Custom, Excise & Service Tax Tribunal
Gravita India Ltd vs Jaipur I.. on 22 March, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. IV
EXCISE APPEAL No. 54759 of 2023-SM
(Arising out of Order in Appeal No. 68 (RLM) CE/JPR/2022 dated
27.12.2022 passed by Commissioner (Appeals), Central Excise &
Central Goods and Service Tax, Jaipur)
M/s. Gravita India Limited ...Appellant
Saurabh Farm Harsuliya Mod,
Jaichand ka Bas,
Phagi-Renwal, Jaipur-303904 (Raj.)
Versus
Commissioner ....Respondent
Central Excise & Central GST
Commissionerate, JCR Building,
C-Sheme, Statue Circle,
Jaipur (Raj.)
APPEARANCE:
Mr. Ankit Totuka, Advocate for the appellant
Mr. Arun Sheoran, Authorized Representative for the Respondent
CORAM : HON'BLE DR.RACHNA GUPTA, MEMBER (JUDICIAL)
Date of Hearing: 22.11.2023
Date of Decision: 22/03/2024
FINAL ORDER No. 55449/2024
DR.RACHNA GUPTA
Brief Facts of the case are as follows:-
The appellant is engaged in the manufacture of Refined lead Ingots, Lead Alloy Ingot, Lead Alloy Anitimony Aluminium Alloy Ingots.
2. During the course of the audit of the records of the appellant and on verification of CENVAT records of Input services maintained by the appellant, it was observed that they have 2 E/54759 / 2023-SM wrongly availed Input Service Tax credit on the services which were not falling under the definition of input service in the contravention of clause (A) of Rule 2(l) of CCR, 2004 and was not eligible to avail the said CENVAT Credit.
3. Following amounts of CENVAT Credit are alleged as wrongly availed:-
(i) Cenvat credit of Rs.6,86,000/- on services not covered by definition of input services in terms of Rule 2(1) of Cenvat Credit Rules, 2004 (CCR. 2004' for short) being not in relation to manufacturing of final product;
(ii) Cenvat credit of Rs.5.15.579/- on 30.06.2017 on Challan in respect of liability under Reverse Charge Mechanism (RCM) for the month of June-17 which was paid in July-17 in contravention of Rule 4(7) of CCR, 2004,
(iii) Excess availed cenvat credit of service tax of Rs.2.41.451/- attributable to the GIL, Phagi in respect of turnover, in contravention of Rule 7 of CCR. 2004;
(iv) Cenvat credit of Education Cess and Secondary & Higher Education Cess ( SHE' in short) totaling to Rs.1.31,219/- in violation of Notification No. 12/2015-
CE (NT) dated 29.10.2015;
(v) Wrongly availed cenvat credit of Rs.82,720/- on M.S. Bar, Channel, HR Coil etc. in violation of Rule 2(a) & 2(k) of CCR, 2004;
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(vi) not paid service tax amounting to Rs.6.64.172/- on Ocean Freight in accordance with Notification No.16/2017-ST dated 13.04.2017 read with Circular No.206/4/2017-ST dated 13.04.2017 and
(vii) not paid service tax amounting to 1,07,393/- on the Government Fees under RCM in accordance with Notification No.22/2016-ST dated 13.04 2016.
4. The above credits were used by the appellant to pay the excise duty while clearing the goods manufactured by them. Hence vide Show Cause Notice (SCN) No.2372 dated 02.01.2020 while denying the eligibility for above credit, Central Excise Duty of Rs.16,56,969/- was proposed to be recovered from the appellant along with interest. The appropriate penalties were also proposed to be imposed.
5. The said proposal was confirmed vide order-in-original No.06/2021 dated 31.07.2021. The appeal against the said order has been rejected vide order in appeal No.68/2022 dated 30.12.2022. Being aggrieved, appellant is before this Tribunal.
6. I have heard Mr. Ankit Totuka, ld. Counsel for the appellant and Mr.Arun Sheoran, Authorised Representative for the Revenue.
7. Arguments of both the parties are summarized, issue wise, as follows:-
Issue No. 1: Wrong availment of CENVAT Credit of Rs. 6,86,000/- on the services received from M/s Satnam Construction Co. Fabrication Unit, Delhi 4 E/54759 / 2023-SM
8. It is submitted that the said services were received from M/s. Satnam Construction Co. for dismantling of PET plant at Harman Bawa Limited, Neemrana and thereafter for bringing these parts to the factory premises of the appellant's company for performing the work of cleaning, painting and then packing the same in wooden boxes provided by the appellant for the purpose of exporting the same to Jamaica. M/s Satnam Construction Co. was also entrusted with the work of installation of the said plant at Jamaica at the behest of the appellant as the appellant had procured the order of such supply. It is further mentioned that though the said services were not used in the manufacturing of lead ingot or aluminium ingot but that cannot be the ground for denial of Cenvat credit as the appellant had used such services for providing supply and installation services to the Jamaican unit. The definition of input service clearly defines that 'Input Service' means any service used by provider of output service for providing output service. Thus the appellant had used the said input service provided by M/s. Satnam Construction Co. for further providing the output service of commissioning and installation to the Jamaican unit and is thus entitled for availing such credit.
9. Ld. Departmental Representative while rebutting the submissions on this issue has mentioned that the services in question are dismantling, cleaning, painting and assisting in packing inside 40 containers and loading on trailor for inland transportation upto Mumbai of all machineries, steel structures, E 5 E/54759 / 2023-SM & I, panels, cables and cable-tray etc. and all associated items of PET plant etc. are not the input services. These are neither covered in the main part of definition of input service nor these services are qualified as the input service in terms of inclusive clause of the definition of input services. Further to qualify for use in the production of final product as envisaged in the main part of the definition, the services should be so integrally related to the ultimate manufacture of goods, so that without that service manufacture may be commercially inexpedient. Thus, the said contention of the appellant is rightly rejected by Commissioner (Appeals).
Issue No.2: Wrong availment of CENVAT Credit of Rs. 5,15,579/- on 30.06.2017 on challan in respect of RCM liability for the month of June-17 paid in July-2017 in contravention of Rule 4(7) of CCR, 2004;
10. On this issue it is submitted by the ld. Counsel for appellant that since, the introduction of GST w.e.f 01.07.2017 filing of ST-3 return for the period post June-17 was discontinued. Hence, the appellant had no option but to avail cenvat credit in its ST-3 return filed for the June-17 quarter. The appellant had deposited the service tax for the month of June-17 on or before the due date of payment of tax which is 6th day of the succeeding month. Hence, the appellant had rightly availed the cenvat credit of service tax in its ST-3 return for June-17 quarter. 6
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11. While rebutting arguments of this issue, ld. Departmental Representative submitted that the appellant had deposited their tax due for the month of June on 03.07.2017. They had received payment challan in the month of July 2017. However they had wrongly availed CENVAT credit amounting to Rs.5,15,579/- during the month of June 2017 itself i.e. before the payment of service tax under RCM and had utilized the same for payment of Central Excise duty. The contention made by the appellant doesn't sustain in the eyes of law and they had contravened the provisions of Rule 3 & 4(7) of the CENVAT Credit Rules, 2004 read with Section 3 of Central Excise Act, 1944. The order passed by the Original Adjudicating Authority below in this regard thus has no infirmity. Issue No. 3: Excess availment of CENVAT Credit of service tax amounting to Rs. 2,41,451/- in excess on the services which were attributable to appellant as well as other manufacturing unit i.e. Gandhidham, Gujarat in contravention of Rule 7 of Cenvat Credit Rules, 2004;
12. Ld. Counsel for appellant, on this issue, has submitted that since both Phagi and Gandhidham unit are registered with Excise Department and are clearing their products on payment of duty therefore, it will not make any difference if excess credit is allocated to one unit as it would be a revenue neutral exercise as both the units are of the same company - M/s Gravita India Limited and shifting of such credit would not make any difference for company as a whole.
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13. The arguments on this issue are objected by ld. Authorised Representative for Department with the mention that it is appellant's own case that they are entitled to allocate and utilize the cenvat credit as per its own discretion and there was no fixed formula for it. Hence, demand of Rs. it being 62,700/- for the period prior to 01.04.2016 deserves to be set-aside on this ground alone, it being in contravention of Rule 7 of CCE, 2004. Issue No.4: Wrong availment of CENVAT Credit total amounting to Rs.1,31,219/- of Education Cess & SHE Cess in violation of Notification No. 12/2015-CE(NT) dated 30.04.2015 and 22/2015-CE (NT) dated 29.10.2015.
14. On this issue it is submitted on behalf of appellant that when the Notification No. 12/2015-CE(NT) dated 30.04.2015 and Notification No. 22/2015-CE(NT) dated 29.10.2015 provides for utilization of Education Cess & SHE Cess on inputs, input services and capital goods received after 01.03.2015 for payment of duty of excise and service tax then not allowing the utilization of balance lying as on 01.03.2015 under excise law for payment of duty of excise and lying as on 01.06.2015 under service tax for payment of service tax would be unjustified and harsh. Further, there is no notification/circular which provide that the said credit lying as on 01.03.2015 would lapse. Hence demand is wrongly confirmed with reference to this issue.
15. While rebutting on this issue ld. D.R. mentioned that the appellant had utilized the credit balance of Ed Cess and Secondary 8 E/54759 / 2023-SM Higher Education Cess on inputs lying as on 28.02.2015 and credit balance of Ed. Cess and Secondary Higher Education Cess on services lying as on 31.05.2015 which were utilized on dated 05.07.2017 and 05.10.2015 respectively for payment of Excise Duty. Thus as per above notifications, Cenvat credit of SHE and Higher secondary cess on input lying before 01.03.2015 and Cenvat credit of SHE and Higher secondary cess on input services lying before 01.06.2015 respectively cannot be utilized by the appellant hence there is no infirmity in the finding in order under challenge.
Issue No.5: Wrong availment of CENVAT Credit of Rs. 82,720/- on M.S. Bar, Channel, H.R. Coil etc. in violation of Rule 2(a) & 2(k) of Cenvat Credit Rules, 2004 used for support of capital goods.
16. Ld. Counsel for appellant submitted that these goods have not been used in fabricating supporting structure of capital goods rather the same have been used for repair maintenance of Kiln, Rotary and refinery furnaces/pot, Chimney, Cooling Tower, fettling tank, bag house and other pollution control equipments. The admissibility of cenvat credit on these goods has been held valid by the Apex Court, High Courts and Tribunals. The appellant placed reliance on the following judgments wherein it has been held by the Apex Court and High Courts that cenvat eredit on these items is admissible:-
1. UOI Vs. Hindustan Zinc Ltd. [2007 (214) ELT-510 Raj.HCJM 9 E/54759 / 2023-SM
2. Panipat Cooperative Sugar Mills Ltd. [2013 (293) ELT 66 (Tri-Del)]
3. Hindalco Industries Ltd. Vs. CCE, Balgaum reported as 2008 (230) ELT - 649 - Tri-Bang
4. Oudh Sugar Mills Ltd. vs. CCE, Lucknow reported as 2008 (226) ELT - 113 - Tri - Del.
17. Alternatively, it is submitted that if the cenvat credit is disallowed on the ground that the same are not covered by the definition of capital goods, cenvat credit is still admissible considering these items as input as the same are used in the factory by the manufacturer of the final product. Reliance is placed on the following decision:-
(i) Metlan India Vs. CCE, Meerut [1999 (105) ELT-339-Tri]
18. Ld. Departmental Representative on the other hand has mentioned that Vide Notification No.16/2009-CE (NT) dated 07.07.2009, an explanation has been inserted in Rule 2 of the Cenvat Credit Rules, 2004 so as to clarify that ínputs' which are eligible for availing Cenvat credit shall not include cement, angles, channels, CTD or TMT bar and other items used for construction of shed, building or structure for support of capital goods. The argument in alternative, as made by the appellant is rebutted with the mention that no documents evidencing use of the impugned items in manufacturing of plant which is further used in the manufacture of the final product or repair and maintenance of 10 E/54759 / 2023-SM capital goods were found on record. Hence credit has rightly been denied.
Issue No. 6: Non-payment of Service Tax amounting to Rs. 6,64,172/- on Ocean Freight in accordance with the Notification 16/2017- ST dated 13.04.17.
19. It is submitted by ld. Counsel for appellant that service tax would be leviable on all taxable services consumed or rendered in India. The charging section for service tax is section 66B. In the present case the recipient of service is not located in India nor the service itself had been provided in India.
20. Appellant is also mentioned to not to be the recipient of service. Therefore, appellant being neither service provider nor service recipient cannot be made liable to pay service tax on a transaction which had originated and concluded outside the taxable territory.
21. It is mentioned while rebutting to this issue that Service tax is leviable on all taxable services consumed or rendered in India Vide notification Nos. 15/2017-ST and 16/2017- ST both dated 13th April, 2017, the importer of goods as defined in the Customs Act. 1962 has been made liable for paying service tax in cases of services of transportation of goods by sea provided by a foreign shipping line to a foreign charterer with respect to goods destined for, India. This change came into effect from 23rd April, 2017, hence the contention of the appellant is rightly rejected. The appellant has placed reliance on decision of BRITISH AIRWAYS 11 E/54759 / 2023-SM (supra) case but the same is not squarely applicable in the present case.
Issue No. 7: Non-payment of Service Tax of Rs. 1,07,393/- on the Government Fees under RCM in accordance with provisions of Notification No. 22/2016-ST .
22. Ld. Counsel for the appellant submitted that tax liability under RCM arises only when any service is provided or agreed to be provided by the government or local authority. In the case of appellant no service has been provided by the DGFT and Transport department. The payment of fees to these departments is for the purpose of procuring Advance License from DGFT for duty free import of raw material for manufacture of final product which is then exported and for obtaining permit respectively. Hence no service has been provided by either of the department. Granting of Advance License by the DGFT for the purpose of procurement of duty free import is not a service.
23. Notification No. 22/2016-ST dated 13.04 2016, is brought to notice according to which the following insertions were made in the Mega (6) Exemption Notification No. 25/2012-ST dated 20.06.2012:
Services provided by Government or a local authority where the gross amount charged for such services does not exceed Rs. 5000/- are exempt other than services by Department of Posts, Life Insurance, agency services provided to a person other than the Government, services in relation to an aircraft or a vessel, 12 E/54759 / 2023-SM inside or outside the precincts of a port or an airport, transport of goods or passengers. However where there is a continuous provision of services where the gross value of services exceeds Rs. 5,000 in a financial year, such services will be taxable.
24. It is impressed upon that even otherwise without causing prejudice to any other submission if the appellant is made liable for payment of service tax then it would be entitled to avail cenvat credit of service tax so paid making the entire exercise revenue neutral. Since, the service tax has been subsumed under Goods and Service Tax w.e.f 01.07.2017, therefore, it would not be practically possible for the appellant to avail such cenvat credit as transition window for carrying forward of such cenvat credit of earlier regime to GST regime is no longer available. Hence, considering the situation revenue neutral no such demand should be raised against the appellant. The appellant place reliance on the following case in support of their contention:-
i. Commissioner of C. Ex. & Cus., Vadodara Vs Narmada Chematur Pharmaceuticals Ltd. (2005 (179) ELT 276 (SC)]
25. Finally it is submitted that demand is time barred hence extended period is invokable. The appellant being a law abiding person is regular in payment of all its dues and filing returns.
From the perusal of the show cause notice it is evident that all the facts have been derived by department from the records and documents of the appellant and the issues involved in the instant matter is of interpretational in nature. The appellant has acted 13 E/54759 / 2023-SM according to best of its understanding of the legal provisions. The appellant has relied upon the decision in the case of Continental Foundation Jt. Venture Vs. CCE, Chandigarh-1 [2007 (216) ELT-177-SC).
26. Penalty is also not imposable in the light of above discussion. With these submissions on behalf of appellant, the order under challenge is prayed to be set aside and appeal is prayed to be allowed.
27. On the contrary ld. Departmental Representative has reiterated the findings about invoking extended period while issuing Show Cause Notice. However, ld. Departmental Representative in the light of their submissions on respective issue, as mentioned above, have prayed for the appeal to be dismissed.
28. Having heard the rival contention and perusing the records the issue wise findings are as follows:
Issue No.1
29. It is observed that very basis of denying CENVAT Credit and utilization thereof for discharge of excise duty is that services as received from M/s. Satnam Constructions are denied to be the input services. Hence foremost definition of input service need to be seen, as given in Rule 2 (i) of Cenvat Credit Rules, 2004. It reads as follows:-
"(1) "input service" means any service. - 14
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(i) used by a provider of (output service] for providing an output service, or 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 promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal,[but excludes). (A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for -
(a) construction or execution of works contract of a building or a civil structure or a part thereof, or 15 E/54759 / 2023-SM
(b) laying of foundation or making of structures for support of capital goods. except for the provision of one or more of the specified services, or
30. Reverting to the facts of the case it is observed that appellant has exported PET plant from Neemrana in India to Jamaica, a place outside India with the services to install the same in Jamaica as received from M/s. Satnam Construction Co. Ltd. The later company only has given services to appellant for dismantling the said PET plant clearing, painting and repacking it for being exported. Hence the services received from M/s. Satnam were services exported. The activity done in India by said M/s. Satnam is definitely a service used by the provider of output service for providing output service. Hence, it is well covered in the definition of input services. I draw my support from the decision in the case of Union of India vs. Hindustan Zinc Ltd. reported as 2007 (2014) ELT 510 where Hon'ble High Court of Rajasthan has held that goods which are necessary for running of plant and up-keeping of the machinery directly involved in the manufacturing and products are eligible to avail Modvat credit.
31. The decision by Hon'ble High Court of Chattisgarh in the case of Ambuja Cement Eastern Ltd. reported in 2010 (256) E.L.T. 690, and of Hon'ble Karnataka High Court in the case of Commissioner of Central Excise, Bangalore v. Alfred Herbert (India) Ltd. reported in 2010 (257) ELT 29, have followed the aforementioned decision of Rajasthan High Court. I 16 E/54759 / 2023-SM also find that the appeal filed by the Government against said judgment of Hon'ble Rajasthan High Court was dismissed by the Apex Court vide judgment reported in 2007 (214) ELT A115. In view of the said settled legal position on this issue.
32. I hold that Cenvat Credit on services received from M/s. Satnam Construction Co. for Rs.6,86,000/- is held admissible to the appellant. Hence the order of the Commissioner (Appeals) is not sustainable qua this issue.
Issue No.2
33. Cenvat Credit of Rs.5,15,579/- is denied on the ground of violation of proviso 1 of Rule 4 (7) of CCR, 2004, however I am of the opinion that with the introduction of GST w.e.f. 01.07.2017 filing of ST-3 return for the period post June-17 was discontinued. Hence, the appellant had no option but to avail Cenvat credit in its STR-3 return filed for the June-17 quarter.
34. Actually all assessees were allowed to carry forward the Cenvat credit under the existing law to electronic credit ledger under the GST law if the Cenvat credit was admissible under the existing law (excise and service tax) and is also admissible as input tax credit under the GST law. If such credit is denied to the appellant then it would cause grave injustice to the. Section 140(5) of the CGST Act, 2017 provides for entitlement to registered person for taking credit of eligible duties and taxes in respect of inputs and input services received on after the appointed date i.e. 30.06.2017 subject to the condition that the 17 E/54759 / 2023-SM invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day then denying the credit to the appellant when the input services were received prior to 30.06.2017 and tax was paid under RCM before the due date prescribed under the Finance Act, 1994 would be unjustified and cause undue hardship to the appellant when there is no legislative intent to do so. The department must appreciate the legislative intent supported by the verdicts of the courts across the country including the Apex Court which have allowed the eligible credit of erstwhile regime to be carried forward to GST regime by way of transition provisions by directing the department to adopt liberal approach towards technical lapses if any committed by an assessee and giving them the substantial benefit to which they are otherwise entitled to.
35. Hence appellant is held entitled for cenvat credit of Rs. 5, 15,579/-. Findings in order under challenge about this issue are also liable to be set aside.
Issue No.3
36. It is alleged that cenvat credit has not been distributed on pro-rata basis.
37. The department had alleged that the appellant had availed excess cenvat credit of service tax amounting to Rs. 2,41,451/- in its Phagi Unit on account of error in calculation. As result of which excess credit has been allocated to Phagi Unit as against its 18 E/54759 / 2023-SM Gandhidham Unit. The appellant submits that since both Phagi and Gandhidham unit are registered with excise department and clearing its product on payment of duty therefore, it will not make any difference if excess credit is allocated to one unit as it would be a revenue neutral exercise as both the units are of the same company - M/s Gravita India Limited and shifting of such credit would not make any difference for company as a whole more so when both the units are paying excise duty on its clearances. Though appellant has relied upon the decision of Hindustan Zinc vs. CC, Udaipur reported as 2019 (370) ELT 1582 Tri. Del. But I observe that the decisions are for the period prior amendment in Rule 7 of Cenvat Credit Rules, 2004 i.e. for the period prior 01.04.2016. The said amendment has substituted word 'shall' instead of word 'may'. Hence I hold that it was mandatory for the appellant to distribute credit as per the directions of said Rule 7. Apparently and admittedly Rule 7 has not been followed while distributing credit. Hence I hold that the phagi unit is rightly held to have been allocated with excess credit.
Issue No.4
38. The contention of the department on this issue is that there is no notification/circular which provides credit of Education Cess and SHE Cess lying as on 01.03.2015 and as on 01.06.2015 in respect of inputs and input services respectively to be utilized for payment of excise duty. However as brought to notice are two Notifications viz. Notification No. 12/2015-CE(NT) dated 19 E/54759 / 2023-SM 30.04.2015 and Notification No. 22/2015-CE(NT) dated 29.10.2015 provides for utilisation of Education Cess & SHE Cess on inputs, input services and capital goods received after 01.03.2015 for payment of duty of excise and service tax respectively. Further, there is no notification/circular which provide that the said credit lying as on 01.03.2015 would lapse. I draw support from decision of Madras High Court judgment in the case of Sutherland Global Services Pvt. Ltd. VS Asst. Comm. [2019 (30) ELT 628 (Mad.)] wherein it is held that neutral. Hon'ble Madras High Court has clearly held that accumulated credit of Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess - Credit continues to be available till such time it is expressly stated to have lapsed No notification/circular/instruction expressly provided that credit accumulated would lapse Authorities cannot now take stand that such credit unavailable for use. It is held that available credit as on date of transition was available to an assessee for set off.
Availment of credit on this account is therefore held to be wrongly denied.
Issue No.5
39. I observe that the items on which cenvat credit had been taken were used in the manufacture of capital goods or repair and maintenance of capital goods. The basic idea is that cenvat credit is admissible so long as the inputs are used in or in relation to the manufacture of final product and whether directly or indirectly. 20
E/54759 / 2023-SM The allegation of the department that the goods on which cenvat credit was availed did not satisfy the definition of the capital goods was considered by the larger bench of the Tribunal in the case of Ballarpur Industries Vs. CCE [2000 36) RLT-537-Tri- LB) wherein the theory of "direct participation" of the goods eligible for modvat credit had been specifically rejected in the light of its earlier larger bench decision rendered in the case of Jawahar Mills Ltd.[1999 (108) ELT-47-Tri-LB] which has been affirmed by the Apex Court.
1. Kisan Sahkari Chinni Mills Ltd VS CCE [2013 (292) ELT 394 (Tri- Del)] has held that items used for repair & maintenance of plant and machinery and goods used for repair and maintenance of machinery are inputs eligible for Cenvat credit - Scope of expression "used in or in relation to manufacture of" final product, whether directly or indirectly and whether contained in final product or not is much larger than expression "used in manufacture of" in the definition of Input in Rule 2(k) of Cenvat Credit Rules, 2004.
2. Judgments in the case of Ambuja Cements [2010 (256) ELT 690 (Chhattisgarh)], Alfred Herbert (India) Ltd. [2010 (257) ELT 29 (Kar.)] and Hindustan Zinc Ltd. [2008 (228) E.LT. 517 (Raj.)] are relied upon wherein it was held that repair and maintenance activity essential for smooth manufacturing operations without which manufacturing 21 E/54759 / 2023-SM activity not commercially feasible Cenvat credit for inputs used for repair and maintenance admissible."
40. In the light of these decisions, the findings in Order-in-Appeal on this issue are not sustainable.
Issue No.6
41. Hon'ble Supreme Court has held that the levy of IGST on the amount of Ocean Freight as unconstitutional in the case of UOI Vs. Mohit Mineral Pvt. Ltd. & Ors. vide its order dated 19.05.2022 passed in Civil Appeal No. 1390/2022. The adjudicating authority had not considered said judgement on the ground that the same has been passed in GST regime. These findings are therefore liable to be set aside Issue No.7
42. Tax liability on the amount in question under this issue arises only when any service is provided or agreed to be provided by the government or local authority. In the case of appellant no service has been provided by the DGFT and Transport department. The payment of fees to these departments is for the purpose of procuring Advance License from DGFT for duty free import of raw material for manufacture of final product which is then exported and for obtaining permit respectively. Demand on this issue is also held to be wrongly confirmed.
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43. In the light of issue-wise discussion, as above, the order confirming demand on all issues except issue No.3 of disproportionate distribution of credit to Phagi unit of appellant is hereby set aside.
44. Appeal stands allowed except for demand on issue No.3.
[Pronounced in the open Court on 22/03/2024] (DR.RACHNA GUPTA) MEMBER (JUDICIAL) Anita