2017 (12) TMI 953 - AT - Central Excise

CENVAT credit - input services in their unit at Shahjahanpur - repair and maintenance service - IPR service - advertisement service - Revenue entertained a view that these input services were not exclusively attributable to the goods manufactured and cleared by the appellant at their Shahjahanpur unit - Held that - though the appellant company is engaged in the manufacture of various items, the service provided by M/s Tekcare on which service tax has been paid, is with reference to products manufactured and cleared by Shahjahanpur unit only - In view of the evidences and supporting documents submitted by the appellant to assert that the repair and maintenance service received by them is only with reference to products manufactured at Shahjahanpur unit, denial of credit is not justifiable - credit allowed. IPR services - Held that - the lower authority is not correct in holding that trademark licence is also for goods procured from other units and marketed by the appellants. The agreement is mainly for use of trademark for manufacturing and selling. The trademark Electrolux cannot be used for the trading goods in terms of the agreement - We are in agreement with the appellant that the terms of agreement are to be read together to understand scope of the same - credit allowed. Advertisement service - Held that - admittedly the Kelvinator brand products are manufactured at other units of the appellant also. However, the credit availed by the appellant is supported by purchase orders and invoices issued to the appellant for advertisement services - denial of credit not justified. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of Cenvat credit on repair and maintenance service.
2. Eligibility of Cenvat credit on IPR services.
3. Eligibility of Cenvat credit on advertisement services.
4. Dispute regarding the limitation of demand.
5. Contestation of penalties imposed on the appellant.

Eligibility of Cenvat credit on repair and maintenance service:
The appellant, engaged in manufacturing refrigerators, availed Cenvat credit on repair and maintenance services at their Shahjahanpur unit. The Revenue contended that these services were not exclusively related to goods manufactured at that unit. The appellant argued that the services were solely for refrigerators manufactured by them at Shahjahanpur, supported by agreements, invoices, and affidavits. The Tribunal found the denial of credit unjustified, emphasizing that the services were indeed linked to products from the Shahjahanpur unit, setting aside the original authorities' findings.

Eligibility of Cenvat credit on IPR services:
Regarding the credit on IPR services, specifically royalty payments to M/s PE Electronics Ltd, the original authority denied credit, suggesting the service might not be solely for goods from the Shahjahanpur unit. However, the Tribunal observed that the agreement focused on using the 'Electrolux' trademark for manufacturing and selling, not for trading goods from other units. The denial of credit was deemed unjustified, as the terms of the agreement indicated the service's relevance to the Shahjahanpur unit.

Eligibility of Cenvat credit on advertisement services:
The appellant faced a challenge on availing credit for advertisement services related to Kelvinator brand products manufactured at various units. Despite this, the appellant provided purchase orders and invoices supporting the credit claim. The Tribunal concluded that the denial of credit was unwarranted, considering the supporting documentation provided by the appellant.

Dispute regarding the limitation of demand and contestation of penalties:
The appellant contested the demand on the grounds of limitation, citing a second notice on the same facts without suppression. Referring to a Supreme Court decision, they argued against penalties. The Tribunal considered these arguments, ultimately setting aside the impugned orders and allowing the appeals based on the detailed analysis and evidence presented by the appellant, emphasizing the justifiability of the Cenvat credits claimed and rejecting the Revenue's contentions.