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Toyota Kirloskar Motors Pvt. Ltd. Versus Commissioner of Central Excise, LTU, Bangalore

2016 (9) TMI 133 - CESTAT BANGALORE

Chargeability - interest - Cenvat credit wrongly taken - reversed the same before utilization of the credit - Held that:- keeping in view the judgment of the Hon’ble Karnataka High Court in the case of CCE & ST, LTU Bangalore Vs. M/s. Bill Forge (P) Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] and the Larger Bench decision of the Tribunal in the case of J.K Tyre & Industries Ltd., wherein it was held that interest is not to be paid on irregular cenvat credit if the same is reversed before util .....

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brokerage/commission paid is a business activity and eligible for input service tax credit, the impugned order holding it as a voluntary service and has nothing to do with the business of the appellant is wrong and not sustainable in law. - Decided in favour of appellant with consequential relief - E/2995/2011, E/2996/2011, E/2997/2011-SM - Final Order Nos. 20669 - 20671/ 2016 - Dated:- 26-8-2016 - Shri S. S. Garg, Judicial Member Shri N. Anand & Shri Anirudha Nayak, Advocates For the Appell .....

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this common order. For the purpose of convenience, the facts of Appeal No. E/2997/2011 is taken. All the three appeals are being directed against the impugned orders dated 29 & 30.06.2011 passed by the learned Commissioner (Appeals) rejecting the appeals of the appellant and confirming the Order-in-Original. Briefly the facts of the present case are that the appellant is engaged in the manufacture of motor vehicles and they availed benefit of cenvat credit on inputs, capital goods and input .....

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ng the demand and aggrieved by the Order-in-Original the appellant filed appeals before the Commissioner who upheld the Order-in-Original and hence the present appeals. 2. Heard both the parties and perused the records. 3. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed ignoring the judgments of the Tribunal and the High Court. He further submitted that the credit taken was reversed after being pointed out. As the credit t .....

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014 (36) STR 45 (Tri.-Chennai)=2014-TIOL-954-CESTAT-MAD. (v) Shree Khedut Sahakari Khand Udyog Mandli Ltd. Vs. CCE, Cus. and ST, Surat-II 2015-TIOL-2373-CESTAT-AHM (vi) M/s. Sage Metals Ltd. Vs. CCE, Delhi-I 2016-TIOL-1114-CESTAT-DEL (vii) J.K Tyre & Industries Ltd. Interim Order No. 59/2016 dated 29.02.2016 4. On the other hand the learned AR submitted that as per Rule 14 of the Cenvat Credit Rules, appellants were liable to pay interest even if credit was reversed before utilization. He pl .....

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t to note Rule 14 of the Cenvat Credit Rules 2004 as it stood during the relevant period. Rule 14. Recovery of Cenvat credit wrongly taken or erroneously refunded. Where the cenvat credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of Sections 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis fo .....

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case of Bill Forge Pvt. Ltd. has made a detailed analysis and observed that the Hon ble Apex Court in Ind-Swift Laboratories Ltd. Vs. CCE, Chandigarh was essentially concerned with the interpretation placed by the Punjab & Haryana High Court with regard to the words or appearing twice in Rule 14 of the Cenvat Credit Rules, 2004. The Hon ble High Court of Karnataka has categorically held that interest is not to be paid on the credit is reversed before utilization. Further the full Bench of th .....

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s in these two appeals viz. E/2996-2997/2011 are not sustainable in law and I set aside the same by allowing the appeals of the appellant. 5.1. In Appeal No. E/2995/2011 the cenvat credit for input service tax credit has been denied on Brokerage and Commission services only on the ground that the appellant is providing residential accommodation to ex-pat employees voluntarily and it has no direct and indirect relation to the manufacture of final products which are cleared on payment of duty. Lea .....

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e real estate agents. The learned counsel further submitted that this service is directly connected with the manufacturing activities of the appellant in view of the fact that employees of the overseas joint venture partner would literally work in the factory premises to meet their specialized knowledge in carrying out the manufacturing of motor vehicle. For better appreciation, the definition of input service as contained in the provisions of Rule 2(l) are reproduced below: Input service means .....

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