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TMI Blog2025 (1) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... n the nature of post-sale customer facilitation service, is actually availed by customers after sale of the vehicle and would be squarely covered under the definition of the activity related to business and therefore is entitled for input service credit - thus, input service credit is allowable on Roadside Assistance Service. Cenvat credit availed on the services used for Study on Automobile Manufacturing investment - HELD THAT:- A perusal of the records indicate that the Assessee have engaged M/s. IPN Associates to conduct a study on incentive benefits provided by various State Governments in order to decide on the place of investment. We find that the above study has no relation with the business activity of the Assessee i.e., manufacturing and selling of cars. No nexus exists with the business activity of the Assessee. The work assigned does not have anything to do with the customer needs, demand and supply in car market, consumer feedback or any analysis of market data. The study was not research about the products of the Assessee or their marketability. As such, the Assessee s argument that the service availed was in the nature of market research or relating to their business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t taken. iii) Demand of interest on reversal of ineligible Cenvat Credit taken is set aside. iv) Penalty imposed is also set aside. The appeal filed by the Assessee is partly allowed. - MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) AND MR. AJAYAN T.V., MEMBER (JUDICIAL) For the Assessee : Shri S. Muthu Venkataraman, Advocate For the Revenue : Shri M. Selvakumar, Authorised Representative ORDER Excise Appeal No. E/40445/2015 has been filed by M/s. Hyundai Motor India Ltd. (hereinafter referred to as Assessee ) being aggrieved by the impugned Order-in-Original dated 02.12.2024 passed by the Commissioner of Central Excise, LTU confirming the demands of Rs.3,54,57,994/- under Rule 14 of Cenvat Credit Rules, 2004 (CCR) read with Section 11A(4) of Central Excise Act, 1944 (ACT) and imposing penalty of Rs.1,77,28,997/-, under Rule 15(2) of CCR read with Section 11AC of the ACT. Whereas Excise Appeal No. E/40546/2015 has been filed by the Revenue assailing the said Order-in-Original against dropping of interest on recovery of ineligible Cenvat Credit under Rule 14 of CCR. Both the Appeals involving the same impugned order are being taken up together for disposal by issuance of this common o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Rule 2(I) of CCR as it related to manufacturing in the premises and the study was incidental to the setting up of the factory premises. iii. It was contended that the denial of Cenvat on demurrage charges was not sustainable, as the penal charges were paid to procure material for manufacturing and hence service tax paid on it could be considered as input service. iv. It was averred that the Penalty imposed was unsustainable as there was sufficient balance of cenvat Credit and more than Rs. 70 Crores was lying in credit balance. In this regard reliance was placed on the following decisions: - (a) E.I. Dupont India Pvt. Ltd. Vs. CCE, Vadodara [2007 (220) ELT 169 (Tri.-Ahmd.)] (b) Central Warehousing Corporation Vs. Commissioner of Service T, Ahmedabad [2013 (30) STR 556 (Tri.-Ahmd.)] (c) Lakshmi Machine Works [2011 (63) ELT 625] (d) Stellar Chemicals Laboratories Vs. Commissioner of Central Excise, Vadodara [2001(134) ELT 504 (Tri.-Mumbai)] 4. Whereas the contentions of the Revenue on the issue of levy of interest on illegal / ineligible Cenvat credit availed by the Assessee are: - i. That the decision in the impugned order to waive interest was legally not tenable as the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty imposed in the impugned order was legally justified. 7. We have carefully considered the submissions made by both the sides and also evidences available on records. 8. The issues that arise for decision in these appeals are: - i. Whether the Assessee is eligible to take input service credit on Road Side Assistance Service, Market Research and Service Tax paid on Demurrage and, whether the penalty imposed was justified? and, ii. Whether demand of interest would be attracted on Cenvat Credit wrongly taken in the Books but not utilised? 9. As the issues relate to availment of Cenvat Credit, we find it important to reproduce the definition of Input service as per Rule 2(l) of CCR, 2004: - [2(l) Input service means any service, - (i) used by a provider of taxable service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Hon ble High Court, Mumbai in the case of CCE, Nagpur Vs. M/s. Ultratech Cement [2010 (260) ELT 369 (Bom.)] citing that the issue had not attained finality due to the pendency of departmental appeal against the said order of the High Court. We find that the Apex Court had since dismissed the appeal of the department on monetary limits on 06.02.2019. We have gone through Section 4(3) of the Central Excise Act, 1944 and we find that the transaction value means the price actually paid or which are payable for the goods when sold and those includes servicing and warranty also. Admittedly the service and warranty is post manufacturing expenses which are to be provided to the customer after the sale. As per the provision of Section 4(3)(d) the value of warranty and servicing, which is a post manufacturing activity are includible in the assessable value and therefore, these expenses incurred are entitled for input service credit. We find that RSA being in the nature of post-sale customer facilitation service, is actually availed by customers after sale of the vehicle and would be squarely covered under the definition of the activity related to business and therefore is entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to conduct a study on Automobile Manufacturing Investment and whether this service falls within the definition of input service as per Rule 2(l) of CENVAT Credit Rules, 2004 is to be determined in this appeal. The Assessee has submitted that a study on the investment climate across the country was conducted through a professional agency and this has to be treated as market research and the word market research has been specifically mentioned in the definition of input service under Rule 2(l) of CCR, 2004. 10.2.2 However, a perusal of the records indicate that the Assessee have engaged M/s. IPN Associates to conduct a study on incentive benefits provided by various State Governments in order to decide on the place of investment. We find that the above study has no relation with the business activity of the Assessee i.e., manufacturing and selling of cars. No nexus exists with the business activity of the Assessee. The work assigned does not have anything to do with the customer needs, demand and supply in car market, consumer feedback or any analysis of market data. The study was not research about the products of the Assessee or their marketability. As such, we are of the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough service tax is not chargeable on container detention charges, the Assessee is eligible to take input tax credit of service tax paid on demurrage charges paid to the Port Trust as it is related to procurement of inputs and also it can be said to be connected and in or in relation to the business of the Assessee. As the Assessee had paid the said demurrage charges together with the service tax to the Port Trust, the transaction being revenue neutral, the availment of credit need not be interfered with. Demand of Interest on irregular Cenvat Credit taken: - 11. Regarding the issue of payment of applicable interest on Cenvat Credit reversed in terms of Rule 14 of CCR,2004, we find that the impugned Order-in-Original No. LTUC/432/2014-C dated 02.12.2014 dropped the demand of interest by relying on the decision of the Hon ble High Court, Madras in the case of CCE, Madurai Vs. M/s. Strategic Engineering (P) Ltd. [2014-TIOL-466-HC-MAD-CX], considering the fact that the Assessee had an accumulated credit balance of around Rs.70 Crores evidencing that the ineligible credit availed was not utilised. The Hon ble High Court of Karnataka in the case of Commissioner of Central Excise Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vantage of wrong entry. He did not take the Cenvat credit or utilized the Cenvat Credit. It is in those circumstances the Tribunal was justified in holding that when the assessee has not taken the benefit of the Cenvat credit, there is no liability to pay interest. Before it can be taken, it had been reversed. In other words, once the entry was reversed, it is as if that the Cenvat credit was not available. Therefore, the said judgment of the Apex Court has no application to the facts of this case. It is only when the assessee had taken the credit, in other words by taking such credit, if he had not paid the duty which is legally due to the Government, the Government would have sustained loss to that extent. Then the liability to pay interest from the date the amount became due arises under Section 11AB, in order to compensate the Government which was deprived of the duty on the date it became due. Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise. 12. Further, Hon ble High Court of Madras in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as penalty. 11 . It is an admitted fact that Rule 14 of the Cenvat Credit Rules has been subsequently amended, wherein it has been clearly stated as taken and utilised . Therefore, it is quite clear that mere taking itself would not compel the assessee to pay interest as well as penalty. Further, as pointed out earlier, the subsequent amendment has given befitting answer to all doubts existed earlier. Since, the subsequent amendment has cleared all doubts existed earlier in respect of Rule 14 of the said Rules, it is needless to say that the argument advanced by the learned counsel appearing for the appellant/Department is erroneous, whereas the argument advanced on the side of the respondent is really having merit and the substantial questions of law settled in the present Civil Miscellaneous Appeal are not having substance and altogether the present Civil Miscellaneous Appeal deserves to be dismissed. 12 . In fine, this Civil Miscellaneous Appeal deserves dismissal and accordingly is dismissed without costs and the order passed in Final Order No. E/920/2006, dated 3-7-2009 is confirmed. As such, we approve the decision of the Adjudicating Authority vide Order-in-Original ..... X X X X Extracts X X X X X X X X Extracts X X X X
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