Custom, Excise & Service Tax Tribunal
The Kerala Minerals & Metals Ltd vs The Commissioner Of Central Excise, ... on 6 December, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeals (s) Involved: ST/21527/2014 [Arising out of Order-in-Appeal No.89 to 93/2014 dated 29.1.2014 passed by the Commissioner of Central Excise, Customs and Service Tax (Appeals), Cochin.] The Kerala Minerals & Metals Ltd. Appellant(s) Versus The Commissioner of Central Excise, Customs & Service Tax Thirvuvanthapuram. Respondent(s)
Appearance:
Mr. Prinsen Philip, Advocate For the Appellant Mr. N. Jagadish, AR For the Respondent Date of Hearing: 20.11.2017 Date of Decision: 06.12.2017 CORAM:
HON'BLE SHRI S.S. GARG, JUDICIAL MEMBER Final Order No. 22960_ / 2017 Per : S.S. GARG The present appeal is directed against the impugned order dated 20.9.2014 passed by the Commissioner (A) whereby the Commissioner (A) has rejected the CENVAT credit availed by the appellant on consultancy services on the ground that the project for which consultancy was received was fully abandoned without its implementation.
2. Briefly the facts of the present case are that the appellant is a Government of Kerala undertaking and has got two unit one a mineral separation unit registered as Mines under Mines Act and the other Titanium Dioxide Pigment Unit registered as a factory under the Factories Act, 1948. Appellants have been availing CENVAT credit on inputs and input services in accordance with the CENVAT Credit Rules, 2004. The Board of Directors of the appellant sanctioned the proposal for expansion work and MECON Ltd., Bangalore was appointed as a consultant for the project expansion work and the appellant executed an agreement on 29.1.2004 with MECON incorporating the terms and conditions for availing its services. Appellant had availed CENVAT credit on the amount paid as consultancy fee to MECON. The Board of Directors subsequently decided to drop the project expansion work and the State Government approved the decision of the Board. Thereafter, the department alleged that the project expansion work was dropped and therefore, the CENVAT credit availed on consultancy services was not having any direct relation with the product manufactured in the present plant. Thereafter, the Department issued a show-cause notice dated 31.3.2009 to the appellant for availing irregular CENVAT credit of Rs.32,32,745/- and Education Cess of Rs.64,656/- along with interest and also proposed penalties. After following the due process of law, the adjudicating authority vide Order-in-Original dated 14.6.2010 confirmed the demand and also imposed Rs.2000/- as penalty under Rule 15. Aggrieved by the said order, appellant filed appeal before the Commissioner (A), who rejected the same vide the impugned order; hence, the present appeal.
3. Heard both the parties and perused the records.
4. The learned counsel for the appellant submitted that the impugned order denying the CENVAT Credit of service tax paid on consultancy charges is unsustainable in law. He further submitted that the service tax was paid for availing the consultancy services which was availed long before the decision to abandon the project work. Even in the show-cause notice, the department admits that the consultancy charges were for preliminary expenditure incurred in connection with the expansion work. He further submitted that the entire demand is time barred as there is no suppression on the part of the appellant as the appellants have been regularly filing ER-1 returns monthly. He also submitted that the modernization, renovation or repair of the factory is allowed as credit even if they are not an activity relating to business as long as input service is able to satisfy the requirements of the definition of input service. For this, he relied upon the following decisions:
* Coca Cola India Pvt. Ltd. Vs. CCE, Pune-III [2009(242) ELT 168 (Tri. Bom.)] * CCE, Nagpur Vs. Ultratech Cement Ltd. [2010-TIOL-745-MUM-ST] 4.1 He further submitted that at the time of availment of credit, there is no dispute that the said credit was taken incorrectly. He also submitted that the subsequent development after taking the credit cannot vitiate the credit already availed. This proposition has been settled in favour of the appellant in catena of decisions cited herein below.
* CCE, Bangalore vs. Tafe Ltd. (Tractor Division) [2011 (268) ELT 49 (Kar.)] * CCE vs. Asian Paints India Ltd. [2015-TIOL-369-HC-MUM] * Khurana Woolen Mills (P) Ltd. Vs. CCE, Ludhiana [2013 (289) ELT 153 (P&H)] * CCE, Bangalore vs. Tata Advance Materials Ltd. [2011 (271) ELT 62 (Kar.)]
5. On the other hand, the learned AR reiterated the findings of the impugned order.
6. After considering the submissions of both the sides and perusal of the material on record, I find that the Management Consultancy Service was taken for the plant. Further, I also find that the credit was availed and utilized in October 2004 to August 2006 and it is not the case of the Revenue that the credit was wrongly availed. Further, I also find that the CENVAT credit once rightly availed is indefeasible and subsequent development of abandoning of plant will not make the appellant liable to reverse the CENVAT credit which was rightly availed by them. Further I also find that the CENVAT credit once rightly availed is indefeasible and subsequent development of abandoning of plant will not make the appellant liable to reverse the CENVAT credit which was rightly availed by them. Further I also find that the appellants have been filing the ER1 returns regularly in which they were showing the CENVAT credit availed by them. Further, I also find that the credit was rightly availed during the period 2004-06 for the purpose of availing the Management Consultancy Service received by the appellant during the said period. Further, I also find that from the decisions relied upon by the appellant cited supra, it has been held that if the credit is rightly availed and utilised, then subsequent development after taking of the credit cannot vitiate the credit already availed. Further, I also find that on an identical issue this Tribunal vide Final Order No.22349/2017 dated 279.2017 in the case of M/s. Travancore Titantium Products Ltd. vs. CCE, Trivandrum (Appeal No. E/21387/2015) has allowed the appeal of the appellant on identical issue.
7. In view of my discussion above, I am of the view that the impugned order is not sustainable in law and therefore I set aside the same by allowing the appeal of the appellant with consequential relief, if any.
(Order was pronounced in open court on 06.12.2017.) S.S. GARG JUDICIAL MEMBER rv 6 1