2016 (11) TMI 408

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t of the service tax paid on Consulting Engineers Services which are exclusively used in R&D activities in the Engineering Research Centre of the assessee and prototypes are manufactured. The period involved in appeal is from 01.04.2011 to 31.12.2011. The adjudicating authority after following the due process of law analysed the provisions of Rule 6(1) of Cenvat Credit Rules, 2004 and held that appellant is ineligible to avail the cenvat credit of the service tax paid on the input services which are used in Engineering Research Centre (ERC). 4. Ld. counsel appearing on behalf of the appellant after taking us through the factual matrix of the case submits that the adjudicating authority has erred in coming to a conclusion inasmuch as the En....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the Tribunal in the case of Jyoti Structures Ltd. 2004 (170) ELT 190, Robert Bosch India Ltd. 2004 (178) ELT 701 for the proposition that testing charges in respect of prototype transmission towers and import of capital goods for development of software of prototype of the car credit cannot be availed. He would also refer to the decision of the apex court in ITC Ltd. 2003 (151) ELT 246 for the proposition that samples which are drawn during the manufacturing process are not liable to duty. Applying the said analogy, prototype which are manufactured are not liable to duty, hence cenvat credit is not eligible. In the same proposition, he would rely upon decision of apex court in Medley Pharmaceuticals Ltd. 2011 (263) ELT 641 (SC). 6. On con....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....cal assistance which has been used in the development of prototypes and the consultancy fees amounting thousands of crores of rupees has been paid. The service tax credit taken is about Rs. 137 crores and even assuming 10% rate, the consideration for the service paid would be of Rs. 1370 crores. It is absurd and irrational to suggest that such a huge sum is paid to the consulting engineers for developing only prototypes and these services are not "in relation to" the manufacture of commercial vehicles. As held by the Hon'ble Bombay High Court in the case of Deepak Fertilizers & Petrochemicals Corporation Ltd. (cited supra), the definition of the expression "inputs service" covers any services used by the manufacturer, whether directly or in....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ent case, we accept the contention of the appellant that the consulting engineers service which they received from the foreign as well as domestic service provider are in relation to the manufacture of commercial vehicles by the appellant and therefore, the appellant is eligible for the benefit of service tax paid thereon. As regards the Revenue's contention that Notification No.167/71 unconditionally exempts a goods manufactured in educational institution, technical or research institutes, this argument of the Revenue is not acceptable for a variety of reasons. In the appellants own case, the CBE&C vide order dated 29/11/1973 held that the appellant would be eligible for the benefit of the said notification only when the prototypes manufac....