9911796707
TMI Blog2024 (11) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... seventy two only) already reversed by the party towards demand being confirmed at (1) above. 3 I impose a penalty of Rs 10,00,000.00 (Rupees Ten lakhs only) on M/s Pepsico India Holdings Private Limited, A-36, UPSIDC, Sathariya Industrial Area, Jaunpur-222202 under Rule 15 (1) of Cenvat Credit Rules, 2004." 2.1 Appellant is engaged in manufacturing of branded Aerated Water falling under Chapter heading 22021010 of Central Excise Tariff Act,1985, They are availing Cenvat credit on input/ capital goods and input services used in or in relation to manufacture of their final products. 2.2 The Officers of Anti- Evasion branch of Central Excise Commissionerate, Allahabad visited the premises of the party on 21.09.2012 and checked the Cenvat Credit records / documents related to Cenvat credit availed by the party on Inputs, Capital goods and Input services. The Finance Manager of the firm, Shri Rakesh Agrawal provided the hard copies of electronic records and informed that the unit had commenced production only in the month of March' 12. The statement of Shri Rakesh Agrawal, Finance Manager of M/s Pepsico India Holdings (P) Ltd. (RUD No. 1) was also recorded on the same day under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the service providers, it appears that these services fall under excluded category i.e. related to setting up of factory or construction of building or structure and most of Cenvat credit on input service pertains to setting up factory prior to March, 2012. * By a written submission dated 05.10.12 it was informed that credits of Rs 16,23,863/- and Rs.7,67,657/- wrongly taken on input service and inputs respectively has been reversed. * From the records of the appellant it appeared that they have taken inadmissible credit amounting to Rs. 78,30,344.81 on various input services such as Civil Engineering, transportation, security Agency, Man Power Supply etc. provided by various service providers viz. M/s M.R. Warerkar & Associates, M's Pest control pyt Ltd., M/s A.G.Developers Pvt. Ltd.,M/s Johnsons Controls (I) Pvt Ltd., M/s Shiv Shakti Fiber Udyog, M/s Khuntia Brothers, M/s Esskey Industrial and M/s Ranjeet Engineering etc. The credit against these services either relate to setting up of factory or construction of building, which is not admissible as per Rule 2(L) of the Cenvat Credit Rules, 2004. These activities relate to excluded category i.e. setting up and cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisturbed samples etc. including report recommendation of foundation, depth and allowable bearing capacity. These activity appeared to fall under the category of industrial construction used for building, which is not admissible as per Rule 2 (l) of the Cenvat Credit Rules, 2004 * Appellant took input service credit of Rs.1,99,279.17 against invoices of M/s A.G. Developers PVT Ltd. for construction of flooring in Plant of the party. This activity appeared to fall under the category of construction of building, which is not admissible as per Rule 2() of the Cenvat credit rules'2004 and therefore the inadmissible credit availed on the service appeared liable to be recovered from the party. * Appellant took input service credit of Rs.83,368.98 on erection work of polycarbonate False Ceiling for the plant. This service has been provided by M/s Shiv Shakti Fibre Udyog, Faridabad under letter of intent (LOI) vide REF/Sathariya/CSD/2010/62/Rev-00 dated 18"h October. 2011. As per LOI "The rates are inclusive of entire erection work for false ceiling and connected work including painting with low VOC paint necessary scaffolding work etc. complete, as per agreement with the servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Cenvat Credit Rules, 2004. * Appellant took input service credit of Rs.1,32,915.45/- against invoices showing work as equipment hiring and construction of Chimney at the plant of the party. Invoices issued by Ms Krishna Traders show services as DG rent, operating charges whereas invoices of M/s Sonu Builders show construction of chimney. These activities relate to setting up of factory and construction work. As such the party appeared not entitled for credit on such nput service as per Rule 2(l) of the Cenvat Credit Rules, 2004. * Appellant took input service credit of Rs.11,97,166.83 against invoices showing work construction and line fabrication by Ms Ranjeet Engineering Works and Ms Esskay industrial. In case of M/s Ranjeet Engineering Works, the invoices/bill depicts description of work as crane charges, man power, unloading or shifting of various machineries at Allahabad warehouse etc. These activities pertain to setting up of factory and construction work which have been provided prior to operation of the factory and as such appeared to be not eligible for credit, as per Rule 2(l) of the Cenvat credit rules'2004. * Appellant took input service credit of Rs.1,64,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Khuntia Brothers and M/s A.G. Developers. They reversed the inadmissible credit as detailed below: (i) Sept'12 Rs 23, 91193.24 (Rs.767329.99 +1623863.25) (ii) Dec' 12 Rs.1818931.42 (iii) Jan' 13 Rs. 705878.21 (iv) Feb' 13 Rs. 243489.81 Total Rs.51,59,492.68 2.5 Thus revenue authorities were of the view that appellant has taken credit against input/ input service, wrongly in contravention of provisions of Rule 2,3,4 & 9 of the Cenvat Credit Rules, 2004. For said contravention appellant was liable for penalty under Rule 15(1) of the Cenvat Credit Rules, 2004 2.6 A show cause notice dated 22.03.2013 was issued to the appellant asking them to show cause as to why :- (i) Cenvat credit taken on input and input services wrongly to the tune of Rs 85,98,001.81 (Rupees Eighty Five Lac Ninety Eight thousand one and paisa Eighty One only) in violation of the provisions of rule 2, 3, 4 & 9 of the Cenvat Credit Rules, 2004 should not be recovered along with interest under Section 11 A & 11 AA of the Central Excise Act 1944 read with Rule 14 of the Cenvat Credit Rules' 2004 and why the amount of Rs. 51,59,492.68 reversed by them should not be appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... galam Cement Limited [2023 (4) TMI 601 CESTAT DELHI] * Unique Chemicals [2019 (8) TMI 200 CESTAT Ahmedabad] * Hindalco Industries ltd. [2023 (4) 601 CESTAT New Delhi] * Credit on Anti termite Treatment services is admissible; * Hindustan Petroleum Corpn Ltd. [2017 (47) STR 136 (T-Hyd)] * Hindustan Petroleum Corpn Ltd. [2019 (5) TMI 1088 CESTAT Hyd] * Cenvat Credit on Security Services is admissible; * Triveni Engineering & Industries Ltd. [2017 (3) GSTL 140 (T-ALL)] * Mangalam Cement Limited [2023 (4) TMI 601 CESTAT DELHI] * Extended period is not invokable. * Reliance Industries Ltd.[2023 (385) E.L.T. 481 (S.C.)] Mahanagar Telephone Nigam Ltd. [2023 (73) G.S.T.L. 310 (Del.)] * Hero MotoCorp Limited, [Final Order No. 55631- 55632/ 2024 in Excise Appeal No. 51930 of 2019 and Excise Appeal No. 50688 of 2020] * GD Goenka Private Limited [Final Order No. 51088/ 2023 in Service Tax Appeal No. 51787 of 2022] * Delhi Airport Metro Express Pvt.Ltd.[Final order No. 50031/ 2024 in Service Tax Appeal No. 50919 of 2015] * Birla Corporation Limited [(2023) 11 Centax 132 (Tri.-Del.)], Affirmed by Hon'ble Supreme Court as reported at [(2023) 11 Centax 133 (S.C.)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 37. The Show cause notice intends to deny cenvat credit taken by the party on inputs and input services, in total amounting to Rs. 85,98,001.00. On persuasion during investigation, the party have reversed credit amounting to Rs.23,91,193.24 in Sept'12, Rs.18,26,242.61 in Dec'12, Rs.7,05,878.21 in Jan' 13 and Rs.2,43,489.81 in Feb'13, in total amounting to Rs.51,66,803.87 though under protest Subsequently, they have further reversed credit amounting to Rs.29,77,568.18 in March'13. The party have claimed that this amount of Rs. 29,77,568.18 has been paid by them before issue of SCN whereas, factually the reversal of Rs. 29,77,568.18 was made on 27.03.13 i.e. after issuance of SCN on 22.03.13. Thus, out of total alleged irregular credit of Rs.85,98,001.00, the party have reversed credit amounting to Rs.81,44,372.12 by March, 2013. Despite making substantial reversals the party have contested the allegations on some issues and have claimed re-credit of some of the amounts reversed. In these circumstances, it is appropriate on my part to discuss the individual issues to arrive at the correct fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; Since it is relevant, the provisions of "Input service" under Rule 2(l) of CCR, 2004 as they existed during the material time i.e. March, 2012 to Dec, 2012, are reproduced below:- 01.04.11 to 30.06.12:- "Input Service means any service- a. used by the provider of taxable service for providing ouput service; or b. used by a manufacturer whether directly or _indirectly in relation to manufacture of final product and clearance of final product upto the place of removal. And includes services in relation to Modernization or renovation or repairs of the premises of provider of output service or an office relating to such premises Advertisement or sales promotion Market research Storage up to the place of removal Procurement of inputs Accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry and security, business exhibition, legal service) Inward transportation of inputs or capital goods and Outward transportation up to the place of removal." but excludes services,-- A) Specified in sub-cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; services) in SO far as they are used for- a. construction or execution or execution of works contract of a building or a civil structure or a part thereof; or b. laying of foundation or making off structure for support of capital goods, except for the provision of one or more of the specified services. Now, in the succeeding paragraphs, I take up the specific service tax credits taken by the party and which the instant SCN intends to deny 40. Erection of pre-Engineered Building- As per facts of the case on record, input service credit of Rs.17,19,787.76 has been taken by the party against the services provided by one M/s Phoenix Infra. The description of work in invoices is mentioned as erection of PreEngineered Building". As per agreement with the service provider, the service actually provided is installation of complete building (including caged ladder / polycarbonate sheets / Jack beam system) as per technical specifications, find that very clearly, the services provided by the service provider to the party are covered under Commercial or Industrial Const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the discussions above, I hold that the credit of Rs. 21,57,497/- availed by the party is irregular and is liable to be reversed / recovered from the party. 42. Construction of flooring in the plant:- As per facts of the case, the party has taken input service credit of Rs. 1,99,279.17 against invoices issued by Ms A.G.Developers Pvt. Ltd. Description of work as mentioned on the invoices is as under:- "Application of high performance industrial flooring 'UCRETE' on smooth sound and dry RCC floor after removing all dust and dirt with the help of hard brushers / grinders / shot blasting complete as per manufacturer's recommendations" Clearly, the services provided by the service provider fall under the Commercial or Industrial Construction Service [ (Section 65 (105) (zzq) ] and have been used for "construction of building". However, as already discussed in para-40 earlier, such services when used for construction of building are barred for the purposes of credit as these services are not covered under the definition of input service". In the defence reply t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Industrial Construction Service and have been used for "construction of building". However, as already discussed in para-40 above, Commercial or Industrial Construction services used for construction of building are barred for the purposes of credit as these services are not covered under the definition of input service' In the defence reply the party has not contested the allegation hereby admitting the non-admissibility of the credit taken on this count. Thus, in the light of definition of input service under Rule 2 (l) as quoted above and the discussions above, I hold that the credit of Rs. 4,08,831.85 availed by the party is irregular and is liable to be reversed / recovered from the party. 45. Project Management Consultancy Service As per facts of the case, the party have taken input service tax credit of Rs. 10,44,261.69 on Project Management Consultancy provided by M/s Johnson Control Pvt. Ltd. As per agreement, the scope of work consists of (i) Design Development (ii) Tendering procurement process and (iii) Project execution. It has been alleged i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... city generated, in turn, was used captively for manufacture of paper. However, in this case before me, the service has been utilized for construction of building which is not related directly or indirectly with the manufacture of final products of the party and thus is not covered under the definition of 'input service' under Rule 2(l) of CCR, 2004 Thus, I deny the credit of Rs, 10,44,261.69 taken on this count, having been taken in contravention of provisions of law. I also hold that the credit is liable to be recovered / reversed by the party. 46. Anti-termite/ Pesticide Treatment Service As per facts of the case the party have taken input service credit of Rs. 71,509.39 on termi-seal service and antitermite treatment at the plant and warehouse. The description of work mentioned in invoices issued by service provider, M/s Pest Control of India Pvt. Ltd. is as under: Invoice No/Date Particulars of work done 429/9.2.2011 Service charges for snake pro-service 359/02.01.2012 Service charges for termiseal service Preconstruction Anti Termite treatment 265/4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegations made in the Show Cause notice and on going through the description of work found on invoices of the service provider, I am of the clear view that the services provided by the service providers are covered under Commercial or Industrial Construction Service [ (Section 65 (105) (zzq)] and used in construction of building and thus, I hold the same not covered under the definition of input service defined under Rule 2(1) of the CCR, 2004. Accordingly, I deny the credit and hold that the credit amounting to Rs. 11,97,166.83 is liable to be recovered from the party. 48. Installation and Commissioning Service as per facts of the case, the party have taken input service credit of Rs.1,64,366.00 against invoice No.1980058480 dated 24.04.12 of M/s Tetra Pak India Pvt. Ltd. showing description of work as installation and commissioning of Sathariya plant. On perusal of LOI dated 19.7.2010, with M/s Tetra Pak India Pvt Ltd., it is observed that the activity involves supervision of installation, unloading/ positioning of equipment and carryout the commissioning of the unit. It has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d directly or indirectly in relation to manufacture of final products' are permissible for Cenvat credit. It is submitted that they had availed services of manpower for the purpose of carrying out renovation, revival of our plant in order to make the plant premises suitable for carrying out commercial production. Since the manpower services availed was a critical part of the renovation of the plant these services are indirectly related to manufacture of final products and hence eligible for Cenvat credit. I have examined the contention of the party in the light of the definition of the input service under Rule 2(l) of the CCR, 2004. I focus on the relevant portion of the definition of 'Input service' as given under Rule 2(l)(ii) of the CCR, 2004 which reads as under:- Rule 2(l) (ii)- Input Service' means any service used by a manufacturer whether directly or indirectly in relation to manufacture of final product and clearance of final product upto the place of removal The language of the definition clearly provides that for availment of credit, the starting point s the manufacture o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removal. The language of the definition clearly provides that for availment of credit, the starting point is the manufacture of products and ranges upto their place of removal. Thus, the input service availed prior to commencement of manufacturing operation, is clearly not eligible for credit, being not covered under the definition of input service? As the service availed by the party is admittedly during the period prior to commencement of manufacture, I hold the same not eligible for input service credit and hence deny the credit. The credit amounting to Rs. 2,94,243.66 is liable to be recovered from the party. 51. Goods Transport Agency Service As per facts of the case, the party have taken input service credit to the tune of Rs. 60,543.21 on Goods Transport Agency service on the strength of Goods Receipt (GRs).The GRs issued by the transporters indicate freight only and not service tax payable. In case of credit against GTA services, Challans evidencing payment of service tax are the specified document under Rule 9(1) (e) of the Cenvat Credit Rules, 2004. On query the party stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find the contention misconceived in as much as the submission of the party itself clearly suggests that services were used for execution of revival of plant which event occurred before commencement of commercial production. It has nothing to do with the manufacture of final products. I further find that the work undertaken by M/s Sonu Builders is construction of chimney, which is nothing but part of construction of building. Hence, I hold that the aforesaid services are not covered under the definition of input service as defined under Rule 2(l) of CCR, 2004 and thus deny the credit. This irregularly availed credit is liable to be recovered from the party. 53. On the basis of the discussions in the preceding paragraphs, I conclude that the following cenvat credits taken by the party are irregular, being in contravention of the provisions of law for the reasons already discussed;- S No Description Amount of credit taken 1 Chemicals used on flooring Rs.7,67,657.00 2 Erection of pre-engineered building by M/s Phenix Rs.17,19,787.76 3 Architectural & Civil Structure service by M/s M.R Warekar Rs.21,57,497.00 4 Construction of flooring by M/s A.G.Developers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sathariya Range, Central Excise Division-I, Allahabad, who has, vide his report submitted under C.No.20-CE/Misc/Sath/06/2012 dated 03.07.14 furnished the closing balance of cenvat credit of the party from the months of March 2012 to Dec,2012 alongwith relevant pages of ER-l's showing closing balance of Cenvat Credit for the respective months. On going through report of the R.O., I find that the closing balance of CENVAT Credit for each month from March, 2012 to December, 2012 was in excess of total demand under reference i.e. Rs. 85,98,001/-. This clearly establishes that the credits availed by the party during the period covered under the present S.C.N, remained unutilized Thus, I hold that no interest is payable by the party under section 11 AA of the Central Excise Act, 1944 in this case, 55. I find that the party have, during the course of taking the subject irregular credits, contravened the following provisions of CCR, 2004:- (i) Rule 2 (k) - in as much as that they have taken credit on chemicals which is not an eligible input for their intended use for flooring of the plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they were not eligible for the same. This contention that 'credit' has been taken by them under bonafide 'belief' is all a sham, put forward on afterthought. In conclusion, I hold that the aforesaid credits have been taken by the party on purpose, fully well knowing that they were not eligible for the same. The referred provisions of law have been contravened by the party intentionally and for the same, they are liable to imposition of appropriate penalty under the provisions of Section 15 (1) of Cenvat Credit Rules, 2004. 4.3 From the perusal of the above order it is quite evident that appellant had not contested the demand made for denial of credit in respect of most of the amounts sought to be denied, and the credit has not been denied in most of the case by consideration of the definition of the inputs (Rule 2(k)) and input services (Rule 2 (l)) as they existed at the relevant time. From the reply dated 25.03.2013, submitted by the appellant in response to the show cause notice, before the adjudicating authority available on page 52 to 78 of it is evident that appellant had in the reply contested denial of credit only in respect of following inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Project Management Consultancy Services 10,44,261.69 Johnson Central March 11 to Nov 12 8 Anti Termite treatment services 71,509.39 Pest Control India February 11 to January 12 9 Work Construction and Line Fabrication Services 11,97,166.83 Esskey Industries February 11 to March 12 Ranjeet Engineering Works 10 Installation and Commissioning of Plant 1,64,366.00 Tetra Pack April 12 11 Manpower Supply Services 2,96,573.82 Aqeel Enterprises February 11 to December 12 ADECCO 12 Security Service 2,94,243.66 Ravi Security April to November 12 Security & Intelligence Services 13 Goods Transport Agency Services 60,543.21 February 11 to March 12 14 Equipment Hiring and construction of chimney services 1,32,915.45 Krishna Trader May 11 to March 12 Sonu Builder Planet India Total 85,98,00181 4.5 From the perusal of the ER-1 returns made available by the appellant for September 2011, October 2011, November 2011, December 2011, February 2012 and March 2012, from information provided at S No 5 (Details of CENVAT Credit taken and Utilized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65685 Credit Utilized 0 1197968 - 23959 -11980 0 0 0 Closing Balance 49221996 21942863 928046 464028 6568489 131370 65685 4.6 Appellant has claimed relying on a series of the decisions that the demand is time barred and extended period of limitation is not invokable. From the tables drawn in para 4.4 and 4.5 on the basis of the ER-1 returns and other details furnished by the appellant it is evident that appellant is only misstating the facts before this tribunal. The credit in respect of the inputs and services have been for the first time taken in the month of March 2012 and reflected in the return filed for that month. The return for the month of March 2012 would have been filed in the Month of April 2012, and the normal period for making the demand would be one year from the date of filing the return. The Show Cause Notice has been issued to the appellant on 22.03.2013 well within the normal period of limitation. The Show Cause Notice has been issued without invoking the extended period of limitation. Had appellant claimed any credit in any month prior to this month the same would have been reflected in the ER-1 return for that month. The submission made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the definition clause first part would not be correct. 6.3 Also tribunal has in cases relied upon by the Authorised Representative that CENVAT Credit in respect of rent a cab service is not admissible. 7. Learned Counsel placed reliance on the decision of this Tribunal in the case of Reliance Industries Ltd. (supra). Specifically he relied upon the paragraph 6.3 which is reproduced below:- "6.3 Now the question that arises is regarding services which were excluded by the amendment after 2-4-2011 to the definition of Rule 2(l) of the Cenvat Credit Rules, 2004. The said services are - outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees such as Leave or Home Travel Concession. The amendment indicates when such services are used purely for personal use for consumption of any employee, the Cenvat credit cannot be allowed. On perusal of the records, we find that the appellants have been taking a consistent stand that in their case Outdoor Catering services, Club or Association service, Health and Fitness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 (S.C.)]observed: "3. In that view of the matter, it cannot be said that the High Court has committed any error in denying the Input Tax Credit and holding that such a service is excluded from the input service. 4. We are in complete agreement with the view taken by the High Court." Similarly Hon'ble Karnataka High Court has in case of Toyota Kirloskar Motors [2021 (50) G.S.T.L. 286 (Kar.)] held as follows: 15. The undisputed facts make it very clear that the period involved in the present appeal is admittedly of post-2011 period and after the amendment to the provisions of Rule 2(l) defining the 'input service' and the amendment to the provision of Rule 2(l) defining the 'input service' came into effect w.e.f., 1-4-2011. The definition of 'input service' post amendment contains exclusion clause and exclusion clause was effected w.e.f. 1-4-2011. Clause (c) of the said exclusion clause specifically excludes the services provided in relation to 'outdoor catering' services. It is certainly not in dispute that said services prior to 1-4-2011 have been held to be covered by the definition of 'input service', however, after the amendment came into force in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad-1 v. Ferromatik Milacron India Ltd., [2011 (21) S.T.R. 8 (Guj.)]. The judgment is again distinguishable as it relates to period w.e.f., March, 2006 to September, 2006 i.e., period prior to amendment under the Cenvat Credit Rules, 2004. In the considered opinion of this Court, the statutory definition of 'input service' under Rule 2(l) post-amendment w.e.f., 1-4-2011 provides that 'outdoor catering' services falls under the exceptionary services in Rule 2(l)(c) of the Cenvat Credit Rules, 2004. Hence, the Tribunal was justified in dismissing the appeal preferred by the assessee. 21. A Taxing Statute has to be strictly construed and in Taxing Statute one has to look merely at what is clearly said. Justice G.P. Singh in his land mark work on Principles of Statutory Interpretation, 14th Edition under the heading Strict Construction of Taxing Statute, has observed as under : "General Principles of strict construction A taxing statute is to be strictly construed. The well-established rule in the familiar words of LORD WENSLEYDALE, reaffirmed by LORD HALS-BURY and LORD SIMOND, means : "The subject is not to be taxed without clear words for that purpose; and also that every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M.P., (2004) 5 SCC 209, p.216 (para 30) : AIR 2004 SC 3552.] 23. Resultantly, this Court has to look squarely at the words of the statute and interpret them. A Taxing Statute has to be interpreted in the light of what is clearly expressed, it cannot imply anything which is not expressed, it cannot merge provisions in the statute so as to supply any assumed deficiencies. Affirming this decision Hon'ble Supreme Court as reported at [2021 (55) G.S.T.L. 129 (S.C.)] held as follows: "2. The statutory provision - Rule 2(l) defining "Input Service" post 1-4-2011 is very clear and the out-door catering services when such services are used primarily for personal use or consumption of any employee is held to be excluded from the definition of "Input Service". 3. In that view of the matter, it cannot be said that the High Court has committed any error in denying the input tax credit and holding that such a service is excluded from input service." Thus in view of the above decisions the goods or services which have been excluded by way of exclusion clause in the definition, could not have been said to be covered by the definition, by referring to the main clause of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repair of a factory could be undertaken of the existing and ongoing plant. Certain decisions and Circular No 943/4/2011-CX dated 29.04.2011 has been referred to by the appellant and to claim that the service received in relation to modernization, renovation and repair are covered by the inclusion clause. We reproduce the said portion of the inclusion clause, below: "Modernization or renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises. ..." Thus the activities of Modernization or renovation or repairs of a factory will be covered by the inclusion clause of the definition and those in relation to the setting up of the factory will be covered by the exclusion clause. It is settled law that the while interpreting a Fiscal Statute the statute should be interpreted strictly on the basis of the words used in the statute. Hon'ble Supreme Court has in case of Dilip Kumar & Company [2018 (361) E.L.T. 577 (S.C.)] observed as follows: "19. The well-settled principle is that when the words in a statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 22. At the outset, we must clarify the position of 'plain meaning rule or clear and unambiguous rule' with respect of tax law. 'The plain meaning rule' suggests that when the language in the statute is plain and unambiguous, the Court has to read and understand the plain language as such, and there is no scope for any interpretation. This salutary maxim flows from the phrase "cum inverbis nulla ambiguitas est, non debet admitti voluntatis quaestio". Following such maxim, the Courts sometimes have made strict interpretation subordinate to the plain meaning rule [Mangalore Chemicals case (Infra para 37).], though strict interpretation is used in the precise sense. To say that strict interpretation involves plain reading of the statute and to say that one has to utilize strict interpretation in the event of ambiguity is self-contradictory." 4.13 Board has issued the Circular dated 29.04.2011, clarifying the matter, stating as follows: S No Issue Clarification 4 Is the credit of input services used for repair or renovation of factory or office available Credit of input services used for renovation or repair of factory or office is allowed. Services used in relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng factory. In case of Dilip Kumar & Company referred above Hon'ble Supreme Court has specifically held that any person claiming any exemption has to establish that he falls within the four corners of exemption notification. The relevant para from the said decision are reproduced below: "28. With the above understanding the stage is now set to consider the core issue. In the event of ambiguity in an exemption notification, should the benefit of such ambiguity go to the subject/assessee or should such ambiguity should be construed in favour of the revenue, denying the benefit of exemption to the subject/assessee? There are catena of case laws in this area of interpretation of an exemption notification, which we need to consider herein. The case of Commissioner of Inland Revenue v. James Forrest, [(1890) 15 AC 334 (HL)] - is a case which does not discuss the interpretative test to be applied to exemption clauses in a taxation statute - however, it was observed that 'it would be unreasonable to suppose that an exemption was wide as practicable to make the tax inoperative, that it cannot be assumed to have been in the mind of the Legislature' and that exemption 'from taxation to some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself, it should have to be construed strictly and the interpretation cannot be extended to sales to other departments. We might find some clue as to the content of a strict construction also. It was canvassed before the Court that the object of Section 5(2)(a)(iii) of the relevant statute, was to give exemption not to the particular departments but to the sale of such goods to those departments and, therefore, sale of those goods made to any Departments of the Government of India, which came to be charged with the duty of purchasing those goods should also come within the purview of the exemption. The Court while repelling the aforesaid interpretation, reasoned as under : "We are unable to accept this line of reasoning. This interpretation will unduly narrow the scope and ambit of the exemption by limiting it to sales of only those goods as, at the date of the Act, used to be sold to those two departments and sales of other goods even to those two departments, however necessary for the prosecution of the war, would not get benefit of the exemption. Such could not possibly be the intention of the Legislature as expressed by the language used by it in framing the Section." 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use in para 29 as follows - "The law is well-settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, thought at times, some latitude can be shown, if there is failure to comply with some requirements which are directory in nature, the noncompliance of which would not affect the essence or substance of the notification granting exemption." 39. The Constitution Bench then considered the doctrine of substantial compliance and "intended use". The relevant portions of the observations in paras 31 to 34 are in the following terms - "31. Of course, some of the provisions of an exemption notification may be directory in nature and some are mandatory in nature. A disti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. 34. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the "substance" or "essence" of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the "essence" of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance with those factors which are considered as essential." 43. There is abundant jurisprudential justification for this. In the Governance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguage alone and the object and purpose for granting exemption is irrelevant and immaterial. 45. In Parle Exports case (supra), a Bench of two-Judges of this Court considered the question whether non-alcoholic beverage base like Gold spot base, Limca base and Thumps Up base, were exempted from payment of duty under the Central Government notification of March, 1975. While considering the issue, this Court pointed out the strict interpretation to be followed in interpretation of a notification for exemption. These observations are made in para 17 of the judgment, which read as follows : "How then should the Courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur. The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. It is, however, necessary to bear in mind certain principles. The notification in this case was issued under Rule 8 of the Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... berally applied rigorous test for determining if expensive items like Gold Spot base or Limca base of Thums Up base were covered in the expression food products and food preparations used in Item No. 68 of First Schedule of Central Excises and Salt Act and held 'that it should not be in consonance with spirit and the reason of law to give exemption for non-alcoholic beverage basis under the notification in question'. Rationale or ratio is same. Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed construe it liberally. Since the respondent did not fall in the first clause of the notification there was no question of giving the clause a liberal construction and hold that production of goods by respondent mentioned in the notification were entitled to benefit." 46. The above decision, which is also a decision of twoJudge Bench of this Court, for the first time took a view that liberal and strict construction of exemption provisions are to be invoked at different stages of interpreting it. The question whether a subject falls in the notification or in the exemption clause, has to be strictly construed. When once the ambiguity or doubt is resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 0 Home Clearance October 2011 22021010 PEPSI L 0 0 0 0 0 Home Clearance November 2011 22021010 PEPSI L 0 0 0 0 0 Home Clearance December 2011 22021010 PEPSI L 0 0 0 0 0 Home Clearance February 2012 22021010 PEPSI L 0 0 0 0 0 Home Clearance March 2012 22021010 PEPSI L 0 134745 68208 66537 17974568 Home Clearance From the table above which has been made on the basis of the ER-1 returns filed by the Appellant and made available to us it is evident that there was no manufacturing activity undertaken by the appellant till month of March 2011. In absence of any evidence to effect that appellant was undertaking any manufacturing activities during the period prior to March 2012, we are constrained to agree with the findings recorded in the a impugned order for denying this credit. We also observe that appellant has during the Month of February 2012 and March 2012 have taken huge amount of CENVAT Credit against capital goods both imported and indigenously procured. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use there is no need for the Department to prove the same. It is a basic and settled law that what is admitted need not be proved.
4.21 Thus, we find that the appellant had even prior to issue of the show cause notice debited the entire amount of inadmissible credit which has been admitted by the adjudicating authority. He has also set aside the demand for interest. In our view this was a fit case where the proceedings should have been closed following the dictum of sub-section (2) of Section 11A of Central Excise Act, 1944. Thus, we do not find any merit in the penalty imposed on the appellant under Rule 15 (1) of the CENVAT Credit Rules, 2004.
4.22 Thus summarizing our findings:
* Quantum of demand needs to be re-determined by the original authority as per the observations made in para 4.19.
* Penalty imposed under Rule 15 (1) is set aside as per para 4.21.
5.1 The appeal is partly allowed as indicated in para 4.22.
(Order pronounced in open court on-13 November, 2024) X X X X Extracts X X X X X X X X Extracts X X X X
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