TMI Blog2023 (5) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... twal, Advocate, for the Appellant Shri Sunil Kumar Katiyar, Assistant Commissioner, Authorised Representative for the Respondent ORDER PER : SANJIV SRIVASTAVA This appeal is directed against Order-in-Appeal No. BR(78)MV/2012 dated 09.10.2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-I, by which Commissioner (Appeals) has upheld the order of the adjudicating authority holding as follows:- ORDER In the facts of this case, as have been found by me, as above i. I determine and confirm the amounts of availed inadmissible cenvat credits, aggregating Rs. 24,85,647/- (Rupees twenty four lakhs eighty five thousand six hundred forty seven only), as demanded in the show cause notice, bearing number V.Adj(Ch.84, 87)15A-25/M-01/2011 dated 31.01.2011 for being recovered alongwith accrued interest thereon, at the applicable rates, from M/s Mahindra Mahindra Limited (Automotive Division), Akurli Road, Kandivali (East), Mumbai - 400 101, in terms of Rule 14 of the CENVAT Credit Rules, 2004 readwith now Section 11A(10) and Section 11AA of the Central Excise Act, 1944; and ii. I impose a penalty of Rs. 24,85,647/- (Rupees twenty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the appellant and Shri Sunil Kumar Katiyar, Assistant Commissioner, Authorised Representative for the Revenue. 3.2 Arguing for the appellant, learned counsel submits that:- The issue is squarely covered in their own case reported at [2012 (28) STR 382 (T)]. In that case the matter was determined in their favour and remanded back to original authority only for verification of the fact that the value of these services has been included in the assessable value of the vehicles at the time of clearance of the goods on the basis of Chartered Accountant s certificate. In the present case they have already produced the copy of the CA certificate dated 05.10.2010 to the adjudicating authority during the personal hearing on 19.04.2011. Following the judicial precedents, the appeal should be allowed in their favour. The issue involved is no longer res integra and decided in the following cases:- Carrier Airconditioning Refrigeration Ltd. [2016 (3) TMI 124 CESTAT NEW DELHI] Samsung India Electronics Pvt. Ltd. [2016 (11) TMI 867 CESTAT ALLAHABAD] Escorts Construction Equipment Ltd. [2018 (8) TMI 943 - CESTAT CHANDIGARH] Honda Motorcycle Scooter In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of inputs or capital goods and outward transportation upto the place of removal . It is clear that in order to be eligible for Cenvat credit as 'input services' the service should be covered under the above category. In addition these services are required to be used by the 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. If any of these services are not used by the 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, then they are not entitled for the Cenvat credit even if these services are covered under the definition of 'input services. The term 'used' is stressed here and the usage should be in or in relation to the manufacture of final products whether directly or indirectly and clearance of final products upto the place of removal. The appellants have stressed on the point that as per the definition of 'input services' they are entitled to take Cenvat credit on these input services' as these are covered under sales p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held that undoubtedly the said two expressions are distinct and separate, but, when an ancillary process (like electricity generation) aids the making of an end product, then, the ancillary process gets integrally connected to the end product. In the said judgment, this Court applied what is called as the dependence test . It may, however, be noted that in the definition of input the expression used in or in relation to the manufacture of final product is not a standalone item. It has to be read in entirety and when so read it reads as used in or in relation to the manufacture of final product whether directly or indirectly and whether contained in the final product or not . These words whether directly or indirectly and whether contained in the final product or not indicates the intention of the legislature. What the legislature intends to say is that even if the use of input (like electricity) in the manufacturing process is not direct but indirect still such an item would stand covered by the definition of input . In the past, there was a controversy as to what is the meaning of the word input , conceptually. It was argued by the Department in a number of cases tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for generation of electricity or steam, input used as an accessory and input used as paint are per se also not relevant. All these considerations become relevant only when they are read with the expression used in or in relation to the manufacture of final product in the substantive/specific part of the definition. In each case it has to be established that inputs mentioned in the inclusive part is used in or in relation to the manufacture of final product . It is the functional utility of the said item which would constitute the relevant consideration. Unless and until the said input is used in or in relation to the manufacture of final product within the factory of production, the said item would not become an eligible input. The said expression used in or in relation to the manufacture have many shades and would cover various situations based on the purpose for which the input is used. However, the specified input would become eligible for credit only when used in or in relation to the manufacture of final product. Hydrogen gas used in the manufacture of sodium cyanide is an eligible input, since it has a significant role to play in the manufacturing process and since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation to the Department . (Emphasis supplied) (10) The facts and circumstance of various citations cited by the appellants are different from the present case; hence the same are not applicable. In the case of Collector of Central Excise, Kolkata v/s Alnoori Tobacco Products {(2004 (170) ELT 135 (S.C)}, the Hon'ble Supreme Court of India has held that circumstantial flexibility, one additional or different fact may make the world of difference between conclusions in two cases. (11) In the present case incorrect availment of Cenvat credit of input service came to light only after the department conducted scrutiny of the records of the appellants. Had the department not initiated any such scrutiny proceedings, detection of such incorrect availment of Cenvat credit on inputs etc, by the appellant would have remained un-noticed resulting in loss of revenue to the Department. The appellants had never intimated to the Department about such incorrect availment of Cenvat credit of input service. Therefore, it cannot be said that they acted under bonafide belief or that there was no suppression of facts on their part. In the case of M/s. Interscape reported in 2006(19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise Act, 1944 which deals with the issue as hereinunder :- (d) transaction value means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. By going through the said provision, we find that the transaction value means the price actually paid or which are payable for the goods when sold and those includes servicing and warranty also. Admittedly the service and warranty is post manufacturing expenses which are to be provided to the customer after sale. As per the provision of Section 4(3)(d) the value of warranty and servicing which is a post manufacturing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax involved thereon. The aspect that the impugned transformers for repair/service were directly received from the customer (GEB) by the party and returned back to GEB without routing through the Appellants is not relevant for determining as to who was the actual receiver of the services in this case. The movement of transformer from GEB to the repairer and back to GEB was an arrangement for convenience between the Appellants and M/s. Danke Electricals and M/s. GEB to avoid unnecessary movement of the transformers. The fact remains that in these cases, the repairer has no direct relation/agreement with GEB in respect of the said repairs etc. and these repairs were undertaken by the repairer at the instance of the Appellants (who are also the manufacturers of the goods) and on their behalf and were paid for by the Appellants. In view of the above reasons as well as the fact that the repairs during warranty period are the obligation of the manufacturers, in this case the appellants and it is they who had assigned the said work to M/s. Danke Electricals and have paid for the same. I do not find merit in the contention of the Department that the impugned services were rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 7. Apart from the above, he has also taken note of the definition of the input service as appearing under Rule 2(1) of Cenvat Credit Rules, 2004 and has held that it is wide enough to take into its ambit the above kind of service being provided by the respondents to GEB. I note that the definition of input service stand examined by Larger Bench of the Tribunal in case of M/s. ABB Ltd. as reported in 2009 (15) S.T.R. 23 (Tribunal- LB) = 2009 (92) RLT 665 (CESTAT-LB), and it has been held that expression activities relating to business are of wide import and would take into its ambit all types of activities. Admittedly, the repair and maintenance of transformers, being an activity relating to the sale of goods, and hence can be said to be relevant to the business, it stand rightly concluded by Commissioner (Appeals) that service of repair and maintenance of transformers during warranty period is a service covered by definition of input service and the assessees are entitled to take Cenvat Credit of service tax paid on such services. I find no reason to take a different view. 6. In view of these observations, we hold that if after sales service expenses are incl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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