Ashok Leyland Limited Vs Commissioner of GST and Central Excise (CESTAT Chennai)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, examined appeals filed against demands raised under Rule 6(3) of the CENVAT Credit Rules, 2004, along with interest and penalties, on the allegation that the appellant was engaged in both manufacturing and trading of vehicles. The appellant, a manufacturer of motor vehicle chassis and commercial vehicles, had entered into a job work arrangement with a joint venture company for manufacturing light commercial vehicles. Under this arrangement, inputs were supplied by the joint venture company, and the appellant undertook manufacturing and assembly activities. The finished vehicles were cleared on payment of Central Excise duty based on transaction value determined under Rule 10A of the Central Excise Valuation Rules.
The Department, based on audit scrutiny for the period 2011–12 to 2013–14 and a subsequent period in 2015, alleged that the appellant was also engaged in trading of vehicles through Regional Sales Offices outside Tamil Nadu. This activity was treated as “exempted service” under Rule 2(e) of the CENVAT Credit Rules, leading to demands for non-maintenance of separate accounts for input services used in both manufacturing and trading activities. Show cause notices were issued, and the demands were confirmed by adjudicating authorities.
