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TMI Blog2013 (12) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... , period till the decision was taken, appellant availed Cenvat credit of the service tax paid by such consultant as service provider. Having abandoned the plan of diversification in the manufacturing herbal products, the services rendered by the consultant on this specific products, credit of said service tax, would not be available to the appellant - appellant has no case of availing Cenvat credit of the service tax paid by the service provider. Penalty seems to be unwarranted as the appellant had an idea of diversification into manufacturing activity of herbal products. When they availed cenvat credit of the service tax paid on the services of the consultant, who was engaged for considering such an activity, they had an intention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al before the first appellate authority. The first appellate authority also did not agree with the contentions raised by the appellant and rejected his appeal. Hence this appeal. 4. Ld. counsel appearing on behalf of the appellant would submit that the appellant is a manufacturer of medicaments falling under Chapter No. 30. It is his submission that in order to diversify into various other activities, appellant shortlisted herbal products as one of the area wherein they would like to expand the business; after such policy decision, they engaged services of one M/s. Millennium Herbal Care for research, standardisations of raw material and preclinical studies; the said M/s. Millennium Herbal Care raised an invoice on which service tax liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product. It is also his submission that the provisions of Rule 2(l) cannot be brought into play for the purpose of availment of Cenvat credit, as it is undisputed that the appellant had not produced any herbal products after availing Cenvat credit. It is his submission that there has to be a nexus between the final products manufactured and cleared for availing Cenvat credit of service tax paid on the services rendered. Ld. D.R. would submit that the judgment of the Hon ble High Court in the case of Ind-Swift Laboratories Ltd. - 2011 (265) E.L.T. 3 (S.C.) = 2012 (25) S.T.R. 184 (S.C.) for imposition of interest will come into play as the Apex Court has held that once the credit has been availed wrongly, interest liability arises. He would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness exigencies. 8. On the above mentioned factual matrix, it needs to be appreciated whether the availment of cenvat credit by the appellant under Cenvat Credit Rules, 2004 of the service tax paid by the service provider is in accordance with Law or not. 9. Plain reading of the definition of input service as enshrined in Rule 2(l) of the Cenvat Credit Rules, 2004 would indicate that input service is a service which is used by provider of a taxable service for providing output service or used by the manufacturer directly or indirectly, in or in relation to the manufacturer of final products. The services received by the appellant from service provider in this case was regarding the starting up of a formation for manufacturing of herbal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer authorities under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944, I find that the penalty seems to be unwarranted as the appellant had an idea of diversification into manufacturing activity of herbal products. When they availed cenvat credit of the service tax paid on the services of the consultant, who was engaged for considering such an activity, they had an intention to start the activity of herbal products. They could have had a bona fide belief in availing the Cenvat credit on such a service tax. In view of this, I hold that the penalty imposed by the adjudicating authority under Rule 15 of the Cenvat Credit Rules, 2004 seems to be inconsistent as the said rules envisages imposition of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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