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2016 (3) TMI 994 - CESTAT MUMBAI

2016 (3) TMI 994 - CESTAT MUMBAI - TMI - Dismissal of refund claim - refund of service tax paid on the said input services used for manufacture and export of final products - denial of cenvat credit - Held that:- The definition of input service as contained in rule 2(l) very much covers all the input services on which Cenvat Credit is claimed and all the services are directly or indirectly related to business. It is a fact that the appellant are 100% EOU. They received the input service from var .....

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the export should be tax free. In other words, the object of the government is to export the goods and services and not the taxes. If the refund of service tax paid on input services is not allowed to the appellant then the said taxes would have to be built in the cost of the final products and thus it would lead to export of taxes which are against the policy of the government. - Decided in favour of assessee - Appeal No. E/1345-1346/2010- Mum - A/85726-85727/16/SMB - Dated:- 11-2-2016 - Hon bl .....

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at the appellant is a 100% EOU and the products manufactured by the appellant are entirely cleared for export. They manufacture excisable goods electrical wires, accessories of aluminium, zinc and copper alloys. The entire production is exported out of India except for waste and scrap arising during the process of manufacture which is cleared in DTA on payment of Central Excise duty. However, the quantum of the said sale is very small and therefore credit of service tax on input services remain .....

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o reject the refund claims filed by them, inter alia, on the ground that the services on which credit has been taken do not qualify as input service in terms of Rule 2(l) of Cenvat Credit Rules, 2004. Both the aforesaid Show Cause Notices were adjudicated by the Assistant Commissioner of Central Excise, Pune V Division. The details of the Order passed by the Assistant Commissioner are given in the table below:- Unit No. Order-in-Original No. & Date Amount of Refund sanctioned (Rs.) Credit in .....

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33 5 Insurance Premium 74,417/- 6 CHA (GTA) 721/- 160/- 7 BAS (Carpentry) - 541/- 8 GTA (double) - 173/- Total 2,46,739/- 1,10,439/- 4. The appellants filed appeals against the aforesaid Orders-in-Original, to the extent it rejected the refund of credit of ₹ 2,46,739/- and ₹ 1,10,439/-. The Commissioner (Appeals), Central Excise, Pune I passed a common Order-in-Appeal dated 26.4.2010 rejecting the appeals filed by appellants. Hence, the present appeals (Appeal No. E/1345/2010 Unit I .....

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inal products. He has also held that the Central government does not have power to include the activities in relation to the business within the scope of input services. Further, the Commissioner has held that Rule 2 of CENVAT Credit Rules, 2004 cannot go beyond the rule making power laid down in Section 37 of Central Excise Act, 1944. Ld. Counsel submitted that the Commissioner (Appeals) is incorrect in holding that the Rule 2(l) of CENVAT Credit Rules, 2004 is beyond the scope and power provid .....

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NVAT Credit Rules, 2004 before the Commissioner and therefore, the ld. Commissioner (Appeals) wrongly assumed the power of High Court or Supreme Court to decide the vires of provisions of CENVAT Credit Rules, 2004. The ld. Counsel cited the case of Coca Cola India P. Ltd. 2009 (15) STR 657 wherein the Bombay High Court held that any activity which is essential for the smooth functioning of the business would qualify as activity relating to business and thus, an input service . He further submitt .....

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manufactured by them. The appellants received the services of Chartered Accountant in order to assist them in the acquisition of the Jaipur unit. It is therefore submitted that Chartered Accountant service is very much essential for the business of the appellants and is an input service . In this regard, he relied on the following decisions:- i) CCE Vs Hindustan Coca Cola Beverages Ltd. 2011 (23) STR 268 (T) ii) CCE Vs Andhra Pradesh Paper Mills Ltd. 2011 (22) STR 126 (T) 7. Secondly, with regar .....

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I and Jaipur Unit all form part of the same legal entity. Therefore, denial of credit in respect of insurance premium pertaining to Unit II and Jaipur Unit is not tenable. In any case, it is not the case of the department that credit of the same amount on the basis of the same insurance bills has been taken by the other Units also apart from Unit 1. Further, it is an undisputed fact that Unit I is the Head Office having registration as Input Service Distributor (ISD). It is also not in dispute t .....

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n the decisions of the Hon ble Karnataka High Court in CCE Vs Ecof Industries Pvt. Ltd. 2011 (271) ELT 58 (Kar.) 8. The next service on which the credit has been denied pertains to CHA service relating to both the units. The ld. Counsel for the appellant submitted that they engaged CHA for clearance of their import shipment. The CHA also engaged other service providers on behalf of the appellants. Accordingly, the CHA charged the appellants for services provided by him as well as services provid .....

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customs house agent and therefore, the services provided by CHA is not an input service as per the impugned order. The aforesaid finding of the Commissioner (Appeals) to deny the input service credit is perverse because it is not in dispute that the appellants have engaged the CHA for clearance of import shipment, which in turn is used for manufacture of final products cleared for export. It is also not in dispute that the appellants have paid service tax on the services received from CHA as wel .....

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he appellants rely on the following decisions:- i) Amar International Vs CST 2015 (37) STR 810 (T) ii) Devesh Agriexim Pvt Ltd Vs CST 2014 (36) STR 1116 (T) iii) Chandra Engineers Vs CCE 2013 (30) STR 699 (T) 9. On the other hand, ld. AR reiterates the findings of the Commissioner and submitted that the services on which the Cenvat Credit has been denied is not in or in relation to the manufacture of the final product and clearance of final product from the place of removal. He further submitted .....

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es are not used in or in relation to the manufacture whether directly or indirectly of the final product and clearance of final product from the place of removal. The main contention of the DR in this case is that these services are not covered within the definition of Rule 2(l) of CENVAT Credit Rules, 2004. To examine this, the definition of input service under Rule 2(l) is reproduced herein as under:- Rule 2(l)- Input Service means any service, - (i) Used by a provider of output service for pr .....

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ounting, auditing, financing, recruitment and quality control, coaching & training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes,- 12. In this case the lower appellate authority has disallowed the Cenvat Credit on the ground that these services do not fall in the category of input services as stated supra and also the amendm .....

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