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OFFICE OF THE ASSISTANT COMMISSIONER, CENTRAL EXCISE,
DIVISION - II, AHMEDABAD- I .
THIRD FLOOR, CENTRAL EXCISE BHAVAN, NEAR POLYTECHNIC,
AMBAWADI, AHMEDABAD-380 015.
/ By R.P.A.D.
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th-T.#.V.84/3-33/Dem/2010.
Date of Order: 28.01.2014
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td/Passed by : Ms.Ruchi Bisht
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/ Assistant Commissioner
3nt1T N. / Order-in-Original No /AC /03/Div-I1/ 2013-14
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Any person deeming himself aggrieved by this order may appeal against this order in Form E.A.1 to
Commissioner (Appeals), Central Excise, Central Excise Bhavan, Ambawadi, Ahmedabad — 380 015
within sixty days from the date of its communication. The appeal should hear a court fee stamp of
Rs.2/- only.
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The Appeal should be filed in Form No. E.A.1 in duplicate. It should be signed by the appellant in
accordance with the provisions of Rule 3 of Central Excise (Appeals) Rules, 2001. It should be
accompanied with the following :(i) 37a"
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Copy of accompanied Appeal.
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Copies of the decision or, one of which at least shall be certified copy, the order appealed against
or the other order which must bear a court fee stamp of Rs.2.00/-.
Sub: Denovo Adjudication in the case of OM No.44/DC/DEM/2010 dated 18.02.2011
(Show Cause Notice No.V.84/3-33/Dem/2010 dated 22.12.2010) as per CESTAT Order
No.A/10637 & 10638/WZB/AHD/2013 & M/12285 & 12286/WZB/AHD/2013 dated
06.05.2013 — matter reg.
BRIEF FACTS OF THE CASE
:
M/s. Cadmach Machinery Co. Pvt. Ltd., 3604/05, Phase IV, GIDC,
Vatva, Ahmedabad 382445 (herein after referred to as "the assessee"), holding
Central Excise Registration No AAA CC 6242 XM001, is engaged in the
manufacture and sale of Pharmaceutical Machinery & its Spares falling under
CH.No.84, 85 & 90 of the Central Excise Tariff Act, 1985.
2.
During the scrutiny of the records of the assessee, it was revealed that
the said assessee had availed Cenvat Credit of Service Tax paid on various
services. Hence, Superintendent, AR-I, Div-II, Ahmedabad-I vide letter F. No. AR1/POE-Cadmach/2010-11 dated 15.10.2010 called for the details of the same. The
assessee submitted the details of Service Tax credit vide their letter dated
19.11.2010. It appeared that the said assessee had wrongly availed the Cenvat
Credit on Service Tax paid on Air Travel Agency, Chartered Accountant Service,
Exhibition Service, Tour Operator Service, Out door Catering Service & Motor
Vehicle Service (hereinafter referred to as the "said services") which were not input
services as per Cenvat Credit Rules, 2004. The said Service Tax credit were availed
on the basis of bills raised by the service providers during the period from January
'10 to October '10 amounting to Rs. 331220/- (ST Z. 321280/- + Education Cess Z.
6756/- + SHE Cess Z. 3184/-).
3.
As per the definition of the Input Service under Rule 2(I) (iii) of the
Cenvat Credit Rules, 2004, Input service means any service,
"used by the manufacturer, whether directly or indirectly, in or in relation
to the manufacture of final products and clearance of final products from the place of
removal and includes services used in relation to setting up, modernization,
renovation or repairs of a factory premises of provider of output service or an office
relating to such factory or premises, advertisement or sale promotion, market
research, storage up to the place of removal procurement of inputs, activities relating
to business, such as accounting, auditing, financing, recruitment and quality control,
coaching, and training, computer networking, credit rating, share registry, and
security inward transportation of inputs or capital goods and outward transportation
up to the place of removal."
4.
It appeared that the Input Service Tax Credit under the category of Air
Travel Agency amounting to Rs. 48191- (ST Z. 4728/- + Ed. Cess 77/- + SH. Cess
Z. 14/-), Chartered Accountant Service amounting to Z. 1345151- (ST Z 130595/- +
Ed. Cess 2613/- + SH. Cess Z. 1307/-), which is for internal audit of records,
Exhibition Service amounting to Z. 8137/- (ST Z. 7900/- + Ed. Cess Z.158/- + SH.
Cess Z. 79/-), Tour operator Service amounting to Z. 333/4 ST Z. 323/ + Ed. Cess Z.
-
6/ + SH. Cess Z. 4/-), Outdoor Catering Service amounting to Z. 178694/-( ST Z.
-
J
173153/- + Ed. Cess Z. 38051- + SH. Cess Z. 1786/-), Motor Vehicles Service under
the category of Authorized Service Station Service amounting to Z. 4722/- (ST Z.
458/- + Ed. Cess Z. 97/- + SH. Cess Z. 44/-) is not admissible as these services are
not used in or in relation to the manufacture of final product and clearance of final
product from the place of removal & as such it appeared that
the services are not
covered under the ambit of "Input Services". Hence, it appeared
that the Credit of
the said services taken by the assessee is not admissible.
Therefore, the said
assessee is required to reverse the said Service
Tax credit taken along with
appropriate rate of interest as applicable.
5.
The aforesaid services were not used in or in relation to the manufacture
of final products and clearance of final products up to the place of
removal and as
such, it appeared that the said services do not fall under the
definition/purview of
input services'. Accordingly, the said Cenvat Credit of
input services taken by the
assessee are not correct and proper and not admissible as 'input services' in terms
of the provisions of Cenvat Credit Rules, 2004.
6.
Further, the said assessee had not disclosed in their ER-I returns that
they had taken Credit of Service Tax paid on various services.
As per the provisions
of Rule 9(6) of the Cenvat Credit Rules,2004, the
burden of proof regarding the
admissibility of the CENVAT Credit shall lie upon the manufacturer or provider of
output service taking such credit. Thus, it appeared that assessee
was required to
ascertain the admissibility of the credit. However, the assessee failed
to do so and
not disclosed to the department either in their ER-I returns
or in any other manner
that they have taken credit on the above said various
services. Thus, it appeared
that the said assessee have contravened the provisions
of Rule 2 and 9 of Cenvat
Credit Rules, 2004 with an intent to evade payment of duty in
as much as they have
resorted to taking Cenvat Credit which was inadmissible to
them.
7.
All these acts of contravention on the part of the said assessee,
appeared to have been committed with an intention to evade payment
of Central
Excise duty and therefore the total Credit during the period from January
'10 to
October '10, amounting to Z. 331220/- ( ST Z. 321280/- +
Education Cess Z. 6756/- +
SHE Cess Z. 3184/-) are wrongly taken on the aforesaid input services and are
required to be demanded and recovered from them along with interest in terms
of
Section 11A(1) & 11AB of the Central Excise Act, 1944 read
with Rule 14 of the
Cenvat Credit Rules, 2004. Further, it also appeared
that all these acts of
contraventions appear to constitute offences of the nature and type as
described in
Rule 15(1) of Cenvat Credit Rules, 2004, which rendered them liable for penalty.
8.
Therefore, Show Cause No.V.84/3-33/Dem/2010 dated 22.12.2010
was issued to M/s. Cadmach Machinery Co. Pvt. Ltd.,
3604/05, Phase IV, GIDC,
4
Vatva, Ahmedabad 382445 to Show Cause to the Assistant Commissioner, Central
Excise, Division-II, Ahmedabad-I as to why;
The Central Excise duty amounting to Z. 331220/- (ST Z.
321280/- + Education Cess Z. 6756/- + SHE Cess Z. 3184/-) for
the period from January '10 to October '10 should not be
demanded and recovered in terms of Section 11A (1) of the
Central Excise Act, 1944, read with Rule 14 of the Cenvat
credit rules, 2004.
The penalty in terms of provisions of Rule 15(1) of the Cenvat
Credit rules, 2004 should not be imposed on them.
iii
The interest at the prescribed rate should not be charged and
recovered in terms of Section 11 AB of the Central Excise Act,
1944 read with Rule14 of the Cenvat Credit Rules 2004.
09.
After due process of personal hearing, the Deputy Commissioner.
Division-II, Central Excise, Ahmedabad-1 had adjudicated the case vide 010
No.44/DC/Dem/2010 dated 18.02.2011 wherein the following orders were passed:i)
ii)
iii)
10.
Confirmed the demand of Rs.1,96,705/- (Rupees one lakh
ninety six thousand seven hundred five only) in respect of
Cenvat Credit availed on Air Travel Agency for Rs.4819/-, Tour
Operator Service for Rs.333/-, Motor Vehicle Services for
Rs.4722/-. Cenvat Credit availed on Exhibition for Rs.8137/-,
Catering Service for Rs.1,78,694/-.
Imposed a penalty of Rs.1,96,705/- (Rs.one lakh ninety six
thousand seven hundred five only under Rule 15(1) of the
Cenvat Credit Rules, 2004.
Ordered recovery of interest at the specified rate in terms of
Section 11 AB of the Central Excise Act, 1944 read with Rule 14
of the Cenvat Credit Rules, 2004.
Aggrieved with the above Order-in-original, the assessee filed appeal
before the Commissioner (Appeals)-1, Ahmedabad on the ground that - the
adjudicating authority has not given any specific grounds regarding the denial of the
Cenvat Credit pertaining to Air Travel Agent/Foreign Travel, Motor Vehicle/car
Repair, Exhibition Service and Out Door Catering. The issue of Out Door catering
services are already settled by the larger bench of the case of GTC Industries
reported in 2008(089)RLt 0197. The penalty is also not imposable. The Services
were used in relation to business activity and therefore, the Credit is not deniable.
11. The Commissioner (Appeals-V), Central Excise, Ahmedabad vide
Order-in-Appeal No.05/2013(Ahd-1)CE/AK/Commr(A)Ahd dated 28.01.2013 /
29.01.2013 has passed an order wherein he upheld part of the impugned order and
allowed part of the appeal. The Commissioner (Appeals) allowed Cenvat Credit
availed on Outdoor Catering services amounting to Rs.1,78,694/-, on the ground that
in the appellant's case itself, CESTAT, vide order dated 24.08.2011 have ruled in
favor of the appellants on the condition mentioned therein. The Commissioner (A)
has also upheld the order of penalty to the duty evaded after requantification of the
Demand by the jurisdictional authority under Rule 15(1) of the Cenvat Credit Rules,
2004. However, in respect of the Cenvat Credit availed on Air Travel Agency,
Business Exhibition Service, Authorised Service Station and Tour Operator Service,
the Commissioner (Appeals) upheld the order of the adjudication authority.
Aggrieved with the said Order-in-Appeal, the assessee filed appeal
12.
before the CESTAT, Ahmedabad against the partly confirmed amount involving the
services of Air Travel Agency, Business Exhibition Service, Authorised Service
Station and Tour Operator Service totally involving Rs.18,011/-. The CESTAT,
Ahmedabad, vide Order No.A/10637 & 10638/VVZB/AHD/2013 & M/12285A &
12286-A/VVZB/AHD/2013 dated 06.05.2013 has ordered that "after following the
principles of natural justice, the original adjudicating authority will quantify the
admissibility of credit in respect of remand proceedings in view of the earlier orders
passed by this bench. Appeals are allowed by way of remand". As communicated by
the Assistant Commissioner(RRA), Central Excise, Ahmedabad-1, the said CESTAT
order has been accepted by the Department on monetary limit ground on
03.06.2013.
PERSONAL HEARING.
13.
Accordingly, this case is taken up for adjudication. Personal hearing
was fixed on 25.11.2013. Shri Naimesh K.Oza, Advocate, duly authorized by the
assessee appeared for the personal hearing. He submitted a letter dated 25.11 2013
along with the following documents.
(a)
A declaration dated 20.11.2013, duly signed by the Vice President of
the organization, declaring that no personal air travel expense is incurred by the
organization.
)
Copies of purchase orders from various companies having address at
outside Gujarat.
Copy of Citation No.2013(32)STR 123(Tri-Del) of CESTAT, New Delhi in the
case of M/s.Goodluck Steel Tubes Ltd, Vs.Commissioner of C.Ex, Noida wherein
Cenvat Credit of Service paid on Air Travel Agent Service was allowed.
14.
Due to the change of adjudicating authority, fresh personal hearing
was granted to the assessee for appearing for PH on 13.12.2013. Shri Shashank
Shah, Manager (Excise) appeared for the personal hearing and reiterated the
submissions made earlier and submitted a letter dated 13.12.2013 along with copy
of letter dated 02.01.2013 addressed to the Commissioner(A), Ahmedabad and
photocopies of documents showing that they had sent the material for Exhibition and
after completion of the Exhibition the material had returned to their factory.
DISCUSSION AND FINDING
15.
I have carefully gone through the records of the case and submission
made before me at the time of personal hearing. The Hon'ble CESTAT, Ahmedabad,
vide order No. A/10637 & 10638/WZB/A1-ID/2013 & M/12285 & 12286/WZB/AHD/2013
dated 06.05.2013 has remanded back the case to the original adjudicating authority
to quantify the admissibility of Cenvat Credit involved in the Show Cause Notice No.
V.84/3-33!Dem/2010 dated 22.12.2010 issued against the assessee which was
adjudicated vide 010 No. 44/DC/Dem/2010 dated 18.02.2011. This case was
appealed by the assessee in the Commissioner (Appeals) and subsequently in the
CESTAT. Cenvat Credit involved in the SCN, allowed in the order-in-orginal and
allowed by the Commissioner(Appeals-V) is as per the following chart.
Sr.
No
Name of
Service
01
Air
Travel
Agency
Chartered
Accountant
Service
Exhibition
Service
Tour,. Operator
Service
Out
Door
Catering
Service
Motor Vehicles
Service
(Authorised
Service
Station)
Total
02
03
04
05
06
the
4819.00
0
Cenvat Credit allowed
by
the
Commr.
(Appeals-V),
Cen.Excise, A'bad vide
OIA No.05 /2013 (Ahd-1)
CE/ AK/ Commr (A)
Ahmedabad dated 28/
29.01.2013.
0
134515.00
134515.00
--
8137.00
0
333.00
0
0
178694.00
0
178694.00*
4722.00
0
0
331220.00
134515.00
178694.00*
Amount of SCN Cenvat
Credit
issued for wrong allowed by the
availment
of adjudicating
authority vide 010
Cenvat
No.44/DC/Dem/2
Credit./Rs.
010
dated
18.02.2011/ Rs.
*Subject to observation of para 9 of Hon'ble CESTAT order dated
24.08.2011 in the case of the same assessee.
16.
The issue of Cenvat Credit availed on Chartered accountant service
has already been decided by the vide 010 No. 44/DC/Dem/2010 dated 18.02.2011.
Further, Commissioner(Appeals-V), vide CIA No. 05 /2013 (Ahd-1) CE/ AK/ Commr
(A) Ahmedabad dated 28/ 29.01.2013 has allowed Cenvat Credit on Outdoor
Catering Service as per the condition laid down by the CESTAT order dated
24 08.2011. The said OIA has been accepted by the Department on
26.02.2013/27.02.2013.
7
17.
In the case of Cenvat Credit availed by the assessee amounting to
Rs.333/- and Rs.4722/- availed on Tour Operator Service and Motor Vehicle Service
respectively, the assessee has not come forward with any evidence to show that the
said services were used in or in relation with the production of goods. As regards
the repair of the vehicles, it was not clear that the said services were in or in relation
of production of goods as they have not produced any evidence to that effect. In fact,
in the Para 13 of 010 No. 44/DC/Dem/2010 dated 18.02.2011 itse!f, it is stated that
that the invoices submitted for Motor Vehicle services issued by M/s.Parsoli Motors
are in the name of M/s.Cadmach Machinery Pvt.Ltd situated at A-1-3706-GIDC,
Phase-4, Vatva, Ahmedabad whereas the appellant's unit is situated at Plot
No.3604/3605, Phase-IV, GIDC, Vatva, Ahmedabad and no evidence has been
produced to show that these services were used by the assessee for promotion of
goods. Therefore, I hold that the assessee is not eligible to avail Cenvat Credit of
Rs.333/- and Rs.4722/- in respect of Tour Operator and Motor Vehicle Services and
required to be recovered with interest.
18.
Cv
As regards the Cenvat Credit relating to Exhibition Service, the
assessee submitted copy of Invoice No.PE/2009/Electricity Connection/063 dated
31.03.2010 raised by FICCI for PHARMAceutical EXPO 2009 (Concurrent with 61 st
IndiaPhrmceutlCongsDmber1-3,209copyfdutainve
dated 09.12.2009, receipt of payment of Rs.3,41,930/- by FICCI, New Delhi, copy of
refund of TDS Rs.824/- from FICCI, Transport Receipt and invoice showing return of
the goods sent for exhibition. Therefore, I hold that the assessee has produced
evidence of goods removed for exhibition and subsequently return of the goods and
accordingly, allow the Cenvat Credit of Rs.8137/- on Exhibition Service availed by
the assessee.
19.
Regarding the Cenvat Credit availed on Air Travel Agency for Rs.4819/-, I find
that the assessee has not produced any evidence on record regarding the nature of
work for which the journey was undertaken. A certificate dated 20.11.2013 by Vice
President of the company stating that as per the policy of the organization, they are
not incurring any air travel expenses of any employee other than for business
purposes and copies of a few purchase orders having at outside Gujarat does not
form any evidence that they have used the said services in or in relation to the
manufacture/production of the goods. In the absence of any evidence that the said
services were used in or in relation to the manufacture/production of the goods, I
hold that the assessee is not eligible to avail Cenvat Credit on the said service also
and required to be recovered with interest.
20.
On the basis of CESTAT Order No.A/10637 & 10638NVZB/AHD/2013 &
M/12285 & 12286/VVZB/AHD/2013 dated 06.05.2013, the admissibility of Cenvat
8
Credit involved in this case has been quantified and I hold that the assessee is not
eligible for Cenvat Credit of Rs.333/- towards Tour Operator Service, Rs.4722/towards Repair and Maintenance Service/Motor Vehicle Service, and Rs.4819/towards Air Travel Agency Services totally amounting to Rs.9,874/- as the said
services were not used in or in relation to the manufacture/production of the goods
and therefore not fall within the definition of input Services as per Rule 2(1) of
Cenvat Credit Rules, 2004.
21.
As per the provisions of Rule 9(6) of the Cenvat Credit Rules, 2004 the
burden of proof regarding the admissibility of the Cenvat Credit shall be upon the
manufacturer or provider of output service taking Cenvat Credit. Thus, the assessee
was required to ascertain the admissibility of the Credit. They had failed to do so and
did not disclose it to the department either in their ER-1 Returns or in any other
manner that they have taken credit on the above said services. The assessee,
therefore, contravened the provisions of Rule 2 and 9 of the Cenvat Credit Rules,
2004 with intent to evade payment of duty in as much as they had resorted to taking
Cenvat Credit which was inadmissible to them. Therefore, I hold that they are liable
to penalty in terms of the provisions of Rule 15(1) of the Cenvat Credit Rules, 2004.
22.
Further, the assessee had informed vide their letter dated 15.03 2013 that
they had reversed the amount of Rs.18011/-. The Range Superintendent was asked
to verify the details vide this office letter dated 26.12.2013. The Superintendent,
Range I, Division-II, vide his letter dated 28.01.2014 has informed that the assessee
has debited an amount of Rs.18011/- from R.G.23A Pt.11 vide entry No.2317 dated
01.01.2014.
Accordingly, I pass the following order:ORDER
23.(1) I disallow Cenvat Credit to the tune of Rs.9,874/- (Rupees nine thousand
eight hundred seventy four only) in respect of Cenvat Credit availed by them on Tour
Operator Service, Repair & Maintenance/Motor Vehicle Service and Air Travel
Agency Service as discussed in above paras and order for recovery of the same
under the proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule
14 of the Cenvat Credit Rules, 2004. As the amount has already been reversed by
the assessee vide entry No.2317 dated 01.01.2014, I appropriate Rs.9874/- (Rupees
nine thousand eight hundred seventy four only) under the provisions of Section
11A(1) of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules,
2004.
23(2) I impose penalty of Rs,9.874/- (Rupees nine thousand eight hundred seventy
four only) upon M/s. Cadmac Mchinery Co.Pvt.Ltd, Ahmedabad, under the
provisions of Rule 15(1) of the Cenvat Credit Rules, 2004.
23(3) I order to recover interest at the prescribed rates from M/s.Cadmac Mchinery
Co.Pvt.Ltd, Ahmedabad, on the said wrongly availed Cenvat Credit in terms of the
provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of
Central Excise Act, 1944 applicable during the relevant period now Section 11AA of
the Central Excise Act, 1944.
(Ruchi Bisht)
Assistant Commissioner,
Central Excise, Division-II,
Ahmedabad-I
Date;28.1.2014.
F. No V.84/3-33/Dem/2010
To,
M/s. Cadmach Machinery Co. Pvt. Ltd.,
3904/5, Phase IV, GIDC,
Vatva, Ahmedabad
Copy to
Copy to-(1) The Commissioner, Central Excise, Ahmedabad-1 (through DC,
,RRA), Central Excise, Ahmedabad-1.
The Superintendent (Systems), Central Excise, Ahmedabad-1
(3) The Superintendent, AR-I, Div-I!, Central Excise, Ahmedabad-I.
(4) Guard file.
,

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