TMI Blog2015 (1) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. Vs. CCE [2012 (11) TMI 376 - CESTAT, MUMBAI]. Commissioner (Appeals) has denied the credit on the ground that the said amount of service tax was in relation to the technical know-how for production of two products namely Candisartan and Irbesartan and has been denied on the ground that the said products have not been manufactured by the appellants - observation of the Commissioner (Appeals) does not flow from any legal requirement. The technical knowhow once obtained begins to be utilised for the purpose of manufacture of products for which it was obtained as such technical knowhow is relevant/required right from the point of setting up the necessary wherewithals required for manufacturing the product. Further as per Rule 4(7) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 17.02.2014 only to the extent input service credit in respect of technical know-how (research and development) amounting to ₹ 14,42,000/- and travel agent service amounting to ₹ 59,651/- has been disallowed. 2. As regards disallowance of input service credit of ₹ 59,651/-, which the appellants had already paid under protest but contested on merits, the Commissioner (Appeals) has conceded in para 8.1 of the impugned order that there is no denying the fact that the credit in respect of the said service is admissible, but added that the same is admissible to the extent of the use in respect of manufacture of final product and that though the appellants have contested that the service was received for booking travel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.1 The adjudicating authority has disallowed cenvat credit on the inputs service i.e. purchase of Technical Knowhow, two products namely Candisartan and Irbesartan. The said products have neither been produced in trial production nor as commercial production. As per Rule 3 of the Credit Rules, credit of the specified services/inputs is allowed in case they are received by the manufacturer for use in, or in relation to, the manufacture of final product. The appellants have not used the services of technical knowhow to manufacture any final product. In this scenario the adjudicating authority held that credit cannot be admissible. The appellants have contested that they intend to manufacture the said final products in the coming times and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the manufacture of the final product. I therefore, hold that input service credit involved on the same amounting to ₹ 14,42,000/- is not admissible to the appellants and the demand confirmed by the adjudicating authority, is upheld. 6.3 However, I may observe here that in case the appellants start utilizing the acquired technical knowhow in producing final products, they are at liberty to take credit of the service tax so paid on the said services at that time. As is evident from the foregoing paragraphs, the Commissioner (Appeals) has clearly conceded that in case appellants start utilising the technical knowhow in producing the final products, they are at liberty to take credit of the service tax so paid on the said service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herewithals required for manufacturing the product. Further as per Rule 4(7) of Cenvat Credit Rules, 2004, CENVAT credit in respect of input services becomes available on or after the date on which payment is made for the value of the input service. The definition of input service includes services used in or in relation to modernisation or renovation of factory. Indeed before the amendment to Rule 2(l) of CENVAT Credit Rules, 2004, even the services used in relation to setting up of the factory was also included in the scope of input service. It can hardly be disputed that the time lag between the commencement of setting up of the factory and the actual production can be in some cases quite long. What is being stated is that the Cenvat Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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