Custom, Excise & Service Tax Tribunal
M/S. Flowserve India Controls Pvt. Ltd vs Commissioner Of Central Excise, ... on 21 June, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/3602/2012-SM [Arising out of Order-in-Appeal No. 265/2012 dated 20/09/2012 passed by Commissioner of Central Excise, BANGALORE-I (Appeal).] M/s. Flowserve India Controls Pvt. Ltd Plot No.41A, Road No 8, EPIP, Whitefield Road BANGALORE - 560066 KARNATAKA Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax Bangalore-I POST BOX NO 5400, CR BUILDINGS, BANGALORE - 560001 KARNATAKA Respondent(s)
Appearance:
Mr. Dayanand, CA VISHNU DAYA & CO CHARTERED ACCOUNTANTS, GF NO.7, KARUNA COMPLEX, NO.337, SAMPIGE ROAD, MALLESWARAM, BANGALORE-560003 For the Appellant Dr. J. Harish, AR For the Respondent Date of Hearing: 21/06/2017 Date of Decision: 21/06/2017 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20947 / 2017 Per : S.S GARG The present appeal is directed against the impugned order dated 20.09.2013 passed by the Commissioner (A) whereby the Commissioner (A) has modified the Order-in-Original and allowed CENVAT credit availed on rent a cab, commission paid, professional fee, courier agency service and denied the CENVAT credit availed on canteen service, repair and maintenance, labour charges job worker, clearing and forwarding agency service, commercial coaching and training service, management consultancy fees. The Commissioner had also confirmed demand of interest as per Section 11AB of the Central Excise Act and penalty under Rule 15 of CENVAT Credit Rules (CCR), 2004.
2. Briefly the facts of the case are that the appellants are engaged in manufacture and clearance of single and multistage chemical process pumps, horizontal split casting pumps, moulding patterns and pump parts for centrifugal pumps, etc., falling under Chapter 8413 7091, 8413 7092 and 8413 9120 of Central Excise Tariff Act, 1985. The original authority vide the impugned order demanded irregular CENVAT credit of Rs.16,79,415/- in terms of Rule 14 of CENVAT Credit Rules (CCR), 2004 read with Section 11A, along with interest and imposed a penalty of Rs.7,50,000/- on ground that the appellants had wrongly availed the CENVAT credit on ineligible input services such as Canteen Service, Repair and Maintenance Service, Commissions, Labour charge-job work, etc., which is in contraventions of the provisions of Rule 2(i) of CENVAT Credit Rules, 2004. Aggrieved by the said order, appellant filed appeal before the Commissioner (A) and the Commissioner (A) has allowed the CENVAT credit in respect of few input services and denied the CENVAT credit with respect to other input services. The appellant has filed the present appeal against those input services for which the Commissioner (A) has denied the CENVAT credit.
3. Heard both the parties and perused the records.
4. Learned CA for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without considering the evidence on record and without properly considering the scope of input service as contained in Rule 2(l) of CCR, 2004. He further submitted that all these services for which CENVAT credit has been denied have been used in or in relation to the manufacture of final product. He further submitted that appellate authority had held that rent-a-cab, commission paid, professional fee, courier agency and clearing and forwarding agency services are eligible credits, as all these above services are used directly or indirectly in relation to the manufacture of final product. If those services are used directly or indirectly in relation to manufacture, then each and every service consumed by the business entity to run the business is required for the production and hence, credit should have been allowed in all these services. Learned counsel relied upon the decision rendered in the case of CCE vs. Ultratech Cement Ltd. reported in 2010 (20) STR 577 (Bom.) wherein it has been held that once the input service is used in the business of manufacture, then the credit will be allowed whether the input service is received prior to production or during the production or post-production of the goods. Hence there is no concept called input service should be used in the manufacture of goods. As long as assessee is engaged in the business of manufacture, the credit should be allowed. Further, in the present case, the appellant is only engaged in the manufacture of dutiable goods and rendering taxable services and is not engaged in any other type of activities and hence it should be presumed that all the services are used in the business of manufacture and the entire credit should have been allowed. He has also relied upon the decision in the case of Coca Cola India Pvt. Ltd. vs. CCE wherein it has been held that when the basic value of the service is included in the final product, the input service credit should be given. He further submitted that vide the impugned order, the Commissioner (A) has not allowed the credit of these services on the ground that they are not used in or in relation to the manufacture of the goods. He also submitted that these services have been neither been directly or indirectly used in the manufacture of goods or used in or in relation to the business of manufacture of dutiable goods or for rendering taxable services.
5. On the other hand, the leaned AR reiterated the findings of the impugned order and submitted that as far as input service on Management Consultancy Fee is concerned, the learned Commissioner (A) has observed that appellant has not produced the copy of the invoice and has also not submitted the details as to how the said service is used in or in relation to the manufacture of final product.
6. After considering the submissions of both the parties and perusal of the material on record and the various judgments cited by the learned CA for the appellant, I am of the view that appellant is entitled to CENVAT credit on canteen service, repair and maintenance, labour charges job worker, clearing and forwarding agency service, commercial coaching and training service as they are directly related to the business of the appellant. But as far as CENVAT credit on Management Consultancy Fee is concerned, the appellant has produced before me the Management Service Agreement as well as invoices and TR-6 challans showing the payment made towards Management Consultancy Fee but these documents were not produced before both the authorities below and therefore, both the authorities did not allow the CENVAT in the absence of these documents. Therefore, as far as this service is concerned, I am of the view that case is to be remanded back to the original authority to examine the documents relating to Management Consultancy services and decide the issue afresh. Therefore, I allow the appeal of the appellant by setting aside the impugned order and remanding the case back to the original authority with a direction to consider the documents which may be produced by the appellant regarding the Management Consultancy services and thereafter pass a reasoned order. Accordingly, the appeal is allowed by way of remand.
(Operative portion of the Order was pronounced in Open Court on 21/06/2017.) S.S GARG JUDICIAL MEMBER rv 2