TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 788
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.... activity related to the business, it has to be an activity which is analogous to the activities mentioned after the words such as ...."By any stretch of interpretation, the credit on these services cannot be allowed to the appellant, as otherwise, this will lead to an all inclusive situation for Cenvat Credit eligibility, which is not intended by law. The appellant have also cited of departmental audits conducted. this argument cannot be of any help to the appellant. Seeking refutation of extended period invocation on this ground is not a valid argument. Will not agreeing with such a plea take all once audited units out of purview of 5 years extended period of demand? The statutory provision relevant for audit is clause (x) of Section 37 (2) and Rule 22 of the Central Excise Rules, 2002. While extended period provisions are provided under Section 11 A of CX Act. both are effect of separate authorities and should not be read in such a way that it makes a particular provision redundant. Fact of regular audit cannot be a ground for rejection of invocation of extended period, if some issues appear to audit. ... Proviso to amended Section 11 AC (1)(c) stipulates that in respect o....
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.... reverse charge basis and availed the CENVAT credit of the service tax paid. 2.5 Revenue was of the opinion that these fees paid by the appellant to their principal in Japan for services received from the principal in Japan do not qualify as input services as defined by Rule 2 l of Cenvat Credit Rules, 2004, as amended from 01.04.2011. 2.6 Proceedings were initiated against the appellant and two show cause notices dated 11th April, 2016 and 16th November, 2016 were issued to the Appellant. The show cause notice dated 11th April 2016 asked appellants to show cause as to why; "(a) CENVAT credit amounting to Rs.38,53,886/- (Rupees Thirty eight lac fifty three thousand eight hundred eighty six only) irregularly availed on service Manuals and Annual Fee for Parts Catalogue should not be demanded and recovered along with interest from them under Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A and Section 11AA of the Central Excise Act, 1944, respectively; (b) The amount of Rs.22,57,029/- (Rupees Twenty Two lac Fifty Seven Thousand Twenty Nine only) already reversed by them on account of wrongly availed CENVAT credit, as explained in this notice, should not be appropriate....
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....d with Section 11AC of the Central Excise Act, 1944 for contravention of the provisions of Cenvat Credit Rules, 2004. (d) The adjudged dues shall be paid henceforth." 2.8 Aggrieved by the Order-in-Original Appellant filed an appeal before Commissioner (Appeals) who vide the impugned order referred in para 1 partially modified the Order-in-Original. 2.9 Aggrieved appellants have filed this appeal. 3.1 We have heard Shri Puneet Bansal, Advocate for the Appellant and Shri Sandeep Pandey, Authorized Representative for the Revenue. 3.2 Arguing for the Appellant, learned counsel submits: ➢ services received by them for preparation of the "Electronic parts Catalogue" and "Service Manual" qualify as input services. ➢ The Electronic Parts Catalogue codifies the various parts, for their effective identification by them and their dealers/ suppliers the parts, for the purpose of procuring, retrieving and dispatch of the parts as desired by their customers. This makes their business operation and management of the parts more efficient and commercially expedient. Thus the services received by them for preparation of this manual essentially qualify as input service. 
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.... the order for the same. The services of these part and service manuals are being used by the dealers and not the appellants. Hence these cannot be termed as input services for availing the CENVAT credit of the service tax paid on the fees for developing these manuals. ➢ appellants have not been able to adduce any evidence to show that their business has been promoted by these manuals. 4.1 We have considered the impugned order alongwith submission made in appeal and during the course of argument. 4.2 The only issue to decide the present appeal is service admissibility of Cenvat Credit Rules paid on service tax under reverse charge mechanism by the appellant on the service fees paid by them to their principals namely Honda Motor Company Ltd., Japan for development of Part Manual and Service Manual. 4.3 Appellant entered into agreement for Service Information Preparation Concerning Automobiles dated 01.10.2010 with Honda Motor Company Ltd., Japan. The relevant excerpts from the agreement are reproduced below: "Whereas, Honda Motor is engaged in, inter alia, the business of the development, manufacture and sale of automobiles and, through experience accumulated in such b....
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....ing and customizing existing Repair or maintenance Information; and 4) Such other services as parties hereto may from time to time agree upon in writing. 2.2 .... Article 4. (Results of Services) 4.1 Honda Motor shall make the results of the Services available in such form as will allow the HMI to enjoy such results. The method by which such results shall be made available shall be determined by agreement of the parties hereto in accordance with their requirements and circumstances. 4.2 The parties hereto acknowledge that the copyrights, patent rights and other intellectual property rights in and to the results of the Services shall remain the sole property of Honda Motor, and that nothing contained herein shall be construed as assigning or transferring any of those rights to HMI; provided that HMI will be entitled to create translations of the results of the Services and to make copies thereof to the extent necessary for the purpose referred to In Article 4.1 hereof." 4.4 On the sample basis appellant counsel had during the course of arguments produced a part catalogue. On page 1 of the catalogue, under the head "Instruction for use of parts catalogue" following is sta....
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.... observations made by the lower authority contrary to this. 4.6 On the first page of "Shop Manual -- Maintenance, Repair and Construction" which we examined on sample basis following is stated: "A Few Words About Safety Service Information The service and repair information contained in this manual is intended for use by qualified, professional technicians. Attempting service or repairs without the proper training, tools and equipment could cause injury to you or others. It could also damage the vehicle or create an unsafe condition. This manual describes the proper methods and procedures for doing service, maintenance, and repairs. Some procedures require the use of specifically designed tools and dedicated equipment. Any person who intends to use a replacement part, a service procedure, or a tool that is not recommended by Honda, must determine the risk to their personal safety and the safe operation of the vehicle. If you need to replace any parts, always use the correct parts supplied by a Honda dealer. Never use inferior quality parts. For Your Customer's Safety Proper service and maintenance are essential to the customer's safety and the reliability of the vehi....
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.... case of Coca Cola India Pvt. Ltd. [2009 (242) E.L.T. 168 (Bom.)] has held as follows: "38. Service tax therefore, paid on expenditure incurred by the assessee on advertisements sales promotion, market research will have to be allowed as input stage credit more particularly if the same forms a part of the price of final product of the assessee on which excise duty is paid. In other words, credit of input service must be allowed on expenditure incurred by the assessee which form a part of the assessable value of the final product. If the above is not done, as sought to be done by the department in the present case, it will defeat the very basis and genesis CENVAT i.e. value added tax. 43. What follows from the above discussion is that the credit is availed on the tax paid on the input service, which is advertisement and not on the contents of the advertisement. Thus it is not necessary that the contents of the advertisement must be that of the final product manufactured by the person advertising, as long as the manufacturer can demonstrate that the advertisement services availed have an effect of or impact on the manufacture of the final product and establish the relationship b....