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TMI Blog2019 (6) TMI 1597X X X X Extracts X X X X X X X X Extracts X X X X ..... OUDHARY, MEMBER(JUDICIAL) AND MR. C.L. MAHAR, MEMBER(TECHNICAL) Shri Amit Jain Shri Dhrub Tiwari, Advocates for the appellant. Shri H.C. Saini, Authorised Departmental Representative for the respondent. ORDER The issue in this appeal is whether the cenvat credit has been rightly denied on IPR and Management Consultancy Services used in or in relation to the manufacturing activities of the appellant. Further, the issue is whether under the facts and circumstances, the extended period of limitation is rightly invoked for the period in dispute March, 2011 to May, 2011. 2. The brief facts are that the Appellant, formerly known as Spicer India Ltd, is a joint venture of Dana Corporation, USA ( Dana ) and Anand Investment Pvt. Ltd., India, and is engaged Inter alia, in the manufacture of drive shafts and axles ( final products ) for automotive industry of Light duty and Heavy duty commercial vehicles, falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985. 3. The Appellant has plants at Satara, Chakan, Jadoli etc., where they are manufacturing the above final product and clearing it on payment of duty. Appellant has also set up a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... royalty payable to Dana. The Appellant used these services commonly for both exempted final products as well as dutiable components and parts and paid service tax thereon. 8. In as much as the royalty (forming part of IPR services) and consideration for the Management Consultancy services so paid were in respect of exempted final products as well as dutiable components and parts, and these services during the relevant period were covered under Rule 6(5) of the Credit Rules, the Appellant availed Cenvat credit of service tax paid in respect of these two services in accordance with the provisions of Cenvat Credit Rules, 2004 ( Credit Rules ). 9. During the audit of Appellant s records on 14/15.01.2013, the Department noticed the availment of credit by the Appellant on the aforesaid services and formed the view that these services were used exclusively in the manufacture of final products cleared without payment of duty i.e. exempted goods, hence, the credit is not admissible to the Appellant. The said audit objection was communicated to the Appellant vide letter dated 06.05.2013. The Appellant replied to the audit objection vide letter dated 31.05.2013, clarifying inter alia, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objection is that both these services were used exclusively in relation to the manufacture of exempted goods i.e. final products cleared without duty payment, hence, the credit of service tax paid on these services is not admissible. Credit was correctly availed on IPR services. 16. It is submitted that the Appellant received and used IPR services, on which royalty was paid, not only in respect of final products manufactured and cleared without duty payment [i.e. exempted goods], but also in respect of components and parts cleared upon payment of duty [i.e. dutiable goods]. 17. As mentioned above, the royalty so paid was calculated as 3% / 2.85% of the net sales price of the total domestic sales and exports of Licensed Products made by the Appellant. The term Licensed Products is defined under the Agreements as those Dana-designed axle products listed in Schedule A, including parts and components thereof. Schedule A (relating to the relevant period when services were received) to the IPR Agreement lists out different kinds of axles and driveshafts and specifically includes all components and parts thereof . 18. Even the Trademark Agreement whereby the Appellant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices were used exclusively in relation to the manufacture of exempted final products. 24. In this regard, it is submitted that Shri Bipin Agarwal, in reply to Question No. 10, had clearly stated that We received technical nature services and management services to manufacture Axel Drive Shaft their components. However, the Ld. Commissioner (Appeals) has only reproduced selective potion of the said statement by omitting the words and their components . Thus, such finding is factually incorrect, hence, unsustainable and is liable to be set aside. 25. It is further urged that omission of Rule 6(5) of Cenvat Credit Rules, 2004 w.e.f. 14.2011 is irrelevant, as subject services were received prior to 1.4.2011. Further, the eligibility to take cenvat credit is determinable on the date the goods or services are received and not the date on which the credit is recorded in the books of accounts. This fact of receipt of the service in dispute, prior to 1.4.2011 is not in dispute. Reliance is also placed on Circular No.943/4/2011-CX dated 29.04.2011, wherein Board clarified that input service credit is admissible even after 1.4.2011 if the services were rendered and received pri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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