2019 (6) TMI 1597

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... and Heavy duty commercial vehicles, falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985. 3. The Appellant has plants at Satara, Chakan, Jadoli etc., where they are manufacturing the above final product and clearing it on payment of duty. Appellant has also set up a plant at Pantanagar, Uttarakhand, from where it is clearing its final products without payment of duty availing the benefit of area based exemption under Notification No. 50/2003-CE dated 10.06.2003 (Notification). In certain cases, inputs of the above final products such as gear, pinion, U.J. Kit, etc. (components and parts), procured from outside and not used in the manufacture of final products, are cleared upon payment of duty in terms of condition No. 4 of the Notification, by undertaking the activity of packing/ repacking of such inputs. 4. The Appellant obtained the technology to manufacture the above final products from Dana, vide two Technology Licensing Agreements dated 10.08.1993 and 01.01.0997 (IPR Agreements) for driveshafts and axles, respectively. These agreements were renewed as well as amended from time to time Vide the Agreements, the Appellant was allowed to use the....

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 duty i.e. exempted goods, hence, the credit is not admissible to the Appellant. The said audit objection was communicated to the Appellant vide letter dated 06.05.2013. The Appellant replied to the audit objection vide letter dated 31.05.2013, clarifying inter alia, that since the services were received prior to 01.04.2011and used in the manufacture of exempted as well as dutiable products, credit was correctly availed in terms of Rule 6(5) of the Credit Rules. 10. In the above factual background, Show Cause Notice dated 15.03.2016 (SCN) was issued proposing to demand and recover Cenvat Credit amounting to Rs. 1,69,04,653/-, along with interest and penalty, by invoking the extended period of limitation. The SCN alleged that the Appellant had availed credit on services used exclusively in the manufacture of exempted goods, thus, such credit is not admissible in terms Rule 6(1) and 6(5) of the Credit Rules. 11. The Appellant filed a detailed reply to the SCN on 03.06.2016, contesting the allegations contained in the SCN. However, without considering the Appellant's submissions, the Joint Commissioner confirmed the entire demand vide Order-in-Original dated 23.02.2017 (OIO) alo....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ana' or 'Spicer', on the goods manufactured, defined the Licensed Products in the same manner as the IPR Agreements did by including the parts and components thereof. This is for the reason that the Dana owned brand name 'Dana' or Spicer' was affixed on the final products (components), which were cleared on payment of duty. 19. Further, description in the invoices raised on the Appellant for payment of royalty, mention final products, alongwith components and parts thereof. 20. Thus, it is submitted that the IPR services were received and used by the Appellant in relation to manufacture of exempted goods i.e. final products cleared without duty payment by availing the area based exemption, as well as dutiable goods i.e. inputs of final products (components), which were cleared on payment of duty. Hence, it cannot be said that IPR services were received and used exclusively in relation to manufacture of exempted goods so as to invoke the embargo under Rule 6(1) read with Rule 6(5). Therefore, the Appellant humbly submits that it has correctly availed the Cenvat Credit on IPR services. Credit was correctly availed on Management Consultancy services. 21. As is evident from the Man....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....vailment of input credit until 1.9.2014, when by amendment made to Rule 4(7) of Cenvat Credit Rules, time limit of six months was prescribed, which was subsequently modified to one year from the date of the receipt of the input service. 26. It is further urged that Head Office of the appellant could have availed and distributed the entire credit in question through ISD route, omission to take ISD registration is mainly a procedural lapse. The appellant has other units situated in Satara, Chakan, Jodali etc. which are clearing final products on payment of duty. Admittedly, the IPR services in question were common to all units of the appellants. Further, it is established law that substantive benefit of cenvat credit cannot be denied on the ground of mere procedural lapse for not following the ISD route, as has been held by the Hon'ble Gujarat High Court in the case of CCE Vs. Chandresh C. Shah - 2014 (36) STR 972 (Gujarat) and the said decision was accepted by CBEC. It was further urged that during the relevant period under the provisions of Cenvat Credit Rules, there was no bar under Rule 7 regarding the distribution of entire credit to any one unit. Such restrictions came into ef....