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TMI Blog2024 (3) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rule 2(1) of Cenvat Credit Rules, 2004 (CCR. 2004' for short) being not in relation to manufacturing of final product; (ii) Cenvat credit of Rs.5.15.579/- on 30.06.2017 on Challan in respect of liability under Reverse Charge Mechanism (RCM) for the month of June-17 which was paid in July-17 in contravention of Rule 4(7) of CCR, 2004, (iii) Excess availed cenvat credit of service tax of Rs.2.41.451/- attributable to the GIL, Phagi in respect of turnover, in contravention of Rule 7 of CCR. 2004; (iv) Cenvat credit of Education Cess and Secondary & Higher Education Cess ( SHE' in short) totaling to Rs.1.31,219/- in violation of Notification No. 12/2015-CE (NT) dated 29.10.2015; (v) Wrongly availed cenvat credit of Rs.82,720/- on M.S. Bar, Channel, HR Coil etc. in violation of Rule 2(a) & 2(k) of CCR, 2004; (vi) not paid service tax amounting to Rs.6.64.172/- on Ocean Freight in accordance with Notification No.16/2017-ST dated 13.04.2017 read with Circular No.206/4/2017-ST dated 13.04.2017 and (vii) not paid service tax amounting to 1,07,393/- on the Government Fees under RCM in accordance with Notification No.22/2016-ST dated 13.04 2016. 4. The above credits wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... painting and assisting in packing inside 40 containers and loading on trailor for inland transportation upto Mumbai of all machineries, steel structures, E & I, panels, cables and cable-tray etc. and all associated items of PET plant etc. are not the input services. These are neither covered in the main part of definition of input service nor these services are qualified as the input service in terms of inclusive clause of the definition of input services. Further to qualify for use in the production of final product as envisaged in the main part of the definition, the services should be so integrally related to the ultimate manufacture of goods, so that without that service manufacture may be commercially inexpedient. Thus, the said contention of the appellant is rightly rejected by Commissioner (Appeals). Issue No.2: Wrong availment of CENVAT Credit of Rs. 5,15,579/- on 30.06.2017 on challan in respect of RCM liability for the month of June-17 paid in July-2017 in contravention of Rule 4(7) of CCR, 2004; 10. On this issue it is submitted by the ld. Counsel for appellant that since, the introduction of GST w.e.f 01.07.2017 filing of ST-3 return for the period post June-17 was di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l amounting to Rs.1,31,219/- of Education Cess & SHE Cess in violation of Notification No. 12/2015-CE(NT) dated 30.04.2015 and 22/2015-CE (NT) dated 29.10.2015. 14. On this issue it is submitted on behalf of appellant that when the Notification No. 12/2015-CE(NT) dated 30.04.2015 and Notification No. 22/2015-CE(NT) dated 29.10.2015 provides for utilization of Education Cess & SHE Cess on inputs, input services and capital goods received after 01.03.2015 for payment of duty of excise and service tax then not allowing the utilization of balance lying as on 01.03.2015 under excise law for payment of duty of excise and lying as on 01.06.2015 under service tax for payment of service tax would be unjustified and harsh. Further, there is no notification/circular which provide that the said credit lying as on 01.03.2015 would lapse. Hence demand is wrongly confirmed with reference to this issue. 15. While rebutting on this issue ld. D.R. mentioned that the appellant had utilized the credit balance of Ed Cess and Secondary Higher Education Cess on inputs lying as on 28.02.2015 and credit balance of Ed. Cess and Secondary Higher Education Cess on services lying as on 31.05.2015 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive, as made by the appellant is rebutted with the mention that no documents evidencing use of the impugned items in manufacturing of plant which is further used in the manufacture of the final product or repair and maintenance of capital goods were found on record. Hence credit has rightly been denied. Issue No. 6: Non-payment of Service Tax amounting to Rs. 6,64,172/- on Ocean Freight in accordance with the Notification 16/2017- ST dated 13.04.17. 19. It is submitted by ld. Counsel for appellant that service tax would be leviable on all taxable services consumed or rendered in India. The charging section for service tax is section 66B. In the present case the recipient of service is not located in India nor the service itself had been provided in India. 20. Appellant is also mentioned to not to be the recipient of service. Therefore, appellant being neither service provider nor service recipient cannot be made liable to pay service tax on a transaction which had originated and concluded outside the taxable territory. 21. It is mentioned while rebutting to this issue that Service tax is leviable on all taxable services consumed or rendered in India Vide notification Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the entire exercise revenue neutral. Since, the service tax has been subsumed under Goods and Service Tax w.e.f 01.07.2017, therefore, it would not be practically possible for the appellant to avail such cenvat credit as transition window for carrying forward of such cenvat credit of earlier regime to GST regime is no longer available. Hence, considering the situation revenue neutral no such demand should be raised against the appellant. The appellant place reliance on the following case in support of their contention:- i. Commissioner of C. Ex. & Cus., Vadodara Vs Narmada Chematur Pharmaceuticals Ltd. (2005 (179) ELT 276 (SC)] 25. Finally it is submitted that demand is time barred hence extended period is invokable. The appellant being a law abiding person is regular in payment of all its dues and filing returns. From the perusal of the show cause notice it is evident that all the facts have been derived by department from the records and documents of the appellant and the issues involved in the instant matter is of interpretational in nature. The appellant has acted according to best of its understanding of the legal provisions. The appellant has relied upon the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision of one or more of the specified services, or 30. Reverting to the facts of the case it is observed that appellant has exported PET plant from Neemrana in India to Jamaica, a place outside India with the services to install the same in Jamaica as received from M/s. Satnam Construction Co. Ltd. The later company only has given services to appellant for dismantling the said PET plant clearing, painting and repacking it for being exported. Hence the services received from M/s. Satnam were services exported. The activity done in India by said M/s. Satnam is definitely a service used by the provider of output service for providing output service. Hence, it is well covered in the definition of input services. I draw my support from the decision in the case of Union of India vs. Hindustan Zinc Ltd. reported as 2007 (2014) ELT 510 where Hon'ble High Court of Rajasthan has held that goods which are necessary for running of plant and up-keeping of the machinery directly involved in the manufacturing and products are eligible to avail Modvat credit. 31. The decision by Hon'ble High Court of Chattisgarh in the case of Ambuja Cement Eastern Ltd. reported in 2010 (256) E.L.T. 690 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to GST regime by way of transition provisions by directing the department to adopt liberal approach towards technical lapses if any committed by an assessee and giving them the substantial benefit to which they are otherwise entitled to. 35. Hence appellant is held entitled for cenvat credit of Rs. 5, 15,579/-. Findings in order under challenge about this issue are also liable to be set aside. Issue No.3 36. It is alleged that cenvat credit has not been distributed on pro-rata basis. 37. The department had alleged that the appellant had availed excess cenvat credit of service tax amounting to Rs. 2,41,451/- in its Phagi Unit on account of error in calculation. As result of which excess credit has been allocated to Phagi Unit as against its Gandhidham Unit. The appellant submits that since both Phagi and Gandhidham unit are registered with excise department and clearing its product on payment of duty therefore, it will not make any difference if excess credit is allocated to one unit as it would be a revenue neutral exercise as both the units are of the same company - M/s Gravita India Limited and shifting of such credit would not make any difference for company as a whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea is that cenvat credit is admissible so long as the inputs are used in or in relation to the manufacture of final product and whether directly or indirectly. The allegation of the department that the goods on which cenvat credit was availed did not satisfy the definition of the capital goods was considered by the larger bench of the Tribunal in the case of Ballarpur Industries Vs. CCE [2000 36) RLT-537-Tri-LB) wherein the theory of "direct participation" of the goods eligible for modvat credit had been specifically rejected in the light of its earlier larger bench decision rendered in the case of Jawahar Mills Ltd.[1999 (108) ELT-47-Tri-LB] which has been affirmed by the Apex Court. 1. Kisan Sahkari Chinni Mills Ltd VS CCE [2013 (292) ELT 394 (Tri- Del)] has held that items used for repair & maintenance of plant and machinery and goods used for repair and maintenance of machinery are inputs eligible for Cenvat credit - Scope of expression "used in or in relation to manufacture of" final product, whether directly or indirectly and whether contained in final product or not is much larger than expression "used in manufacture of" in the definition of Input in Rule 2(k) of Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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