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TMI Blog2025 (1) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit under Rule 14 of CCR. Both the Appeals involving the same impugned order are being taken up together for disposal by issuance of this common order. 2. Facts as culled out from the Appeal are that, the Assessee, who is engaged in the manufacture and trading of motor cars had availed irregular Cenvat Credits during the period from 2009-10 to 2011-12 and had reversed the credits amounting to Rs.2,75,51,787/- subsequently on being pointed out by the Revenue. However, the Revenue felt that such reversal of wrong Cenvat credit was liable to be recovered along with interest of Rs. 79,32,352/-under Rule 14 of CCR. Other issues taken up by the department pertained to ineligible Cenvat credit of Rs.79,25,843/- which was availed on Roadside Assistance Service, input service credit on service utilised for study on Automobile Manufacturing Investment, credit on demurrage charges incurred, credit taken on traded goods, credit taken on canteen equipment and maintenance and double credits which were not reversed. A Show Cause Notice was issued to the Assessee seeking recovery of ineligible Cenvat along with applicable interest under Rule 14 of CCR read with Section 11 A of the Act, beside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st on illegal / ineligible Cenvat credit availed by the Assessee are: - i. That the decision in the impugned order to waive interest was legally not tenable as the issue was settled by Hon'ble Supreme Court in the case of M/s. Ind-Swift Laboratories Ltd. [2011 (265) ELT 3(SC)] wherein it was held that interest was payable from the date of taking credit. ii. It was pointed out that that the above decision of the Apex Court was followed in M/s. Sundaram Fastners Ltd. [2004 (304) ELT 7 (Mad)] wherein it was held that as per Rule 14, interest obligation arises on happening of any of the three circumstances viz. (i) Credit taken or (ii) Credit utilised wrongly or(iii) Credit erroneously refunded. 5. The Ld. Counsel Shri S. Muthuvenkataraman representing the Assessee have reiterated the averments in the grounds of appeal and prayed for setting aside the impugned order as the demands confirmed and penalty imposed therein were not sustainable. Regarding, dropping of demand of interest, he maintained that the impugned order had correctly held that interest was not leviable by relying on the decision of Karnataka High Court in the case of Commissioner of Central Excise & Service Tax, LT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal;" The Rule 2(l) of CCR, 2004 (insofar as it relates to the manufacture of final product is concerned), consists of three categories of input services. The first category covers services which are directly or indirectly used in or in relation to the manufacture of final products. The second category covers the services which are used for clearance of the final products up to the place of removal. The third category, includes services namely; (a) Services used in relation to setting up, modernization, renovation or repairs of a factory, (b) Services used in an office relating to such factory, (c) Services like adverti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-sale customer facilitation service, is actually availed by customers after sale of the vehicle and would be squarely covered under the definition of the activity related to business and therefore is entitled for input service credit. On a similar issue in the case of M/s. Escorts Construction Equipments Ltd. Vs. Commissioner of Central Excise, Delhi-IV [2014 (33) STR 102], the Tribunal, New Delhi has held as follows: - "5. We have carefully considered the submissions from both the sides and perused the records. The main ground for denial of Cenvat credit in respect of after-sale repair services during warranty period is that this service has been received after the removal of the goods from the place of removal of the goods and hence, the same is not covered by the definition of 'input service'. On going through the definition of 'input service' and especially the inclusive portion of the definition, we are of the prima facie view that this ground for denial of credit is not correct, as there are a number of services mentioned in the inclusive portion of the definition of 'input service' which cannot be linked with the removal of the goods. Moreover, it has not been denied by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do with the customer needs, demand and supply in car market, consumer feedback or any analysis of market data. The study was not research about the products of the Assessee or their marketability. As such, we are of the considered view that that the Assessee's argument that the service availed was in the nature of market research or relating to their business is not acceptable. It cannot be said to be connected either directly or indirectly with the manufacturing process or the business of the Assessee and as such, it cannot be covered under the definition of input service under Rule 2(l) of the CCR, 2004. 10.3 Cenvat Credit on demurrage charges of Rs.20,148/-: - The Assessee availed Cenvat credit on service tax paid towards demurrage charges levied by the Port Trust. We find that the Assessee has inadvertently remitted the Service Tax on detention charges as the CBEC Circular No. 121/2010-ST dated 26.04.2010 which has been reproduced below, has clarified that detention charges are not chargeable to Service Tax: - "Subject : Service tax on Container Detention Charges - Regarding. Generally marine containers are temporarily brought into a customs territory and have to be re-e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CX], considering the fact that the Assessee had an accumulated credit balance of around Rs.70 Crores evidencing that the ineligible credit availed was not utilised. The Hon'ble High Court of Karnataka in the case of Commissioner of Central Excise & Service Tax, LTU, Bangalore Vs. M/s. Bill Forge Pvt. Ltd. [2012 (279) E.L.T. 209 (Kar.)] has held that mere wrong availment of Cenvat credit does not attract interest liability unless such Cenvat credit was taken and utilised wrongly which reads as below: - "21. Interest is compensatory in character, and is imposed on an assessee, who has withheld payment of any tax, as and when it is due and payable. The levy of interest is on the actual amount which is withheld and the extent of delay in paying tax on the due date. If there is no liability to pay tax, there is no liability to pay interest. Section 11AB of the Act is attracted only on delayed payment of duty i.e., where only duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person liable to pay duty, shall in addition to the duty is liable to pay interest. Section do not stipulate interest is payable from the date of book en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise." 12. Further, Hon'ble High Court of Madras in the case of CCE, Madurai Vs. M/s. Strategic Engineering (P) Ltd. [2014-TIOL-466-HC-MAD-CX] have ruled as follows: - "-----------5. The short point involved in the present Civil Miscellaneous Appeal is as to whether a mere taken of CENVAT credit facilities without actually using it, would carry interest as well as penalty? 6. The Appellate Tribunal has come to a definite conclusion to the effect that in the instant case the assessee has merely taken CENVAT credit facilities and before utilising the same, the Department has reversed it and therefore, the assesses is not liable to pay interest and penalty. 7. The learned counsel appearing for the appellant has contended elaborately that the reasoning given by the Appellate Authority for setting aside the order passed by the Authority is totally baseless and also against law. Under the said circumstances, the order passed by the Appellate Authority is liable to be set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 12. In fine, this Civil Miscellaneous Appeal deserves dismissal and accordingly is dismissed without costs and the order passed in Final Order No. E/920/2006, dated 3-7-2009 is confirmed." As such, we approve the decision of the Adjudicating Authority vide Order-in-Original No. LTUC/432/2014-C dated 02.12.2014 in dropping the demand of interest on irregular Cenvat credit availed but not utilised. In the present case, the Assessee has produced a Chartered Accountant's Certificate dated 11.12.2024 issued by M/s. Vaidyanathan Meenakshi & Co. who has certified after detailed examination of the Cenvat Credit Accounts and related records that the Assessee was always having enough Cenvat credit balance to cover the ineligible credits taken by mistake thus proving that Cenvat credit was merely taken but not put to use. We find that no interference is called for on this issue and the issue is decided in favour of the Assessee. Therefore, the appeal filed by the Revenue cannot be sustained and so ordered to be set aside on the issue of demand of interest. 13. As such, the impugned Order-in-Original No. LTUC/432/2014-C dated 02.12.2014 is required to be modified to the extent of demand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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