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2017 (3) TMI 556 - AT - Central ExciseCENVAT credit - input services - manufacture of Open Top Containers - Held that - The appellant availed the accumulated Cenvat Credit on input service in relation to the Banking and other Financial Services, which were not directly or indirectly related to the manufacturing of the final products - the provider of output service M/s.Indian Container Leasing Co.Ltd., had accumulated Cenvat Credit, which has been transferred to a manufacturer of final products for utilisation in their factory, which is beyond the scope of Rule 10 of the CCR, 2004. And therefore, the lower authorities rightly denied the Cenvat Credit - It is a case of interpretation of the provisions of the CCR, therefore, the imposition of penalty u/s 11AC of the CEA, 1944, cannot be invoked - denial of Cenvat Credit, along with interest is upheld. Penalty imposed u/s 11AC is set aside - appeal allowed - decided partly in favor of appellant.
Issues:
Transfer of Cenvat Credit under Rule 10 of Cenvat Credit Rules, 2004; Denial of Cenvat Credit on input services; Interpretation of input service under Rule 2(l) of Cenvat Credit Rules, 2004; Applicability of case laws; Imposition of penalty under Section 11AC of the Central Excise Act, 1944. Transfer of Cenvat Credit under Rule 10: The case involved a dispute regarding the transfer of Cenvat Credit under Rule 10 of the Cenvat Credit Rules, 2004. The appellant, engaged in manufacturing and service provision, availed accumulated credit on input services post a transfer. The Tribunal analyzed Rule 10, emphasizing its applicability to the transfer of Cenvat Credit by a manufacturer to a transferred factory and a service provider to a transferred business. The judgment highlighted that the transfer of Cenvat Credit from a service provider to a manufacturer for utilization in the factory was beyond the rule's scope, leading to the denial of credit. Denial of Cenvat Credit on Input Services: The dispute also revolved around the denial of Cenvat Credit on input services amounting to a specific sum. The Adjudicating Authority disallowed the credit, which was upheld by the Commissioner(Appeals). The Tribunal examined the nature of input services under Rule 2(l) of the Cenvat Credit Rules, 2004, emphasizing services directly or indirectly related to manufacturing as eligible. The judgment noted that the appellant availed credit on services not linked to manufacturing, leading to the denial upheld by lower authorities. Interpretation of Input Service under Rule 2(l): The Tribunal delved into the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004, to determine the eligibility of the services for credit. The rule specified services used directly or indirectly in or in relation to the manufacture of final products as input services. The judgment highlighted the importance of services being related to manufacturing for credit eligibility, a criterion not met in the case under consideration. Applicability of Case Laws: The legal representatives cited relevant case laws to support their arguments. The judgment discussed the applicability of the cited cases - S.S. Engineers v. Commissioner of Central Excise, Pune-I and Sumita Tex Spin Pvt.Ltd. v. Commissioner of C.Ex. & S.T., Rajkot. The Tribunal differentiated the facts of these cases from the present scenario, emphasizing the lack of alignment with the issues at hand, thereby not influencing the final decision. Imposition of Penalty under Section 11AC: Regarding the imposition of penalties under Section 11AC of the Central Excise Act, 1944, the Tribunal considered the case as a matter of interpreting Cenvat Credit Rules. Consequently, the imposition of penalties was deemed inappropriate under the circumstances. The judgment set aside the penalty while upholding the denial of Cenvat Credit with interest. The appeal was disposed of accordingly, providing a comprehensive analysis of the issues at hand.
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