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Denso Kirloskar Industries (P) Ltd. Versus Commissioner of Central Excise & Service Tax, LTU

2016 (7) TMI 654 - CESTAT BANGALORE

Extended period of limitation - Levy of penalty - Cenvat Credit - input services - nexus with manufacturing activity - service tax paid on Travel Services relating to transport of their employees though transport of employees - Held that:- the appellant’s action of taking cenvat credit even on the part amount, which was recovered from the employees in case of facility of travel to and fro, is only a bonafide action; no malafides cannot be attached to the said action of taking cenvat credit. - .....

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of irregular cenvat credit in case of input service of traveling. It is, therefore, right to conclude that the subject demand and recovery would be legally unauthorized beyond the normal period of one year from the relevant date. - The case is remanded to the original adjudicating authority, who will freshly adjudicate and arrive at the revised liability of 'disallowed' cenvat credit along with liability of interest for the normal period of one year after following the observations and the c .....

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ore, who upheld the Order-in-Original passed by the Additional Commissioner, LTU whereunder the cenvat credit of ₹ 2,15,541/- (Rupees Two Lakhs Fifteen Thousand Five Hundred and Forty One only) was disallowed and the said demand of cenvat credit was held recoverable along with interest and an equal mount of penalty was also imposed under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Central Excise Act 1944.The period of dispute is from 2005-06 to 2009-10. 2. The subje .....

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t have any relation with the manufacturing activity of the appellant. The Revenue also alleged that the appellant had suppressed the fact of availment of credit of service tax on Travel Services from the knowledge of the Department which came to light only during the course of audit of their records by AG Audit Team. 2.1. The Revenue in its Order-in-Original dated 28.07.2011 passed by the Additional Commissioner allowed the cenvat credit of ₹ 11,44,767/- (Rupees Eleven Lakhs Forty Four Tho .....

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(1) (2) (3) (4) (5) 2005-06 to 2009-10 12,68,617 91,691 13,60,308 (i) 11/05 to 9/06 =Rs. 45,512 (ii) 10/06 to 03/10=Rs. 1,70,029 GT=Rs. 2,15,541 3. The appellant has been represented by the learned advocate, Shri N. Anand, who inter alia has argued as follows: (i) The cenvat credit taken on Travel Services is related to the manufacturing activity of the appellant and they are entitled to take the cenvat credit for the same. (ii) In case of cenvat credit taken for the part amount of recoveries ma .....

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nvat credit in the case of Outdoor Catering/Canteen Services, where part cost is borne by the employees, the appellant is also accordingly entitled to the cenvat credit on the entire amount of service tax paid for the input service of traveling, even when part of cost of travel is borne by the employees. 3.1. The learned advocate for the appellant further argues that this demand/disallowance of cenvat credit is time-barred beyond the normal period of one year as the appellant did not suppress an .....

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t, the demand is valid only for the period from 13.11.2009 to 31.03.2010 (in the financial year 2009-10). 3.2. The learned advocate further submits that when there is the decision from the Larger Bench of the CESTAT in the case of CCE, Mumbai-V Vs. GTC Industries Ltd. (supra) in case of Outdoor Catering Services supplied to the manufacturer, the same decision will be applicable for the Travel Services also and following the same in case of Travel Services, demand beyond the normal period i.e. fo .....

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ng will be sustainable against the assessee and no cenvat for the service tax paid on such amount will be allowed as cenvat credit to the manufacturer/assessee. 4. The Revenue has been represented by learned AR, Shri Pakshi Rajan, who has inter alia pleaded as follows: (i) The appellant did not provide relevant data/information; therefore, it is suppression on the part of the appellant with intention to evade payment of duty and demand of service tax is sustainable for the five year period i.e. .....

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and the submissions of both the sides, it is clear that there has not been any suppression of facts or contravention of laws relating to Central Excise and Service Tax with an intention to evade payment of duty on the part of the appellants. The Department has issued the notice of demand saying that the appellant suppressed the fact of availment of credit of service tax on Travel Services from the knowledge of the Department which came to light only during the course of audit by AG Audit Team. .....

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ear cannot be sustained. 6.1. Considering the facts on record, the conclusion drawn is that the appellant s action of taking cenvat credit even on the part amount, which was recovered from the employees in case of facility of travel to and fro, is only a bonafide action; no malafides cannot be attached to the said action of taking cenvat credit. In this regard the support is taken from the Hon ble Supreme Court s decision in the case of Uniworth Textiles Ltd. Vs. CCE, Raipur reported in 2013 (28 .....

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/deliberate default is mandatory prerequisite. 6.2. The principle that the part amount which has been borne by the employees in case of Catering Services, in this case it is Travel Services, has been given finality by the Honble High Court of Bombay s decision in the case of CCE, Nagpur Vs. Ultratech Cement Ltd. (supra) which was pronounced on 25.10.2010. In the present appeal period involved is from 2005-06 to 2009-10. When the certainty for the principle that cenvat credit is not to be allow .....

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d the normal period of one year from the relevant date. 6.3. It is noticed that the Order-in-Original has imposed equal amount of penalty under Rule 15(2) of Cenvat Credit Rules 2004 read with Section 11AC of the Central Excise Act 1944. Rule 15(2) of Cenvat Credit Rules 2004 is quoted below: Rule 15. Confiscation and penalty (1) (2) In a case, where, the cenvat credit in respect of input or capital goods has been taken or utilized wrongly on account of fraud, willful misstatement, collusion or .....

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