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M/s Federal Mogul TPR (India) Ltd. Versus Commissioner of Customs & Service Tax

2016 (8) TMI 895 - CESTAT BANGALORE

Imposition of penalty - Rule 15(2) of CENVAT Credit Rules 2004 - manufacture of pistons, pistons rings etc., - receive management consultancy services - payment of management fee and sole selling commission – CENVAT credit on input services – delay in deposit of service tax by service provider – Held that: - the appellant who has paid the service tax to the service provider is entitled to avail the credit of the same without finding whether such service tax paid by him to the service provider st .....

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enalty imposed – decided in favor of appellant. - E/3125/2011-SM - Final Order No. 20647/ 2016 - Dated:- 18-8-2016 - Shri S. S. Garg, Judicial Member Mr Ajayan T.V. Adv For the Appellant Mr Parashiva Murthy, A.R. For the Respondent ORDER Per S. S. Garg The present appeal is directed against the order-in-original dated 17.10.2011 passed by learned Commissioner vide which he has dropped the proceedings initiated against the appellant for recovery of ₹ 67,54,992/- vide show-cause notice d .....

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ty of CENVAT Credit under CENVAT Credit Rules 2004. During the course of audit of the records of the appellant during April 2007 for the period 2004-05 to 2006-07, the Accountant General Audit Party made observation that the appellant was receiving management consultancy services from M/s Federal Mogul Goetze (India) Ltd hereinafter referred to as (FMGIL) during the period from 2004-05 to 2006-07 for which they were paying management fee and sole selling commission to FMGIL and were availing CEN .....

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of CENVAT Credit Rules 2004 read with Section 78 of Finance Act and interest was also demanded. The appellant controverted the allegation in the show-cause notice and submitted that they have rightly availed the CENVAT Credit as they are entitled to avail the same as per the provisions of CENVAT Credit Rules. They further submitted that if there is a delay in depositing the service tax by the service provider then the Revenue should proceed against the service provider and not the appellant. The .....

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led to take credit of the service tax paid on input services immediately upon having paid the invoice of the service provider and that there is no requirement to await the actual payment of service tax by the service provider. He further submitted that for the delay in payment of service tax into the Govt account by the service provider, the appellant cannot be made liable. If at all any action had to be taken for the said delay, the department ought to have proceeded against the service provide .....

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is nothing irregular in the credit taken by the appellant as service receiver which is in accordance with the provisions of Rule 4(7) of CENVAT Credit Rules 2004. He further submitted that the adjudicating authority has dropped the demand against the appellant based on facts, then there does not arise a question of the appellant being liable to be penalized for delayed payment of service tax by the service provider. The Revenue s remedy lies only at the end of the service provider for recovery .....

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has been observed that for the purpose of availing CENVAT credit, there is no requirement that the service tax should have been deposited by the service provider before availment of the credit. If the service provider has not deposited the service tax with the department on due date, Revenue s remedy lies at the end of the service provider for recovery of service tax along with interest. The other submission of the learned counsel for the appellant is that penalty under Rule 15 cannot be imposed .....

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