9911796707
TMI Blog2014 (11) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. Cadila Healthcare Pvt. Limited inasmuch as the services availed by the assessee are in respect of products which are not put to manufacture even after availment of the services in question. The assessee has not commenced manufacture of the final product in view of the fact that if the product is manufactured during the patent period there would be violation of Intellectual Property Rights which would have huge financial implications. Hence, the assessee is waiting till the time the product becomes generic before commencing manufacture of the final product. The Commissioner (Appeals) has, therefore, held that as and when the assessee is able to co-relate the use of the above services as input service used in its final product it would be eligible for credit of such taxes. The Tribunal, in the impugned order has without delving into the facts of the present case and noticing the distinguishing features, has blindly followed its earlier decision in the case of M/s. Cadila Health Care Pvt. Limited. However, the Tribunal being the final fact finding authority having not examined the facts of the case in proper perspective, in the absence of proper facts being placed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show cause notices. The assessee carried the matter in further appeal before the Tribunal which came to be allowed by the impugned order dated 3-8-2009. 5. Having heard Mr. Darshan Parikh, learned senior standing counsel for the appellant and Mr. J.C. Patel learned counsel for the respondent, this court is of the view that appeal requires consideration. Hence Admit. The following substantial question of law arises for determination : Whether the Customs, Excise and Service Tax Appellate Tribunal was justified in holding : (i) Technical Testing and Analysis services (ii) Technical Inspection and Certification services, (iii) Intellectual property services, to be input service as envisaged under Rule 2(l) of the Cenvat Credit Rules, 2004? 6. As can be seen from the impugned order, the Tribunal has merely followed its earlier decision in the case of M/s. Cadila Healthcare Pvt. Limited and has allowed the appeal. It is an accepted position that the above decision of the Tribunal in the case of M/s. Cadila Healthcare Pvt. Limited came to challenged before this court in Tax Appeal Nos. 353 of 2010 [2013 (30) S.T.R. 3 (Guj.)] and 577 of 2010 (sic) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said to have been used for the manufacture of the final product or in relation to the manufacture of the final product? (xviii) In ITC Ltd. v. Collector of Central Excise, Patna, (2003) 1 Supreme Court Cases 678, the Supreme Court was dealing with a converse case where the appellant Company was a manufacturer of cigarettes. The department issued a number of show cause notices to the appellant alleging therein that the appellant had been clearing without payment of excise duty a certain quantity of sticks of cigarettes daily as samples for test in its quality control laboratory within the factory premises. The case of the appellant was that excisable goods contemplated under Section 3(1)(a) of the Act were those which were marketable. Since the cigarettes removed for the purpose of testing in the quality control laboratory situated within the factory premises had not been kept in packets as required under Rule 93 of the Central Excise Rules, 1944 the process of their manufacture was not completed and they were not marketable. The court observed that definition of manufacture under Section 2(f) very clearly includes process which is incidental or ancillary to the completion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is justified in contending that when the product which is sent for testing and analysis is subject to payment of excise duty, the respondents cannot be heard to contend that Cenvat credit is not admissible on the service tax paid in respect of such service. Under the circumstances, the Tribunal was justified in holding that the assessee was entitled to avail of Cenvat credit in relation to service tax paid in relation to technical testing and analysis services availed by it. 5.6 Technical Inspection and Certification. (iv) From the facts and contentions noted hereinabove, it is apparent that technical inspection and certification services have been availed of by the assessee in respect of inspection and checking of instruments which are used for the purpose of measuring size : gauges and vernier calipers, measuring weight : scales, and measuring temperature : temperature indicators, and instruments like thermo hygrometers for measuring humidity and temperature, etc. which are all in the nature of precision instruments which measure various factors with precision. Such instruments/equipments, by their very nature are required to be of the required standards, accurate and preci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in no way connected or used in relation to manufacture of the final products. The main ground for holding that the assessee was not entitled to avail of Cenvat credit on the above services was that such credit is available on business related activities but in fact the assessee had not yet carried on the business. 8. The Commissioner (Appeals) found that the assessee had used the above services for developing a formulation of a drug. Though clinical samples were got tested they were not put to commercial production as it would have violated the Intellectual Property Rights with huge financial implications on them if the product was manufactured during the patent period. Therefore, they were left with no option but to wait till the time the product becomes generic. According to the Commissioner (Appeals), to avail of Cenvat credit under Rule 3 of the Cenvat Credit Rules, 2004 the service should be input service received and used by the manufacturer. In the subject appeal though the assessee had received such services, it had not used the same either directly or indirectly in or in relation to the manufacture of any dutiable pharma product, hence it was not eligible for the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng placed before it, it is not possible for this court to answer the question formulated hereinabove. Under the circumstances, the matter is required to be remitted back to the Tribunal to examine the facts of the present case and thereafter give its findings thereon, keeping in view the decision of this court in the case of M/s. Cadila Health Care Pvt. Limited (supra). However, insofar as the Cenvat credit availed in respect of Technical Testing and Certification services, considering the nature of such services, if the same have been rendered in respect of equipment/instruments which have also been used in or in relation to the manufacture of other final products, the assessee would be entitled to avail of Cenvat credit in respect of such services. 10. In the light of the above discussion, in the absence of proper facts being placed before this court, it is not possible to decide the question posed before this court. The same is, accordingly, left unanswered at this stage. The matter is remitted to the Tribunal to decide the same afresh in accordance with law, after examining the facts of the case. The appeal stands disposed of accordingly, with no order as to costs. - - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
