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TMI Blog2024 (5) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest, at the applicable rates, on the aforesaid adjudged sums to be recovered from the party under Rule 14 of the said Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 from the party. 3. I impose penalty of Rs.1,03,47,921/- (Rs One Crore Three Lakh Forty Seven Thousand and Nine Hundred Twenty One) under Rule 15(1) of the Cenvat Credit Rules, 2004." 2.1 The facts of the case in brief that M/s Denso India Pvt. Ltd. (hereinafter referred to as 'the Appellants') is engaged in the manufacture of Alternator Assembly, Starter Assembly, Wiper Assembly, Magneto/CDI/FLY WH, Fan/Vent/Blower and Spares of Motor Vehicles. The Appellant was availing Cenvat credit on various capital goods, inputs and input services used directly or indirectly in the manufacture of excisable goods as per the provisions of the Cenvat Credit Rules, 2004. The Appellant, out of the duty paid inputs received in this factory, subsequently cleared certain quantity of inputs after performing quality check to another factory situated at Haridwar after reversing credit of excise duty availed on such inputs. 2.2 Audit of the Appellant was carried out from 31.03.2011 to 13.06.2012 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e wrongly availed Cenvat credit of Service Tax is thus liable to be recovered by invoking extended period." 2.5 Subsequently, another show cause notice dated 22.12.2014 was issued on the same grounds. The Appellant filed the reply and contested the demand. The impugned order has been passed upholding the demand. The Appellant being aggrieved by the impugned order preferred appeal against the impugned order. Apart from reiterating the submissions made in the memorandum of appeal filed by the appellant, the following written submissions are being made. Hence the present appeal before the Tribunal. 3. The learned advocate appearing on behalf of the appellant submits that the appellant is not liable to reverse reverse cenvat credit of the service tax availed on any services in relation to inputs received in the factory and part quantity of which was cleared to another factory because there is no provision in the Credit Rules or any other statute, which provides for reversal of such cenvat credit. 4. Learned Departmental Representative has justified the impugned order and prayed that the appeal filed by the appellant be dismissed being devoid of any merits. 5. Heard both the sides a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earance of inputs/capital goods as such from the factory of the manufacturer. The present Rule 3(5) of the Cenvat Credit Rules, 2004 does not mention 'Input Services' amongst the credits required to be reversed and therefore it is not possible to demand reversal of credit of input services. There is need to amend the rules so that reversal of credit taken on input services can also be achieved Discussion & Decision The conference noted that Rule 3(5) of the CENVAT Credit Rules, 2004 does not provide for reversal in respect of input services for a reason. Input services are consumed once the inputs and capital goods are received in the factory. Thus, on receipt of inputs and capital goods, the associated input services have to be considered as consumed within the factory and become a cost to the business. Demand for reversal of the input services credit, when such input services cannot be reused, unlike inputs and capital goods which are available for reuse would not be fair to the trade. Therefore, the conference concluded that the present rule represents the correct provision in accordance with the principles of input tax credit. Rule 3(5) of the Cenvat Credit Rules, 2004, doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The same is set aside. The appeal is allowed." 11. It has been specifically mentioned in the memo of appeal by the Revenue that no appeal was preferred by it against the judgment relied upon by the Tribunal. 12. Be that as it may, however, still even on merits, this court finds that the view as expressed by the Tribunal is strictly in conformity with the Rules. Rule 2(k) of the Rules defines 'input', whereas Rule 2(l) defines 'input service', meaning thereby both the terms have been defined independently. Rule 3 defines the term 'Cenvat credit', which includes duty paid under various enactments and also the service tax leviable under Section 66 of the Finance Act, 1994. Rule 3(5) of the Rules only talks about the Cenvat credit taken on inputs or capital goods. It does not refer to the Cenvat on input service, whereas Rule 5, on which reliance is sought to be placed by the Revenue, specifically talks about the Cenvat credit on any input or input service used in the manufacture of final product. This rule pertains to refund in case of exports, which stands altogether on different footings. Once the rule-making authority has defined the terms specifically and used the same in differ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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