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2017 (1) TMI 1230 - AT - Central Excise100% EOU - CENVAT credit - Courier Service - Financial Service - Photography Machine Service - Transport Service - Placement Service - Commission - Consultancy Service - Printer Cartridge Services - denial on the ground that credit had been availed on activities which were not input services within the meaning of Rule 2(l) of Cenvat Credit Rules, 2004 - Held that - the appellant is not entitled to cenvat credit on Car Hire Service and Transport Service which have been specifically excluded in the definition of input service after 01.04.2011. The appellants are entitled to Consultancy Service, Courier Service, Financial Services, Photocopy Machine Services and Placement Services as of those services are covered in the inclusive part of the definition of input service under Rule 2(I) of Cenvat Credit Rules, 2004. Imposition of penalty u/r 15(1) of Cenvat Credit Rules - Held that - since the issue relates to interpretation of provision and there is no mens rea on the part of the appellant, therefore, I do not think it that penalty is imposable under Rule 15(1) of the Cenvat Credit Rules. Appeal disposed off - decided partly in favor of appellant.
Issues:
1. Determination of admissibility of cenvat credit on input services. 2. Interpretation of the definition of 'input service' under Rule 2(l) of Cenvat Credit Rules, 2004. 3. Imposition of penalty under Rule 15(1) of Cenvat Credit Rules. Analysis: Issue 1: Determination of admissibility of cenvat credit on input services The appellant, a 100% EOU engaged in the manufacture and export of readymade garments, availed cenvat credit on certain input services during the period from April 2009 to March 2013. The Department issued show-cause notices demanding cenvat credit repayment on grounds of inadmissible activities. The Assistant Commissioner determined the admissibility of credit in two separate cases, leading to the present appeals. The Commissioner (Appeals) upheld the admissibility of credit for 'Credit Rating Service' but disallowed credit for other services, prompting the appellant to file the appeals. Issue 2: Interpretation of the definition of 'input service' under Rule 2(l) of Cenvat Credit Rules, 2004 The appellant argued that even after the amendment in the definition of 'input service,' they were entitled to cenvat credit on various input services due to their indirect nexus with the manufacturing process. The definition of 'input service' under Rule 2(l) encompasses services used directly or indirectly in relation to the manufacture of final products. The Tribunal analyzed the amended definition and concluded that while Car Hire Service and Transport Service were specifically excluded post-amendment, Consultancy Service, Courier Service, Financial Services, Photocopy Machine Services, and Placement Services fell within the inclusive part of the definition, allowing cenvat credit for these services. Issue 3: Imposition of penalty under Rule 15(1) of Cenvat Credit Rules Regarding the imposition of penalty under Rule 15(1) of Cenvat Credit Rules, the Tribunal held that since the issue involved interpretation without any mens rea on the appellant's part, no penalty was warranted. Consequently, the Tribunal partly allowed the appeals, permitting cenvat credit for certain services while dismissing it for others and ruling out the imposition of penalties. In conclusion, the Tribunal partially allowed the appeals by determining the admissibility of cenvat credit on specific input services in accordance with the amended definition under Rule 2(l) of Cenvat Credit Rules, 2004. The decision also clarified the non-imposition of penalties due to the absence of mens rea.
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