India Cements Ltd. Vs Commissioner of CGST & Central Excise (CESTAT Chennai)
Summary: The Customs, Excis and Service Tax Appellate Tribunal (CESTAT), Chennai, allowed the appeal filed by India Cements Limited against Order-in-Original No. 02/COMMR/CE/2015 dated 9 October 2015, which had disallowed CENVAT credit of Rs. 1,10,44,158 for April 2013 to November 2013, together with interest and an equivalent penalty. The appellant, engaged in manufacturing Ordinary Portland Cement and Portland Pozzolana Cement, had availed credit on services relating to demolition of decommissioned chimneys, clearing and forwarding operations, logistics and advertising. The Department considered these services ineligible under the CENVAT Credit Rules, 2004. The principal question before the Tribunal was whether these services qualified as input services under Rule 2(l) and whether credit distributed through Input Service Distributor (ISD) invoices could lawfully be denied to the appellant’s manufacturing unit.
Regarding demolition services, India Cements submitted that the chimneys, although decommissioned in 1990, obstructed the movement of heavy vehicles transporting limestone and other raw materials within the factory. Their demolition enabled smooth access to the crusher and facilitated manufacturing operations. The appellant argued that such expenditure was directly or indirectly connected with the manufacture of cement and also qualified as renovation or repair of the factory under the inclusive portion of the input service definition. The Department maintained that demolition of abandoned chimneys could not constitute modernization, renovation or repair. The Tribunal examined Rule 2(l) of the CENVAT Credit Rules, 2004, and observed that services used directly or indirectly in relation to manufacturing were covered by the definition. It found that the appellant’s explanation regarding the operational necessity of demolition had not been controverted. The Tribunal further held that demolition was not construction and did not fall within the specified exclusions. Consequently, the denial of CENVAT credit on demolition services was unjustified.
The Tribunal next considered CENVAT credit availed through ISD invoices relating to clearing and forwarding services. India Cements argued that its corporate and regional offices were registered as Input Service Distributors and that questions concerning the eligibility and distribution of credit should ordinarily be examined by the jurisdictional authorities responsible for those registered offices. The appellant also maintained that the disputed clearing and forwarding services were connected with clearance of goods up to the place of removal rather than outward transportation beyond that point. The Tribunal referred to Commissioner of Service Tax, Ahmedabad v. Godfrey Philips India Ltd. and United Phosphorous Ltd. v. CCE, Surat-II, and accepted the appellant’s objection concerning denial of credit at the recipient unit. It also observed that the adjudicating authority had not effectively rebutted the appellant’s factual submissions regarding the nature of the clearing and forwarding services. Accordingly, the denial of credit on these services was held unsustainable.
With respect to services supplied by Chettinad Logistics Private Limited, the Department alleged that credit had been distributed contrary to Rule 7(c) of the CENVAT Credit Rules, 2004. The Tribunal found that the show cause notice did not establish the factual basis for this allegation, including the number of units receiving credit or the turnover-based allocation that would demonstrate a violation of the prescribed distribution mechanism. Although India Cements had furnished a statement detailing the ISD credit relating to Chettinad Logistics, neither the adjudicating authority disputed those particulars nor established that the distribution was incorrect. The Tribunal therefore rejected the disallowance as unsupported by evidence. It also examined credit relating to Image Public Relations Private Limited, whose services had been used for advertisements during the Indian Premier League. Since advertisement and sales promotion were expressly included within the definition of input services, the Tribunal held that India Cements was entitled to the credit availed on those services as well.
Having found all the disputed categories of CENVAT credit admissible, the Tribunal concluded that the demand for reversal of credit, consequential interest and equivalent penalty could not survive. It separately examined the invocation of the extended period of limitation and observed that the dispute arose from interpretation of the CENVAT Credit Rules, 2004, with the Department also relying on returns filed by the appellant. No positive act satisfying the requirements for invoking the extended limitation period had been established. The Tribunal therefore held that the extended period and the penalty were independently unsustainable. By Final Order No. 40222/2025 dated 17 February 2025, the Tribunal set aside the impugned Order-in-Original and allowed India Cements Limited’s appeal with consequential relief, if any, in accordance with law.
Cases Discussed
- Coca Cola India Pvt Ltd v CCE, Pune III, (2009) 242 ELT 168 (Bom)
- Commissioner of Central Excise v Derlikon Balzers Coating India P Ltd, 2019 (366) ELT 624 (Bom)
- Castrol India Limited v Commissioner of Central Excise, Vapi, 2013 (291) ELT 469 (Tri.-Ahmd)
- Commissioner of Service Tax, Ahmedabad v Godfrey Philips India Ltd, 2009 (14) STR 375 (Tri.-Ahmd)
- Hindustan Zinc Ltd, 2017 (8) TMI 60 (CESTAT New Delhi)
- Nipro India Corporation P Ltd, 2018 (10) TMI 745 (AAR Maharashtra)
- Clariant Chemicals (I) Ltd, 2015 (10) TMI 2754 (CESTAT Mumbai)
- Ramala Sahkari Chini Mills Ltd v Commissioner of Central Excise, Meerut-I, 2010 (260) ELT 321 (SC)
- Collector of Central Excise v Solaris Chemtech Ltd, 2007 (214) ELT 481 (SC)
- Doypack Systems (Pvt) Ltd v Union of India, 1988 (36) ELT 201 (SC)
- United Phosphorous Ltd v CCE, Surat II, 2013 (30) STR 509 (Tri.-Ahmd)
FULL TEXT OF THE CESTAT CHENNAI ORDER
M/s India Cements Limited, the appellants herein, have preferred this appeal assailing the impugned order in original No.02/COMMR/CE/2015 dated 09.10.2015, whereby the adjudicating authority has demanded Rs.1,10,44,158/- being ineligible CENVAT credit taken and availed during the period April 2013 to November 2013 along with appropriate interest thereon and imposing an equivalent penalty.
2. Briefly stated, the facts are that the appellants are engaged in the manufacture of Ordinary Portland Cement and Portland Pozzalona Cement falling under Tariff Sub heading 25232910 and 25232930 of Central Excise Tariff Act, 1985 respectively. During the course of audit for the period from 04/2013 to 11/2013 it was noticed that the appellants had wrongly availed Cenvat credit of service tax paid on certain input services provided by service providers directly to the appellant and credit distributed by their corporate office and regional offices at Tamil Nadu & Kerala. The Department being of the view that the credit availed for demolition of chimneys decommissioned in the year 1990 by the appellants, the credit availed based on Input Service Distributor’s (ISD) invoices on services of transportation rendered by clearing and forwarding agents, the credit distributed in respect of M/s.Chettinad Logistics, Chennai and M/s. Image Public Relations P Ltd, New Delhi, were ineligible credits availed by the appellants, issued a show cause notice (SCN) proposing recovery of the ineligible credits with appropriate interest thereon and proposing imposition of penalty. The appellants filed their reply contesting the allegations, pursuant to which they were granted a personal hearing and the adjudicating authority passed the impugned OIO confirming the demand of ineligible credits with appropriate interest thereon and imposing equivalent penalty. Aggrieved by the impugned OIO the appellants are before this Tribunal.
3. The Ld. Counsel Shri. M.N. Bharathi appeared and argued for the appellants. It is submitted that the adjudicating authority has erred in holding that the demolition of chimneys cannot be termed as modernization, renovation and repair of the factory, failing to appreciate that these chimneys posed a hindrance blocking free entry of heavy vehicles into the factory. It is the learned counsel’s submission that the adjudicating authority failed to appreciate that such removal of the stumbling block by demolition is only effective repair of the passage facilitating free movement of heavy vehicles engaged in transportation of the raw materials, into and out of the factory, without which the very manufacturing operation in the plant would come to a standstill. It is submitted that the said activity is also not covered under the specific exclusions and hence, the cenvat credit on the expenses incurred in such activity would come within the ambit of modernization or renovation or repair of the factory and is to be allowed as provided for in Rule 2(1) of Cenvat Credit Rules. The definition of ‘input service’ as applicable to a manufacturer uses the expression “used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products”. It is further submitted that a manufacturer can take Cenvat credit on all those input services which are so used by him as long as it can be established that it is used by him directly or indirectly in relation to the manufacture of final products. It is further submitted that the demolition of chimneys carried out to make available a smooth pathway for free movement of heavy vehicles for carriage of limestone to crusher was a service directly in relation to the manufacture of cement and hence entitled to credit. Thus, the service provided by M/s Advance Constructions Technology P Ltd, Chennai has been utilized directly or indirectly, in or in relation to the manufacture of the final products, i.e. cement and is clearly covered under the definition of input service’ under Rule 2(1)(ii) of the Cenvat Credit Rules, 2004.
4. As regards the ISD invoices, the learned counsel submitted that the impugned order had not rendered any finding on the submissions made on the aspect of jurisdiction as stated in the reply to show cause notice dated 22.11.2014. It is submitted that as per the definition of ISD in sub-rule (m) of Rule 2 it is clear that the ISD has to be an office of the manufacturer or producer of final products or provider of output service who will distribute the credit to his manufacturing units or service providing units as the case may be on an invoice containing the details specified in Rule 4A (2) of Service Tax Rules, 1994 (STR, 1994). Further, Rule 7 of CCR, 2004 prescribes the manner of distribution of credit by ISD, as per which the ISD may distribute the CENVAT credit in respect of the service tax paid on the input service to its manufacturing units or units providing output service, subject to the specified conditions. It is submitted that the impugned invoices have been issued by the Appellant’s Head Office and Regional offices which are duly registered with jurisdictional Service Tax authorities in accordance with the statutory provisions and complying with the requirements of registration, periodical return submission, audits etc. Hence the returns filed by the said ISD registered premises are subject to scrutiny by their local authorities and the returns/accounts maintained in these registered premises regularly audited by their jurisdictional Service Tax audit officials. The learned counsel submits that the eligibility or otherwise of the service tax credit has to be examined at the end of input service distributor only. Thus it is the responsibility of the jurisdictional officer with whom input service distributor has registered to decide the dispute regarding eligibility or otherwise of the service tax credit that the input service distributor has taken and proposes to pass on to others and therefore the appellant’s Sankar Nagar Plant having availed Cenvat credit as per valid ISD invoices issued by ISD registered premises, cannot be called upon to explain the underlying nature of services on which credit has been availed by the ISD units falling under different Service Tax jurisdiction.
5. The learned counsel submits without prejudice to the earlier submissions that denial of the subject credit through ISD mechanism is purely based on assumptions/presumptions conjectures/surmises and not borne out of proper verification of facts on records. That the adjudicating officer has neither applied his mind nor considered the submissions made by way of reply to the show cause notice, at the time of personal hearing and in their written submissions, namely, that the Input Service Distributor (ISD) had complied with the requirement of registration and periodical submissions of return that are subjected to scrutiny by the local authority and in the event of any deficiency, the show cause notice ought to have been issued to them only and not to the appellant who are only taking credit based on the invoices issued by the ISD and further that it is an admitted fact that the sale in completed at customer’s place and the place of removal is only the customer’s end and therefore the place of removal is the customer’s end to enable the appellant to take Cenvat credit and reliance is placed on Board Circular No.988/12/2014 dated 20.10.2014 on the above contention. The learned counsel submits that the adjudicating authority has merely reproduced the allegation in the SCN that the service rendered by C &F agents are outward freight transportation beyond the place of removal without addressing their averments in this regard. That the reliance placed on the order of the Kerala Commercial taxes department is misconceived as the said department has passed the order holding that the C & F agent is not liable to pay VAT as they are rendering services and thus it is clear that the services provided by the C& F agents at the appellant’s godowns are services on which the appellant is entitled to take credit. That as regards the entitlement of the appellant to take credit on the ISD invoices issued with respect to services provided by M/s. Chettinad logistics, the appellant without prejudice to their submissions on jurisdiction had also submitted statement containing details of ISD credit pertaining to M/s. Chettinad logistics to substantiate that the corporate office had complied with the provisions of ISD mechanism as per Cenvat Credit Rules, 2004. That the credit the appellant availed on ISD invoices pertaining to M/s. Image Public Relations ltd is for their advertisement made during IPL and such advertisements being for sales promotion they are entitled to avail cenvat credit as it is also covered by the term “in relation to” used in the inclusive part of the definition of input service as held by the decision of the Honourable Bombay High Court in M/s. Coca Cola India Pvt Ltd v CCE, Pune III, (2009) 242 ELT 168 (Bom). He also places reliance on the case laws in:
1) COMMR OF CIT., PUNE-I, COMMISSIONERATE V DERLIKON BALZERS COATING INDIA P. LTD, 2019 (366) ELT. 624 (Bom.)
2) CASTROL INDIA LIMITED V COMMISSIONER OF CENTRAL EXCISE, VAPI; 2013 (291) E.L.T. 469 (Tri. -Ahmd)
3) COMMR OF SERVICE TAX, AHMEDABAD V GODFREY PHILIPS INDIA LTD., 2009 (14) 5.T.R. 375 (Tri. Ahmd)
4) COCA COLA INDIA PVT. LTD V COMMISSIONER OF C EX, PUNE- III; 2009 (242) ELT 168 (Bom.)
6. The Learned AR Ms. Anandalakshmi Ganeshram represented the department and submitted as under:
A that as per Rule 2(l) of CCR, input services includes services in relation to modernization, renovation or repairs of a factory and in the present case, the activity involved is demolition of chimneys which were decommissioned in the year 1990 itself, which cannot be termed as modernization, renovation or repairs of a factory and thus the adjudicating authority has rightly held that the CENVAT credit taken on the service tax paid on activity of demolition is against the law.
B Reliance is placed on the judgements in the case of M/s. Hindustan Zinc Ltd 2017 (8) TMI 60 CESTAT New Delhi & M/s. Nipro India Corporation P Ltd 2018 (10) TMI 745 AAR, Maharashtra, wherein it has been held that the appellants are not eligible for CENVAT credit on demolition service, and these judgements are squarely applicable to the present case.
C that as per Rule 7 (iii) of CCR 2004 it is clear that the credit of service tax attributable to service used wholly in a unit shall be distributed only to that unit. The ISD/Corporate office can distribute only the common services on the turnover basis and other credits of ST attributable to service used wholly in a unit shall be distributed to that unit as per Rule 7(c) of CCR. In the present case, the credit distributed was not related to that particular unit and also the credit had not been distributed pro rata on the basis of the turnover of that unit. Hence the distribution of the same is not correct and has to be recovered along with interest.
D Reliance is placed on the judgement in the case of M/s Clariant Chemicals (1) Ltd. 2015 (10) TMI 2754 CESTAT MUMBAI wherein it has been held that the distribution of ST through ISD is only a facility provided under the Rules and does not deal with recovery. Therefore, the credit if taken wrongly, has to be recovered from the person who has taken credit. This judgement is squarely applicable to the present case and therefore, the appeal filed by the appellant may be rejected.
7. We have heard both sides, perused the records and relied upon case laws.
8. The issues boil down to whether the credit availed by the appellants on the services availed for demolition of chimneys decommissioned in the year 1990, the credit availed based on Input Service Distributor’s (ISD) invoices on services of transportation rendered by clearing and forwarding agents, the credit distributed in respect of M/s. Chettinad Logistics, Chennai and M/s. Image Public Relations P Ltd, New Delhi, were ineligible credits availed by the appellants.
9. In order to appreciate the issue, it is necessary to examine the definition of input service as it existed in the CCR during the relevant period that is April 2013 to November 2013. The definition of “input service” in Rule 2(l) of the CCR came to be substituted by the Cenvat Credit First Amendment Rules, 2011 notified vide notification No.3/2011 C.E.(NT) dated 01.03.2011 with effect from 01.04.2011 and stood further amended vide Notification No.28/2012 C.E.(NT) dated 20-6-2012 with effect from 01-07-2012.
10. What constitutes ‘input service’ stood defined during the relevant period under Rule 2(l) as under: – “Input Service” means any service, –
(i) used by a provider of output service for providing an output service; or
(ii) 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 modernization, 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
(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
(B) services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods; or
(BA) service of general insurance business, servicing, repair and maintenance, in so far as they relate to a motor vehicle which is not a capital goods, except when used by-
(a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such a person; or
(b) an insurance company in respect of a motor vehicle insured or reinsured by such a person; or
(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee.
11. On an analysis of the above definition, it is seen that the same is broadly in three parts; First part, which is the main part, covers input services used for providing output service or used by manufacturer, directly or indirectly, in relation to manufacture or clearance of final product upto the place of removal; Second part is the inclusive part of the definition which expands the scope beyond the coverage of the first part, the word ‘includes’ enlarging the scope, without being exhaustive or restrictive, and the Third part covers specific exclusions. The exclusions listed in sub-clause (A), sub-clause (B) and sub-clause (BA) have their exceptions; the service portion in the execution of a works contract and construction services including specified services in sub-clause (A) being permissible when they are used for provision of one or more of the specified services, that is, service listed under clause (b) of Section 66E of the Finance Act, namely the declared services of construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion certificate by the competent authority. The services listed in sub-clause (B) is so far as they relate to motor vehicle are permissible when they are being provided in cases when the credit on the motor vehicle is available as capital goods. The service of general insurance business, servicing, repair and maintenance, in so far as they relate to a motor vehicle which is not a capital goods, is available when used by a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such a person; or an insurance company in respect of a motor vehicle insured or reinsured by such a person. However, the exclusions in sub-clause (C) are only when such services are used primarily for personal use or consumption of any employee.
12. Thus, from a plain reading of the definition, it is evident that for a manufacturer, the input service only needs to be used either directly or indirectly, in or in relation to the manufacture of the final product.
13. We are of the view that the rationale for such demolition as provided by the appellant, is that such demolition of chimneys were carried out to make available a smooth pathway for free movement of heavy vehicles for carriage of limestone to crusher and thus was a service directly in relation to the manufacture of cement. The appellant had also contended that such demolition of chimneys also facilitated free movement of heavy vehicles engaged in transportation of the raw materials, into and out of the factory, without which the very manufacturing operation in the plant would come to a standstill. While these contentions were noted by the adjudicating authority, they were never controverted. Thus, the denial of credit on the demolition services availed by the appellant has been made by the adjudicating authority by a mere ipse dixit without providing any reason therefor. We are of the view that the justification stated by the appellant merits acceptance and such demolition services in these circumstances can be counted as services used by the appellant directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal.
14. Further, it is trite that generally the word “include” should be given a wide interpretation as by employing the said word, the legislature intends to bring in, by legal fiction, something within the accepted connotation of the substantive part. (Ramala Sahkari Chini Mills ltd v. Commissioner of C. Ex, Meerut-I, reported in 2010 (260) E.L.T. 321 (S.C.) refers). It is settled law that the expression “in relation to”, used in the said rule, has to be given a wide connotation as has been held by the Apex Court in Collector of Central Excise v. Solaris Chemtech Limited, 2007(214) ELT 481 (SC) and Doypack Systems (Pvt) Ltd v. Union of India, 1988(36) ELT 201 (SC).
15. We also notice that, Rule 2(t) of Cenvat Credit Rules, 2004 provides that words and expressions used in these rules and not defined but defined in the Excise Act or the Finance Act shall have the meanings respectively assigned to them in those Acts. While factory is not defined in the Cenvat Credit Rules, 2004, it is seen that Section 2(e) of the Central Excise Act, 1944 defines “factory” means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on. Therefore, on an evaluation of the aforesaid statutory provisions and the definition of factory reproduced supra, which means any premises and includes precincts thereof, wherein or in any part of which excisable goods are manufactured or any manufacturing process connected with the production of these goods is being carried on, we are of the view that chimneys, even though they were decommissioned in 1990, continue to be on the premises or precincts wherein or in any part of which the appellant’s activity of manufacture is being carried out. Therefore, the demolition of these chimneys, would even otherwise come within the ambit of services used in relation to renovation or repair of a factory, as provided in the inclusive part of the definition of “input service” cited supra. It is also pertinent that this is an activity of demolition and not construction and cannot in any manner be conceived as coming within the specified exclusions to the input services. The learned A.R. has relied on the decisions in M/s. Hindustan Zinc Ltd 2017 (8) TMI 60 CESTAT New Delhi & M/s. Nipro India Corporation P Ltd 2018 (10) TMI 745 AAR, Maharashtra to contend that the denial of credit on demolition services as made in the impugned OIO is correct. We find that the decision in M/s. Hindustan Zinc supra by the learned single member of the Tribunal, was to remand the matter to the original authority to decide the eligibility of the cenvat credit and no finding had been rendered as regards the credit taken on demolition services in the said matter. The decision in M/s. Nipro India Corporation is the credit availment under GST Act and by the authority for advance ruling in a decision that is only binding inter se the parties to the ruling. It has no precedential value or application in the circumstances of the appeal before us. As such the decisions cited by the learned A.R. are inapplicable. We therefore hold that the adjudicating authority erred in denying the cenvat credit on the demolition services used by the appellant for demolition of the decommissioned chimneys.
16. As regards the credit availed based on Input Service Distributor’s (ISD) invoices, on services of transportation rendered by clearing and forwarding agents, the preliminary objection of the appellant is that it is the responsibility of the jurisdictional officer with whom input service distributor has registered to decide the dispute regarding eligibility or otherwise of the service tax credit that the input service distributor has taken and proposes to pass on to others. The appellant has relied on the decision in Commr of Service Tax, Ahmedabad v Godfrey Philps India Ltd, 2009(14) STR 375 (Tri-Ahmd) in this regard, and we find that this Tribunal has indeed rendered a finding as contended by the appellant. The said decision is also seen followed by this Tribunal in United Phosphorous Ltd v CCE, Surat II, 2013 (30) STR 509 (Tri- Ahmd). It is seen that both, the learned adjudicating authority and the learned A.R., have relied on a decision in Clariant Chemicals (I) Ltd of CESTAT, Mumbai, which being an interim order, again has no precedential value. No contrary decision was relied on or produced before us. So, on this ground alone the denial of cenvat credit taken by the appellant, on Clearing and forwarding agent services based on ISD invoices issued by depots at Chennai and Cochin, is not tenable in law. Even otherwise, we also find that the adjudicating authority has not rendered any finding controverting the appellant’s contentions on facts regarding the nature of C & F agent services, namely, that the appellant was availing being not outward freight transportation and rather related to use of these services for clearances being only that upto the place of removal which is permitted under the aforementioned definition of input services.
17. Further, in respect of the services provided by M/s. Chettinad Logistics P Ltd, we concur with the contention of the appellant that the allegation in the SCN, is sans any evidence and is a mere assumption. While the SCN states that the unit at sankar nagar were not having the required particulars as the same is dealt by their corporate office, yet it raises a presumptive allegation that the distribution is not as per Rule 7(c) of Cenvat Credit Rules, 2004 without detailing how such conclusion has been arrived at without any details as to the number of units to which the credit has been distributed, what is the pro rata credit based on the turnover of the respective units arrived at to come to the conclusion that Rule 7 (c) has been violated as alleged. The adjudicating authority too, merely reiterates the allegation without anything more. In fact, the statement containing the details of ISD credit pertaining to M/s. Chettinad Logistics P Ltd that has been provided to substantiate the appellant’s contention that the provisions of distribution as per Cenvat Credit Rules, 2004 has been complied with has, although noted, was neither disputed by the adjudicating authority, nor was it stated to have been found to be incorrect. Therefore, the denial of cenvat credit on this count, without controverting the appellants’ statement containing the details of ISD credit pertaining to M/s. Chettinad logistics P. Ltd ,furnished to substantiate that their corporate office had complied with the provisions of ISD mechanism as per CCR, 2004, is contrary to law and thus, untenable.
18. We do not agree with the findings of the adjudicating authority, namely, that the ISD credit distributed in respect of M/s. Image Public Relations P Ltd do not have integral connection with the appellant’s manufacture of final products. We find that the appellant had contended that the services were used by the appellant for their advertisement during IPL. We find that the definition of input services as reproduced supra includes advertisement or sales promotion and therefore we hold that the appellants are entitled to the credit availed on the services rendered by M/s. Image Public Relations P Ltd.
19. In as much as we have found that the appellant is entitled to the availment of all the cenvat credit, on merits of its eligibility and which has been sought to be denied in the impugned order in original as ineligible, the demand of ineligible credit, consequential demand of interest and imposition of penalty cannot sustain and is liable to be set aside. We find that the entire dispute is on the entitlement to cenvat credit and premised on the interpretation of provisions of cenvat credit rules, 2004, and is also by placing reliance on the returns filed by the appellant. Thus, no positive act that would qualify as any of the ingredients required to invoke the extended period of limitation, has been evidenced as committed by the appellant. Therefore, we find the invocation of extended period of limitation and imposition of penalty on this count is also unsustainable.
20. In view of the foregoing facts borne out from the records and the discussions and findings stated above, we find that the appellant succeeds in its Appeal on merits as well as on its plea against invocation of extended period of limitation. The demand made in the impugned order in original being untenable, the demand of consequential interest and the penalty imposed also do not sustain. Hence the impugned order in original is set aside and the appeal is allowed with consequential relief, if any, in law.
(Order pronounced in the open court on 17.02.2025)
