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M/s Pipavav Defence & Offshore Engineering Co Ltd Versus Commissioner of Central Excise-Bhavnagar

2016 (3) TMI 1044 - CESTAT AHMEDABAD

CENVAT Credit - denial of benefit on Input, Input Service and Capital Goods used in the manufacture of excisable goods and Outward Service - denial of Cenvat Credit on photo copy of the invoices - Held that:- We find that the definition of Input under Rule 2 (k) of Cenvat Credit Rules 2004 is in two parts. Clause (i) of Rule 2(k) relates to the manufacturer. Clause (iv) of Rule 2 (k) is in respect of the Output Service. We agree with the submission of the Ld. Authorised Representative to the ext .....

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for manufacturing Ship which is exempted from the Central Excise duty, we are directing to the Adjudicating Authority to examine as to whether the inputs exclusively used in the manufacture of Ship and decide the matter in accordance with law. The denial of Cenvat Credit on photo copy of the invoices, we direct the Adjudicating Authority to decide afresh after providing the report and to consider the submission of the appellant. Penalty is set aside. - Appeal No.: E/13602/2014 - Order No. A/100 .....

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ip. By the impugned order, the Adjudicating Authority denied the Cenvat Credit benefit on, Input, Input Service and Capital Goods used in the manufacture of excisable goods and Outward Service during the period from Feb. 2010 to Sept. 2010. 2. The Ld Advocate on behalf of the appellant submits that on the identical issue, the Tribunal in their own case by Final Order A/10460/2015 dtd 30.4.2015 allowed the appeal for the subsequent period from Oct. 2010 to Feb. 2011. 3. On the other hand, the Ld .....

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, capital goods and on input service used in the manufacture of finished goods viz., Ship classifiable under heading No. 89.01 of the schedule to the Central Excise Tariff Act 1985. Further, there is allegation of availment of Cenvat Credit on the basis of the photo copy of the invoices. The Learned Authorised Representative submits that the Tribunal, while passing order dtd 30.4.2015 had not considered that the inputs used in the Ship cannot be admissible for Cenvat Credit. 5. For the proper ap .....

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al part with which, the operation is performed. In the case of Commissioner of Income Tax Vs Anand Theatres, (2000) 5 SCC 393, the Hon ble Supreme Court observed that Dry Dock a concrete dry structure can be held a plant because the whole Dock was used for carrying on the entire operation. In the instant case, the Appellant fabricates Dry Dock for manufacturing ships, excisable goods and to provide output service namely repair service, which is covered under the definition of Input Service under .....

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e relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal. 7. The definition of input service- under Rule 2(l) .....

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ver wide encompass of the definition of input service. The Hon ble Supreme Court in the case of Indian Chamber of Commerce (AIR 1976 SC 348) observed that the expression for has to be interpreted as for the purpose of . CBEC Circular No.120/01/2010-ST, dt.19.01.2010, clarified that the definition of input service qua a manufacturer and provider of output service. In our considered view, CENVAT Credit availed on input service, input and capital goods for setting up Dry Dock would be allowed for p .....

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Rule 6(6) of the Rules. CBEC by Circular No.928/18/2010-CX, dt.28.06.2010, clarified that a 100% EOU are required to export the goods under bond in terms of customs and excise notifications. CBEC by Circular No.120/01/2010-ST, dt.19.01.2010, in the context of the problems faced by the exporter for availing of refund of excess credit, observed that the major reason causing delay in granting refund as well as rejecting the claim is that as per the wordings of the notification, refund is permitted .....

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product/services has to be closer and more direct than that is required for taking credit. It has been clarified that the input services should be directly used in the output service exported. As regards the extent of the nexus between the input/input services and export goods/services, it must be borne in mind that the purpose is to refund the credit that has already taken by them. There cannot be different yardsticks for establishing the nexus between taking of the credit and for refund of cre .....

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sition to utilise the same, they are entitled for the benefit of refund under Rule 5 of the Rules. In the present case, the Appellant stated that they have claimed the refund for the unutilised credit under Rule 5 of the said Rules. This decision of Hon'ble High Court was upheld by Honble Supreme Court as reported in 2009 (234) ELT A 16 (SC). The relevant portion of the decision of Honble Karnataka High Court in the case of ANZ International is reproduced below:- With reference to the abov .....

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6) and recorded the reasons stating that there is a provision of exporting the goods under bond. In the case of 100% EOUs, the input can be imported free of duty and they can obtain indigenously also free of duty. When duty is paid on the inputs, then the appellants are entitled for the Cenvat credit facility under the Rules Cenvat Credit Rules. There is nothing in the Rules which prohibits 100% EOUs availing Cenvat credit. Rule 5 of the said Rules provides for refund of Cenvat credit availed .....

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o the department. The learned counsel for the appellant has pointed out that in the case of Sterlite Opitcal Technologies Ltd. v. CCE, Aurangabad - 2006 (201) E.L.T. 428 (Tri.-Mumbai), wherein it is held that letter of undertaking accepted in lieu of bond for export even though finished goods were exempted, refund of Cenvat credit on inputs and packing materials are admissible in terms of Rule 5 of the Rules. Therefore, the Tribunal has held that 100% EOU is entitled to take Cenvat credit on the .....

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e it must fail and is dismissed. 10. In the case of Commissioner of Central Excise Vs M/s Drish Shoes Ltd - 2010 (254) ELT 417 (H.P.), the Hon ble Himachal Pradesh High Court observed that the Rule 6(6) of CENVAT Credit Rules, 2004 applies both to exempted as well as dutiable goods as term used in later is excisable goods and not dutiable goods . In that case, the question of law was whether an assessee exclusively manufacturing wholly exempted goods (chargeable to Nil rate of duty) is eligible .....

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contained in Rule 6(6) of the said Rules, used in the manufacture of such goods, if the goods were exported. In view of the above discussion, the contention of the learned Authorised Representative for the Revenue is that there is no requirement of furnishing of Bond by 100% EOU, is not admissible. 11. As revealed from the Adjudication order that input service credit was denied mainly on the basis that the input service credit availed on the input services was shown in ER-1 return instead of ST .....

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ive ST-3 returns. As already discussed, the criteria to qualify the services used as input service are different in case of Manufacturer and Output Service Provider. Therefore, if the service received were qualified as input service for providing output service viz. Transport of Goods by Road or Ship Management Service, the Noticee should have shown the same as CENVAT Credit in the relevant ST-3 returns filed with the jurisdictional Service Tax authorities. 12. CBEC vide Circular F.No.381/23/201 .....

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in a common pool and can be used for payment of excise duty or service tax. Ultimately, the CENVAT Credit taken during the period shown in ER-1 or ST-3 return could be same. It is clarified that if these returns are being filed separately the Service Tax Commissionerate, while undertaking service tax audit, the officers should verify the said return also for confirming the correctness of such credit. 13. The Larger Bench of the Tribunal in the case of Commissioner of Customs & C.Ex., Meerut .....

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categories of specified excise duties, customs duty and service tax allowed to be taken as credit. Similarly, a provider of taxable service is also entitled to take credit of specified excise duty, additional duty of customs and service tax in respect of input service and utilised credit from these sources for the purpose of paying service. Rules permit taking of credit under a common pool and permit the use of the credit from common pool for different purposes and there is no restriction placed .....

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they can utilise the CENVAT credit available with them either for payment of excise duty on the final products or for payment of service tax on the output services as stipulated in sub-rule (4) of Rule 3 of CENVAT Credit Rules, 2004. The restriction on utilisation of CENVAT Credit stipulated relates only for specific type of duties i.e. education cess on excisable goods or payment of education cess on output service. There is no restriction for utilisation of common input credit availed on the .....

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es and equipments, appliances and parts have been assembled at site to set up the Oxygen plant and such plant being an immovable property, it will be preposterous to deny the CENVAT Credit on these individual machineries/equipments/appliances. The Hon ble Andhra Pradesh High Court in the case of Commissioner of Central Excise Visakhapatnam-II Vs Sai Sahmita Storages (P) Ltd - 2011 (270) ELT 33 (A.P.) held that storage and ware housing service could not have been rendered without creating a ware .....

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