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Pyramid Filters Pvt. Ltd. Versus Commissioner of Central Excise, Pune I

2015 (12) TMI 1269 - CESTAT MUMBAI

Denial of CENVAT credit on photography / validation service, transit insurance service and insurance service - Nexus with manufacturing activity - Held that:- as regards the “transit insurance” and “insurance service”, these are in respect of finished goods and goods exported which are manufactured and within the factory in respect of business of manufacture. If that so, these services are used by the appellant for his business activity. In my considered view the judgement of the Hon'ble High Co .....

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ower authorities that the appellant had specifically mentioned that these amounts of service tax are included in the cost of final product, though being undertaken at the site but are in respect of business activity. I find this Bench in the case of Reliance Industries Ltd. [2015 (11) TMI 100 - CESTAT MUMBAI] has relying upon the judgement of the Hon'ble High Court in the case of Ultratech Cement, held any amount which has been accounted as an expenses and considered in costing of final products .....

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involved in this case is regarding denial of CENVAT credit on photography / validation service, transit insurance service and insurance service. Appellant had availed CENVAT credit of the service tax paid on these three services while the Revenue is of the view that the service tax paid on these services are not directly or indirectly connected with the manufacturing activity of the appellant. 4. On perusal of the records, I find that as regards the transit insurance and insurance service , the .....

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. The appellant is engaged in the manufacture of excisable goods which fall under Chapters 28, 29 and 31 of the Central Excise Tariff Act, 1985. The appellant has installed storage tanks for storing ammonia at its premises situated at JNPT. The appellant claims that it is eligible for Cenvat credit of Service Tax paid on input services used for the ammonia storage tanks installed at JNPT since the input/raw material stored there is intended for manufacture of the final product at the factory of .....

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11AB and a penalty was proposed to be imposed under Rule 15A. After adjudication the demand was confirmed together with interest and a penalty of ₹ 5,000/-. The appellant filed an appeal before the Tribunal which was dismissed by the impugned order dated 12 November, 2012. 4. Rule 3(1) of the Cenvat Credit Rules, 2004 provides that a manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit inter alia of the Service Tax leviable under Sect .....

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y 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, up to 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 .....

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n (i) any input or capital goods received in the factory of manufacturer of the final product; and (ii) any input service received by the manufacturer of the final product. The subordinate legislation in the present case makes a distinction between inputs or capital goods on the one hand and input services on the other. Clause (i) above provides that the Service Tax should be paid on any input or capital goods received in the factory of manufacture of the final product. Such a restriction, howev .....

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tory of production. The definition of the expression input service covers any services used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products. The words directly or indirectly and in or in relation to are words of width and amplitude. The subordinate legislation has advisedly used a broad and comprehensive expression while defining the expression input service . Rule 2(l) initially provides that input service means any services of the des .....

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and for the inward transportation of inputs. This interpretation which has been placed by the Tribunal is ex facie contrary to the provisions contained in Rule 2(l). The first part of Rule 2(l) inter alia covers any services used by the manufacturer directly or indirectly, in or in relation to the manufacture of final products. The inclusive part of the definition enumerates certain specified categories of services. However, it would be farfetched to interpret Rule 2(l) to mean that only two ca .....

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s paid on any input or capital goods received in the factory of manufacturer of the final product, insofar as any input service is concerned, the only stipulation is that it should be received by the manufacturer of the final product. This must be read with the broad and comprehensive meaning of the expression input service in Rule 2(l).The input services in the present case were used by the appellant whether directly or indirectly, in or in relation to the manufacture of final products. The app .....

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