 2(l) cannot be brought into play for the purpose of availment of Cenvat credit, as it is undisputed that the appellant had not produced any herbal products af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, research requirement, standardization of materials and preclinical studies; on receipt of such report from the consultant, they were deliberating on the question of expansion/diversification. During the interregnum, period till the decision was taken, appellant availed Cenvat credit of the service tax paid by such consultant as service provider. On a specific query from the Bench, ld. counsel for the appellant, submits that the appellant has abandoned the idea of venturing into the manufacturing of herbal products due to business exigencies. 8. On the above mentioned factual matrix, it needs to be appreciated whether the availment of cenvat credit by the appellant under Cenvat Credit Rules, 2004 of the service tax paid by the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sultant on this specific products, credit of said service tax, would not be available to the appellant. In view of the foregoing reasons, on merits, I find that the appellant has no case of availing Cenvat credit of the service tax paid by the service provider. 10. Since on merits, the appellant is not eligible to avail Cenvat credit, in my view, the interest liability on the appellant arises in this case as has been held by the Hon'ble Supreme Court in the case of Ind-Swift Laboratories Ltd. 11. As regards penalty imposed by the lower authorities under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944, I find that the penalty seems to be unwarranted as the appellant had an idea of diver ..... X X X X Extracts X X X X X X X X Extracts X X X X
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