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Transcription

1 cro p 377-6, 50-11d, 5c I II, 31- e,laild, I. st-iftt 1-) add, OFFICE OF THE ASSISTANT COMMISSIONER, CENTRAL EXCISE, DIVISION - II, AHMEDABAD- I. THIRD FLOOR, CENTRAL EXCISE BHAVAN, NEAR POLYTECHNIC, AMBAWADI, AHMEDABAD maw 31V co / By R.P.A.D. th-t.#.v.84/3-33/dem/2010. arrtu Date of Order: fr aftrlf / Date of issue : t,diu td/passed by : Ms.Ruchi Bisht / Assistant Commissioner 3nt1T N. / Order-in-Original No /AC /03/Div-I1/ Tiffzfr).111 crit 7rt t, 31/3 crta-r 1=4-cr t This copy is granted free of charge for private use of the person(s) to whom it is sent. 31-rtw a it r &1-1 -a- 'II a- 60(#1-5) c jertf 3c-L-11d, 311IT-drgt, ,11(,04 T. t.v.1 ch i -1.4-)(11 t I $4-1 arcfr - LIT 2/-(e PTC)!1,0-ch e d-r -fitcr I Any person deeming himself aggrieved by this order may appeal against this order in Form E.A.1 to Commissioner (Appeals), Central Excise, Central Excise Bhavan, Ambawadi, Ahmedabad within sixty days from the date of its communication. The appeal should hear a court fee stamp of Rs.2/- only. 3-Ta , 31-cfm-wacr TAT cif-ft er 1ri'dzri - rftw 71.ĀT VrItCr 1311 trt 30-11d, (311, 2001 fa-trag- 3 t crratir --2:11T _T 6 t-(11a17 f+- T vrfp- I T4:ItTITZT 4-M,1 0-1 f+-7 :- The Appeal should be filed in Form No. E.A.1 in duplicate. It should be signed by the appellant in accordance with the provisions of Rule 3 of Central Excise (Appeals) Rules, It should be accompanied with the following :- (i) 37a" 1;11c Copy of accompanied Appeal. (ii) zr r ClfdRTY 31-2-TaT T 3TraW ftt-4" 3ft17 t"t d c 3 chch.qch TIT 317z - r 31-1t21 D ILR 2/- - rf'o-tr I Copies of the decision or, one of which at least shall be certified copy, the order appealed against or the other order which must bear a court fee stamp of Rs.2.00/-. Sub: Denovo Adjudication in the case of OM No.44/DC/DEM/2010 dated (Show Cause Notice No.V.84/3-33/Dem/2010 dated ) as per CESTAT Order No.A/10637 & 10638/WZB/AHD/2013 & M/12285 & 12286/WZB/AHD/2013 dated matter reg.

2 BRIEF FACTS OF THE CASE : M/s. Cadmach Machinery Co. Pvt. Ltd., 3604/05, Phase IV, GIDC, Vatva, Ahmedabad (herein after referred to as "the assessee"), holding Central Excise Registration No AAA CC 6242 XM001, is engaged in the manufacture and sale of Pharmaceutical Machinery & its Spares falling under CH.No.84, 85 & 90 of the Central Excise Tariff Act, During the scrutiny of the records of the assessee, it was revealed that the said assessee had availed Cenvat Credit of Tax paid on various services. Hence, Superintendent, AR-I, Div-II, Ahmedabad-I vide letter F. No. AR- 1/POE-Cadmach/ dated called for the details of the same. The assessee submitted the details of Tax credit vide their letter dated It appeared that the said assessee had wrongly availed the Cenvat Credit on Tax paid on Air Travel Agency, Chartered Accountant, Exhibition, Tour Operator, Out door Catering & Motor Vehicle (hereinafter referred to as the "said services") which were not input services as per Cenvat Credit Rules, The said Tax credit were availed on the basis of bills raised by the service providers during the period from January '10 to October '10 amounting to Rs /- (ST Z /- + Education Cess Z. 6756/- + SHE Cess Z. 3184/-). 3. As per the definition of the Input under Rule 2(I) (iii) of the Cenvat Credit Rules, 2004, Input service means any service, "used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal and includes services used in relation to setting up, modernization, renovation or repairs of a factory premises of provider of output service or an office relating to such factory or premises, advertisement or sale promotion, market research, storage up to the place of removal procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching, and training, computer networking, credit rating, share registry, and security inward transportation of inputs or capital goods and outward transportation up to the place of removal." 4. It appeared that the Input Tax Credit under the category of Air Travel Agency amounting to Rs (ST Z. 4728/- + Ed. Cess 77/- + SH. Cess Z. 14/-), Chartered Accountant amounting to Z (ST Z /- + Ed. Cess 2613/- + SH. Cess Z. 1307/-), which is for internal audit of records, Exhibition amounting to Z. 8137/- (ST Z. 7900/- + Ed. Cess Z.158/- + SH. Cess Z. 79/-), Tour operator amounting to Z. 333/4 ST Z. 323/ - + Ed. Cess Z. 6/- + SH. Cess Z. 4/-), Outdoor Catering amounting to Z /-( ST Z.

3 J /- + Ed. Cess Z SH. Cess Z. 1786/-), Motor Vehicles under the category of Authorized Station amounting to Z. 4722/- (ST Z. 458/- + Ed. Cess Z. 97/- + SH. Cess Z. 44/-) is not admissible as these services are not used in or in relation to the manufacture of final product and clearance of final product from the place of removal & as such it appeared that the services are not covered under the ambit of "Input s". Hence, it appeared that the Credit of the said services taken by the assessee is not admissible. Therefore, the said assessee is required to reverse the said Tax credit taken along with appropriate rate of interest as applicable. 5. The aforesaid services were not used in or in relation to the manufacture of final products and clearance of final products up to the place of removal and as such, it appeared that the said services do not fall under the definition/purview of input services'. Accordingly, the said Cenvat Credit of input services taken by the assessee are not correct and proper and not admissible as 'input services' in terms of the provisions of Cenvat Credit Rules, Further, the said assessee had not disclosed in their ER-I returns that they had taken Credit of Tax paid on various services. As per the provisions of Rule 9(6) of the Cenvat Credit Rules,2004, the burden of proof regarding the admissibility of the CENVAT Credit shall lie upon the manufacturer or provider of output service taking such credit. Thus, it appeared that assessee was required to ascertain the admissibility of the credit. However, the assessee failed to do so and not disclosed to the department either in their ER-I returns or in any other manner that they have taken credit on the above said various services. Thus, it appeared that the said assessee have contravened the provisions of Rule 2 and 9 of Cenvat Credit Rules, 2004 with an intent to evade payment of duty in as much as they have resorted to taking Cenvat Credit which was inadmissible to them. 7. All these acts of contravention on the part of the said assessee, appeared to have been committed with an intention to evade payment of Central Excise duty and therefore the total Credit during the period from January '10 to October '10, amounting to Z /- ( ST Z /- + Education Cess Z. 6756/- + SHE Cess Z. 3184/-) are wrongly taken on the aforesaid input services and are required to be demanded and recovered from them along with interest in terms of Section 11A(1) & 11AB of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, Further, it also appeared that all these acts of contraventions appear to constitute offences of the nature and type as described in Rule 15(1) of Cenvat Credit Rules, 2004, which rendered them liable for penalty. 8. Therefore, Show Cause No.V.84/3-33/Dem/2010 dated was issued to M/s. Cadmach Machinery Co. Pvt. Ltd., 3604/05, Phase IV, GIDC,

4 4 Vatva, Ahmedabad to Show Cause to the Assistant Commissioner, Central Excise, Division-II, Ahmedabad-I as to why; The Central Excise duty amounting to Z /- (ST Z /- + Education Cess Z. 6756/- + SHE Cess Z. 3184/-) for the period from January '10 to October '10 should not be demanded and recovered in terms of Section 11A (1) of the Central Excise Act, 1944, read with Rule 14 of the Cenvat credit rules, The penalty in terms of provisions of Rule 15(1) of the Cenvat Credit rules, 2004 should not be imposed on them. iii The interest at the prescribed rate should not be charged and recovered in terms of Section 11 AB of the Central Excise Act, 1944 read with Rule14 of the Cenvat Credit Rules After due process of personal hearing, the Deputy Commissioner. Division-II, Central Excise, Ahmedabad-1 had adjudicated the case vide 010 No.44/DC/Dem/2010 dated wherein the following orders were passed:- i) Confirmed the demand of Rs.1,96,705/- (Rupees one lakh ninety six thousand seven hundred five only) in respect of Cenvat Credit availed on Air Travel Agency for Rs.4819/-, Tour ii) iii) Operator for Rs.333/-, Motor Vehicle s for Rs.4722/-. Cenvat Credit availed on Exhibition for Rs.8137/-, Catering for Rs.1,78,694/-. Imposed a penalty of Rs.1,96,705/- (Rs.one lakh ninety six thousand seven hundred five only under Rule 15(1) of the Cenvat Credit Rules, Ordered recovery of interest at the specified rate in terms of Section 11 AB of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, Aggrieved with the above Order-in-original, the assessee filed appeal before the Commissioner (Appeals)-1, Ahmedabad on the ground that - the adjudicating authority has not given any specific grounds regarding the denial of the Cenvat Credit pertaining to Air Travel Agent/Foreign Travel, Motor Vehicle/car Repair, Exhibition and Out Door Catering. The issue of Out Door catering services are already settled by the larger bench of the case of GTC Industries reported in 2008(089)RLt The penalty is also not imposable. The s were used in relation to business activity and therefore, the Credit is not deniable. 11. The Commissioner (Appeals-V), Central Excise, Ahmedabad vide Order-in-Appeal No.05/2013(Ahd-1)CE/AK/Commr(A)Ahd dated / has passed an order wherein he upheld part of the impugned order and allowed part of the appeal. The Commissioner (Appeals) allowed Cenvat Credit availed on Outdoor Catering services amounting to Rs.1,78,694/-, on the ground that in the appellant's case itself, CESTAT, vide order dated have ruled in favor of the appellants on the condition mentioned therein. The Commissioner (A)

5 has also upheld the order of penalty to the duty evaded after requantification of the Demand by the jurisdictional authority under Rule 15(1) of the Cenvat Credit Rules, However, in respect of the Cenvat Credit availed on Air Travel Agency, Business Exhibition, Authorised Station and Tour Operator, the Commissioner (Appeals) upheld the order of the adjudication authority. 12. Aggrieved with the said Order-in-Appeal, the assessee filed appeal before the CESTAT, Ahmedabad against the partly confirmed amount involving the services of Air Travel Agency, Business Exhibition, Authorised Station and Tour Operator totally involving Rs.18,011/-. The CESTAT, Ahmedabad, vide Order No.A/10637 & 10638/VVZB/AHD/2013 & M/12285A & A/VVZB/AHD/2013 dated has ordered that "after following the principles of natural justice, the original adjudicating authority will quantify the admissibility of credit in respect of remand proceedings in view of the earlier orders passed by this bench. Appeals are allowed by way of remand". As communicated by the Assistant Commissioner(RRA), Central Excise, Ahmedabad-1, the said CESTAT order has been accepted by the Department on monetary limit ground on PERSONAL HEARING. 13. Accordingly, this case is taken up for adjudication. Personal hearing was fixed on Shri Naimesh K.Oza, Advocate, duly authorized by the assessee appeared for the personal hearing. He submitted a letter dated along with the following documents. (a) A declaration dated , duly signed by the Vice President of the organization, declaring that no personal air travel expense is incurred by the organization. ) Copies of purchase orders from various companies having address at outside Gujarat. Copy of Citation No.2013(32)STR 123(Tri-Del) of CESTAT, New Delhi in the case of M/s.Goodluck Steel Tubes Ltd, Vs.Commissioner of C.Ex, Noida wherein Cenvat Credit of paid on Air Travel Agent was allowed. 14. Due to the change of adjudicating authority, fresh personal hearing was granted to the assessee for appearing for PH on Shri Shashank Shah, Manager (Excise) appeared for the personal hearing and reiterated the submissions made earlier and submitted a letter dated along with copy of letter dated addressed to the Commissioner(A), Ahmedabad and photocopies of documents showing that they had sent the material for Exhibition and after completion of the Exhibition the material had returned to their factory.

6 DISCUSSION AND FINDING 15. I have carefully gone through the records of the case and submission made before me at the time of personal hearing. The Hon'ble CESTAT, Ahmedabad, vide order No. A/10637 & 10638/WZB/A1-ID/2013 & M/12285 & 12286/WZB/AHD/2013 dated has remanded back the case to the original adjudicating authority to quantify the admissibility of Cenvat Credit involved in the Show Cause Notice No. V.84/3-33!Dem/2010 dated issued against the assessee which was adjudicated vide 010 No. 44/DC/Dem/2010 dated This case was appealed by the assessee in the Commissioner (Appeals) and subsequently in the CESTAT. Cenvat Credit involved in the SCN, allowed in the order-in-orginal and allowed by the Commissioner(Appeals-V) is as per the following chart. Sr. Name of the Amount of SCN Cenvat Credit Cenvat Credit allowed No issued for wrong allowed by the by the Commr. availment of adjudicating (Appeals-V), Cenvat authority vide 010 Cen.Excise, A'bad vide Credit./Rs. No.44/DC/Dem/2 OIA No.05 /2013 (Ahd-1) 010 dated CE/ AK/ Commr (A) / Rs. Ahmedabad dated 28/ Air Travel Agency 02 Chartered Accountant 03 Exhibition Tour,. Operator Out Door * Catering 06 Motor Vehicles (Authorised Station) Total * *Subject to observation of para 9 of Hon'ble CESTAT order dated in the case of the same assessee. 16. The issue of Cenvat Credit availed on Chartered accountant service has already been decided by the vide 010 No. 44/DC/Dem/2010 dated Further, Commissioner(Appeals-V), vide CIA No. 05 /2013 (Ahd-1) CE/ AK/ Commr (A) Ahmedabad dated 28/ has allowed Cenvat Credit on Outdoor Catering as per the condition laid down by the CESTAT order dated The said OIA has been accepted by the Department on /

7 7 17. In the case of Cenvat Credit availed by the assessee amounting to Rs.333/- and Rs.4722/- availed on Tour Operator and Motor Vehicle respectively, the assessee has not come forward with any evidence to show that the said services were used in or in relation with the production of goods. As regards the repair of the vehicles, it was not clear that the said services were in or in relation of production of goods as they have not produced any evidence to that effect. In fact, in the Para 13 of 010 No. 44/DC/Dem/2010 dated itse!f, it is stated that that the invoices submitted for Motor Vehicle services issued by M/s.Parsoli Motors are in the name of M/s.Cadmach Machinery Pvt.Ltd situated at A GIDC, Phase-4, Vatva, Ahmedabad whereas the appellant's unit is situated at Plot No.3604/3605, Phase-IV, GIDC, Vatva, Ahmedabad and no evidence has been produced to show that these services were used by the assessee for promotion of goods. Therefore, I hold that the assessee is not eligible to avail Cenvat Credit of Rs.333/- and Rs.4722/- in respect of Tour Operator and Motor Vehicle s and required to be recovered with interest. 18. As regards the Cenvat Credit relating to Exhibition, the Cv assessee submitted copy of Invoice No.PE/2009/Electricity Connection/063 dated raised by FICCI for PHARMAceutical EXPO 2009 (Concurrent with 61 st dated , receipt of payment of Rs.3,41,930/- by FICCI, New Delhi, copy of refund of TDS Rs.824/- from FICCI, Transport Receipt and invoice showing return of the goods sent for exhibition. Therefore, I hold that the assessee has produced evidence of goods removed for exhibition and subsequently return of the goods and accordingly, allow the Cenvat Credit of Rs.8137/- on Exhibition availed by the assessee. Indian Pharmaceutical Congress December 11-13, 2009, copy of duty paid invoice 19. Regarding the Cenvat Credit availed on Air Travel Agency for Rs.4819/-, I find that the assessee has not produced any evidence on record regarding the nature of work for which the journey was undertaken. A certificate dated by Vice President of the company stating that as per the policy of the organization, they are not incurring any air travel expenses of any employee other than for business purposes and copies of a few purchase orders having at outside Gujarat does not form any evidence that they have used the said services in or in relation to the manufacture/production of the goods. In the absence of any evidence that the said services were used in or in relation to the manufacture/production of the goods, I hold that the assessee is not eligible to avail Cenvat Credit on the said service also and required to be recovered with interest. 20. On the basis of CESTAT Order No.A/10637 & 10638NVZB/AHD/2013 & M/12285 & 12286/VVZB/AHD/2013 dated , the admissibility of Cenvat

8 8 Credit involved in this case has been quantified and I hold that the assessee is not eligible for Cenvat Credit of Rs.333/- towards Tour Operator, Rs.4722/- towards Repair and Maintenance /Motor Vehicle, and Rs.4819/- towards Air Travel Agency s totally amounting to Rs.9,874/- as the said services were not used in or in relation to the manufacture/production of the goods and therefore not fall within the definition of input s as per Rule 2(1) of Cenvat Credit Rules, As per the provisions of Rule 9(6) of the Cenvat Credit Rules, 2004 the burden of proof regarding the admissibility of the Cenvat Credit shall be upon the manufacturer or provider of output service taking Cenvat Credit. Thus, the assessee was required to ascertain the admissibility of the Credit. They had failed to do so and did not disclose it to the department either in their ER-1 Returns or in any other manner that they have taken credit on the above said services. The assessee, therefore, contravened the provisions of Rule 2 and 9 of the Cenvat Credit Rules, 2004 with intent to evade payment of duty in as much as they had resorted to taking Cenvat Credit which was inadmissible to them. Therefore, I hold that they are liable to penalty in terms of the provisions of Rule 15(1) of the Cenvat Credit Rules, Further, the assessee had informed vide their letter dated that they had reversed the amount of Rs.18011/-. The Range Superintendent was asked to verify the details vide this office letter dated The Superintendent, Range I, Division-II, vide his letter dated has informed that the assessee has debited an amount of Rs.18011/- from R.G.23A Pt.11 vide entry No.2317 dated Accordingly, I pass the following order:- ORDER 23.(1) I disallow Cenvat Credit to the tune of Rs.9,874/- (Rupees nine thousand eight hundred seventy four only) in respect of Cenvat Credit availed by them on Tour Operator, Repair & Maintenance/Motor Vehicle and Air Travel Agency as discussed in above paras and order for recovery of the same under the proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, As the amount has already been reversed by the assessee vide entry No.2317 dated , I appropriate Rs.9874/- (Rupees nine thousand eight hundred seventy four only) under the provisions of Section 11A(1) of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004.

9 23(2) I impose penalty of Rs,9.874/- (Rupees nine thousand eight hundred seventy four only) upon M/s. Cadmac Mchinery Co.Pvt.Ltd, Ahmedabad, under the provisions of Rule 15(1) of the Cenvat Credit Rules, (3) I order to recover interest at the prescribed rates from M/s.Cadmac Mchinery Co.Pvt.Ltd, Ahmedabad, on the said wrongly availed Cenvat Credit in terms of the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of Central Excise Act, 1944 applicable during the relevant period now Section 11AA of the Central Excise Act, (Ruchi Bisht) Assistant Commissioner, Central Excise, Division-II, Ahmedabad-I F. No V.84/3-33/Dem/2010 Date; To, M/s. Cadmach Machinery Co. Pvt. Ltd., 3904/5, Phase IV, GIDC, Vatva, Ahmedabad Copy to Copy to-(1) The Commissioner, Central Excise, Ahmedabad-1 (through DC,,,RRA), Central Excise, Ahmedabad-1. The Superintendent (Systems), Central Excise, Ahmedabad-1 (3) The Superintendent, AR-I, Div-I!, Central Excise, Ahmedabad-I. (4) Guard file.