TMI Blog2023 (1) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant nor by anybody else on his behalf. It is rather the buyer of the appellant who himself has undertaken the responsibility of segregating such defective pieces where defect was not arising out of mis-handling and has charged the compensation in form of penalty from the appellant for undertaking such an activity. This particular fact is sufficient to hold that the activity was performed by the buyer for himself, as such cannot be called as eligible input service in terms of section 2(l) of Cenvat Credit Rules. The activity in question also do not qualify Rule 3 of Cenvat Credit Rules 2004. Any service to be eligible for Cenvat credit under this Rule is to be the one which has been received by the manufacturer for manufacturing final product. But the activity in question is the activity undertaken by the buyer of the manufacturer that too to ensure his right as he got reserved between the contracting parties for not receiving the damaged goods. From no stretch of imagination, said activity performed by the buyer can be called as the service which is eligible for Cenvat credit in terms of either Rule 2(l) of Cenvat Credit Rules or Rule 3 of Cenvat Credit Rules, 2004. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with respect to the defects not arising from mis-handling, the buyer had reserved the right to reject the defective material where the defect was not arising from mishandling. It is impressed upon that the activity of segregation was actually the after sale service to be provided by the appellant to its buyers, however was performed by the buyer itself out of contract between the two. Hence, it was an eligible service for Cenvat Credit in terms of Rule 2(l) of Cenvat Credit Rules, 2004as also in terms of Rule 3 of the said Rules. Learned Counsel has relied upon the decision of this Tribunal, Ahmadabad Bench in the case of Commissioner of Central Excise Vapi vs Alidhara Textool Engineers Pvt. Ltd. reported as [2009 (1) TMI-129 CESTAT-Ahmadabad] wherein it was held that it is not necessary for the eligible input service to have been rendered at the factory of manufacturer itself. 4. He also relied upon the decision of this Tribunal Delhi Bench in the case of M/s. New Holland Construction Equipment (I) Pvt. Ltd. vs Commissioner of Central Excise, Ujjain, [2021 (8) TMI 963] wherein it was held that Cenvat credit on amount of service tax paid for the services provided by the deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yer is charging a penalty amount from the appellant against an invoice inclusive of service tax. The said amount is being paid by the appellant. From the Cenvat Credit Rules, it is clear that every amount of service tax paid is not eligible for the availment of Cenvat credit to decide the eligibility of service tax credit. Hence what is to be examined in the present case is: whether the service in question can be held to be rendered in or in relation to manufacture directly or indirectly. The relevant provision is Rule 2(l) of Cenvat Credit Rules, 2004. It reads as follows: [2(l) input service means any service, - (i) used by a provider of [output service] for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accountin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the consumer. Thus, even post removal service can be eligible to Cenvat credit, however, if and only if, those are provided in relation to the manufacture either directly or indirectly. 8. From the facts of the present case, the activity in question is not provided by the appellant nor by anybody else on his behalf. It is rather the buyer of the appellant who himself has undertaken the responsibility of segregating such defective pieces where defect was not arising out of mis-handling and has charged the compensation in form of penalty from the appellant for undertaking such an activity. This particular fact is sufficient to hold that the activity was performed by the buyer for himself, as such cannot be called as eligible input service in terms of section 2(l) of Cenvat Credit Rules. The activity in question also do not qualify Rule 3 of Cenvat Credit Rules 2004. The Rule reads as follows: RULE 3 (1) -A manufacturer or producer of final products or a provider of output service shall be allowed to take credit (hereinafter referred to as the CENVAT Credit) of- (ix) the service tax leviable under Section 66 of the Finance Act; (ixa) the Service Tax leviable under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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