2018 (8) TMI 1498 - AT - Central Excise

Denial of credit revoked under Cenvat Credit Rules, 2004.

The denial of credit for business development services was set aside, and the penalty imposed under the Cenvat Credit Rules, 2004 was revoked. The ... CENVAT credit - input service - business development services - Held that:- The period involved is prior to 01.04.2011 when the definition of input service included the words ‘activities relating to business’ - denial of credit unjustified. Penalty u/r 15(1) of the Cenvat Credit Rules, 2004 - Held that:- Since the major credit of business development service has been set aside, the penalty is also unwarranted and requires to be set aside. Appeal allowed - decided in favor of appellant. Issues: Denial of credit on certain input services, applicability of definition of input service, imposition of penalty under Cenvat Credit Rules, 2004.The judgment pertains to an appeal where the appellants had availed credit of various input services, and a Show Cause Notice was issued proposing to deny credit on certain services. The authorities below had denied credit on some services, leading to a demand against which the appellant filed the present appeal. The appellant contested specifically the denial of credit in respect of business development services amounting to Rs. 92,700. The appellant argued that these services were utilized for marketing activities and business development, falling within the definition of input service during the relevant period. The appellant relied on a previous decision in FLOWSERVE SANMAR LTD. Vs. CCE Chennai, 2017 (5) G.S.T.L. 375 (Tribunal - Chennai) to support their claim.During the hearing, the learned Counsel for the appellant highlighted that they were focusing their challenge only on the denial of credit for business development services, which were availed before 01.04.2011 when the definition of input service included 'activities relating to business'. The judge noted that the denial of credit on the business development service was unjustified, especially considering the precedent cited by the appellant. Consequently, the judge set aside the denial of credit on the business development service and also revoked the penalty of Rs. 10,000 imposed under Rule 15(1) of the Cenvat Credit Rules, 2004. As the major credit of Rs. 92,700 for the business development service was allowed, the judge deemed the penalty unwarranted and ordered it to be set aside.In conclusion, the impugned order denying credit for business development services was set aside, along with the associated penalty, while the rest of the order remained unaffected. The appeal was partly allowed in the mentioned terms, with any consequential reliefs to be provided accordingly.