cro p 377-6, 50-11d, 5c•I II, 31- e,laild, I .

st-iftt 1-) add, — 380 015.

OFFICE OF THE ASSISTANT COMMISSIONER, CENTRAL EXCISE, DIVISION - II, AHMEDABAD- I .

THIRD FLOOR, CENTRAL EXCISE BHAVAN, NEAR POLYTECHNIC, AMBAWADI, AHMEDABAD-380 015.

maw 31V co / By R.P.A.D.

th-T.#.V.84/3-33/Dem/2010. arrtu Date of Order: 28.01.2014

7111fr aftRlf / Date of issue : 28.01.2014

t,diu td/Passed by : Ms.Ruchi Bisht / Assistant Commissioner

3nt1T N. / Order-in-Original No /AC /03/Div-I1/ 2013-14

-6-Tiffzfr) .111 crit 7rt t, 31/3 crta-r 1=4-cr

t This copy is granted free of charge for private use of the person(s) to whom it is sent.

31-rtw a it r &1-1 -a- ' II a- 60(#1-5) c jerTf 3c-L-11d, 311IT-drgt,

— 380 015 1,11(,04 T. t.v.1 ch•i -1.4-)(11 t I $4-1 arcfr - LIT 2/-(e PTC)

!1,0-ch e—d-r -fitcr I

Any person deeming himself aggrieved by this order may appeal against this order in Form E.A.1 to Commissioner (Appeals), Central Excise, Central Excise Bhavan, Ambawadi, Ahmedabad — 380 015 within sixty days from the date of its communication. The appeal should hear a court fee stamp of Rs.2/- only.

3-Ta- 31141, 31-cfm-wacr TAT cif-FT er 1ri'dzri- rftw 71.-AT VrItCr 1311 trT 30-11d, (311, 2001 fA-Trag- 3 t crratir _T--2:11T 6 t-(11a17

f+- T vrFp- I T4:ItTITZT 4-M ,1 0-1 f+-7 :-

The Appeal should be filed in Form No. E.A.1 in duplicate. It should be signed by the appellant in accordance with the provisions of Rule 3 of Central Excise (Appeals) Rules, 2001. It should be accompanied with the following :-

(i) 37a" 1;11c Copy of accompanied Appeal.

(ii) 1 111-zr r ClfdRTY 31-2-TaT T 3TraW ftT-4" 3ft17 t"t d c 3 chcH

.Qch TIT 317z- r 31-1t21 D÷ILR 2/- - rf'o-tr I

Copies of the decision or, one of which at least shall be certified copy, the order appealed against

or the other order which must bear a court fee stamp of Rs.2.00/-.

Sub: Denovo Adjudication in the case of OM No.44/DC/DEM/2010 dated 18.02.2011 (Show Cause Notice No.V.84/3-33/Dem/2010 dated 22.12.2010) as per CESTAT Order No.A/10637 & 10638/WZB/AHD/2013 & M/12285 & 12286/WZB/AHD/2013 dated 06.05.2013 — matter reg.

BRIEF FACTS OF THE CASE :

M/s. Cadmach Machinery Co. Pvt. Ltd., 3604/05, Phase IV, GIDC,

Vatva, Ahmedabad 382445 (herein after referred to as "the assessee"), holding

Central Excise Registration No AAA CC 6242 XM001, is engaged in the

manufacture and sale of Pharmaceutical Machinery & its Spares falling under

CH.No.84, 85 & 90 of the Central Excise Tariff Act, 1985.

2. During the scrutiny of the records of the assessee, it was revealed that

the said assessee had availed Cenvat Credit of Service Tax paid on various

services. Hence, Superintendent, AR-I, Div-II, Ahmedabad-I vide letter F. No. AR-

1/POE-Cadmach/2010-11 dated 15.10.2010 called for the details of the same. The

assessee submitted the details of Service Tax credit vide their letter dated

19.11.2010. It appeared that the said assessee had wrongly availed the Cenvat

Credit on Service Tax paid on Air Travel Agency, Chartered Accountant Service,

Exhibition Service, Tour Operator Service, Out door Catering Service & Motor

Vehicle Service (hereinafter referred to as the "said services") which were not input

services as per Cenvat Credit Rules, 2004. The said Service Tax credit were availed

on the basis of bills raised by the service providers during the period from January

'10 to October '10 amounting to Rs. 331220/- (ST Z. 321280/- + Education Cess Z.

6756/- + SHE Cess Z. 3184/-).

3. As per the definition of the Input Service under Rule 2(I) (iii) of the

Cenvat Credit Rules, 2004, Input service means any service,

"used by the manufacturer, whether directly or indirectly, in or in relation

to the manufacture of final products and clearance of final products from the place of

removal and includes services used in relation to setting up, modernization,

renovation or repairs of a factory premises of provider of output service or an office

relating to such factory or premises, advertisement or sale promotion, market

research, storage up to the place of removal procurement of inputs, activities relating

to business, such as accounting, auditing, financing, recruitment and quality control,

coaching, and training, computer networking, credit rating, share registry, and

security inward transportation of inputs or capital goods and outward transportation

up to the place of removal."

4. It appeared that the Input Service Tax Credit under the category of Air

Travel Agency amounting to Rs. 48191- (ST Z. 4728/- + Ed. Cess 77/- + SH. Cess

Z. 14/-), Chartered Accountant Service amounting to Z. 1345151- (ST Z 130595/- +

Ed. Cess 2613/- + SH. Cess Z. 1307/-), which is for internal audit of records,

Exhibition Service amounting to Z. 8137/- (ST Z. 7900/- + Ed. Cess Z.158/- + SH.

Cess Z. 79/-), Tour operator Service amounting to Z. 333/4 ST Z. 323/ - + Ed. Cess Z.

6/ - + SH. Cess Z. 4/-), Outdoor Catering Service amounting to Z. 178694/-( ST Z.

J

173153/- + Ed. Cess Z. 38051- + SH. Cess Z. 1786/-), Motor Vehicles Service under

the category of Authorized Service Station Service amounting to Z. 4722/- (ST Z.

458/- + Ed. Cess Z. 97/- + SH. Cess Z. 44/-) is not admissible as these services are

not used in or in relation to the manufacture of final product and clearance of final product from the place of removal & as such it appeared that the services are not covered under the ambit of "Input Services". Hence, it appeared that the Credit of the said services taken by the assessee is not admissible. Therefore, the said assessee is required to reverse the said Service Tax credit taken along with appropriate rate of interest as applicable.

5. The aforesaid services were not used in or in relation to the manufacture of final products and clearance of final products up to the place of removal and as such, it appeared that the said services do not fall under the definition/purview of input services'. Accordingly, the said Cenvat Credit of input services taken by the

assessee are not correct and proper and not admissible as 'input services' in terms

of the provisions of Cenvat Credit Rules, 2004.

6. Further, the said assessee had not disclosed in their ER-I returns that they had taken Credit of Service Tax paid on various services. As per the provisions of Rule 9(6) of the Cenvat Credit Rules,2004, the burden of proof regarding the admissibility of the CENVAT Credit shall lie upon the manufacturer or provider of

output service taking such credit. Thus, it appeared that assessee was required to ascertain the admissibility of the credit. However, the assessee failed to do so and not disclosed to the department either in their ER-I returns or in any other manner that they have taken credit on the above said various services. Thus, it appeared that the said assessee have contravened the provisions of Rule 2 and 9 of Cenvat Credit Rules, 2004 with an intent to evade payment of duty in as much as they have resorted to taking Cenvat Credit which was inadmissible to them.

7. All these acts of contravention on the part of the said assessee, appeared to have been committed with an intention to evade payment of Central Excise duty and therefore the total Credit during the period from January '10 to October '10, amounting to Z. 331220/- ( ST Z. 321280/- + Education Cess Z. 6756/- + SHE Cess Z. 3184/-) are wrongly taken on the aforesaid input services and are required to be demanded and recovered from them along with interest in terms of Section 11A(1) & 11AB of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004. Further, it also appeared that all these acts of contraventions appear to constitute offences of the nature and type as described in Rule 15(1) of Cenvat Credit Rules, 2004, which rendered them liable for penalty.

8. Therefore, Show Cause No.V.84/3-33/Dem/2010 dated 22.12.2010

was issued to M/s. Cadmach Machinery Co. Pvt. Ltd., 3604/05, Phase IV, GIDC,

4

Vatva, Ahmedabad 382445 to Show Cause to the Assistant Commissioner, Central

Excise, Division-II, Ahmedabad-I as to why;

The Central Excise duty amounting to Z. 331220/- (ST Z.

321280/- + Education Cess Z. 6756/- + SHE Cess Z. 3184/-) for

the period from January '10 to October '10 should not be

demanded and recovered in terms of Section 11A (1) of the

Central Excise Act, 1944, read with Rule 14 of the Cenvat

credit rules, 2004.

The penalty in terms of provisions of Rule 15(1) of the Cenvat

Credit rules, 2004 should not be imposed on them.

iii The interest at the prescribed rate should not be charged and

recovered in terms of Section 11 AB of the Central Excise Act,

1944 read with Rule14 of the Cenvat Credit Rules 2004.

09. After due process of personal hearing, the Deputy Commissioner.

Division-II, Central Excise, Ahmedabad-1 had adjudicated the case vide 010

No.44/DC/Dem/2010 dated 18.02.2011 wherein the following orders were passed:-

i) Confirmed the demand of Rs.1,96,705/- (Rupees one lakh ninety six thousand seven hundred five only) in respect of Cenvat Credit availed on Air Travel Agency for Rs.4819/-, Tour

Operator Service for Rs.333/-, Motor Vehicle Services for Rs.4722/-. Cenvat Credit availed on Exhibition for Rs.8137/-, Catering Service for Rs.1,78,694/-.

ii) Imposed a penalty of Rs.1,96,705/- (Rs.one lakh ninety six

thousand seven hundred five only under Rule 15(1) of the Cenvat Credit Rules, 2004.

iii) Ordered recovery of interest at the specified rate in terms of

Section 11 AB of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004.

10. Aggrieved with the above Order-in-original, the assessee filed appeal

before the Commissioner (Appeals)-1, Ahmedabad on the ground that - the

adjudicating authority has not given any specific grounds regarding the denial of the

Cenvat Credit pertaining to Air Travel Agent/Foreign Travel, Motor Vehicle/car

Repair, Exhibition Service and Out Door Catering. The issue of Out Door catering

services are already settled by the larger bench of the case of GTC Industries

reported in 2008(089)RLt 0197. The penalty is also not imposable. The Services

were used in relation to business activity and therefore, the Credit is not deniable.

11. The Commissioner (Appeals-V), Central Excise, Ahmedabad vide

Order-in-Appeal No.05/2013(Ahd-1)CE/AK/Commr(A)Ahd dated 28.01.2013 /

29.01.2013 has passed an order wherein he upheld part of the impugned order and

allowed part of the appeal. The Commissioner (Appeals) allowed Cenvat Credit

availed on Outdoor Catering services amounting to Rs.1,78,694/-, on the ground that

in the appellant's case itself, CESTAT, vide order dated 24.08.2011 have ruled in

favor of the appellants on the condition mentioned therein. The Commissioner (A)

has also upheld the order of penalty to the duty evaded after requantification of the

Demand by the jurisdictional authority under Rule 15(1) of the Cenvat Credit Rules,

2004. However, in respect of the Cenvat Credit availed on Air Travel Agency,

Business Exhibition Service, Authorised Service Station and Tour Operator Service,

the Commissioner (Appeals) upheld the order of the adjudication authority.

12. Aggrieved with the said Order-in-Appeal, the assessee filed appeal

before the CESTAT, Ahmedabad against the partly confirmed amount involving the

services of Air Travel Agency, Business Exhibition Service, Authorised Service

Station and Tour Operator Service totally involving Rs.18,011/-. The CESTAT,

Ahmedabad, vide Order No.A/10637 & 10638/VVZB/AHD/2013 & M/12285A &

12286-A/VVZB/AHD/2013 dated 06.05.2013 has ordered that "after following the

principles of natural justice, the original adjudicating authority will quantify the

admissibility of credit in respect of remand proceedings in view of the earlier orders

passed by this bench. Appeals are allowed by way of remand". As communicated by

the Assistant Commissioner(RRA), Central Excise, Ahmedabad-1, the said CESTAT

order has been accepted by the Department on monetary limit ground on

03.06.2013.

PERSONAL HEARING.

13. Accordingly, this case is taken up for adjudication. Personal hearing

was fixed on 25.11.2013. Shri Naimesh K.Oza, Advocate, duly authorized by the

assessee appeared for the personal hearing. He submitted a letter dated 25.11 2013

along with the following documents.

(a) A declaration dated 20.11.2013, duly signed by the Vice President of the organization, declaring that no personal air travel expense is incurred by the organization.

) Copies of purchase orders from various companies having address at outside Gujarat.

Copy of Citation No.2013(32)STR 123(Tri-Del) of CESTAT, New Delhi in the case of M/s.Goodluck Steel Tubes Ltd, Vs.Commissioner of C.Ex, Noida wherein Cenvat Credit of Service paid on Air Travel Agent Service was allowed.

14. Due to the change of adjudicating authority, fresh personal hearing

was granted to the assessee for appearing for PH on 13.12.2013. Shri Shashank

Shah, Manager (Excise) appeared for the personal hearing and reiterated the

submissions made earlier and submitted a letter dated 13.12.2013 along with copy

of letter dated 02.01.2013 addressed to the Commissioner(A), Ahmedabad and

photocopies of documents showing that they had sent the material for Exhibition and

after completion of the Exhibition the material had returned to their factory.

DISCUSSION AND FINDING

15. I have carefully gone through the records of the case and submission

made before me at the time of personal hearing. The Hon'ble CESTAT, Ahmedabad,

vide order No. A/10637 & 10638/WZB/A1-ID/2013 & M/12285 & 12286/WZB/AHD/2013

dated 06.05.2013 has remanded back the case to the original adjudicating authority

to quantify the admissibility of Cenvat Credit involved in the Show Cause Notice No.

V.84/3-33!Dem/2010 dated 22.12.2010 issued against the assessee which was

adjudicated vide 010 No. 44/DC/Dem/2010 dated 18.02.2011. This case was

appealed by the assessee in the Commissioner (Appeals) and subsequently in the

CESTAT. Cenvat Credit involved in the SCN, allowed in the order-in-orginal and

allowed by the Commissioner(Appeals-V) is as per the following chart.

Sr. No

Name of the Service

Amount of SCN issued for wrong

Cenvat Credit allowed by the

Cenvat Credit allowed by the Commr.

availment of Cenvat

adjudicating authority vide 010

(Appeals-V), Cen.Excise, A'bad vide

Credit./Rs. No.44/DC/Dem/2 OIA No.05 /2013 (Ahd-1) 010 dated CE/ AK/ Commr (A) 18.02.2011/ Rs. Ahmedabad dated 28/

29.01.2013. 01 Air Travel 4819.00 0 0

Agency 02 Chartered 134515.00 134515.00 --

Accountant Service

03 Exhibition 8137.00 0 Service

04 Tour,. Operator 333.00 0 0 Service

05 Out Door 178694.00 0 178694.00* Catering Service

06 Motor Vehicles 4722.00 0 0 Service (Authorised Service Station) Total 331220.00 134515.00 178694.00*

*Subject to observation of para 9 of Hon'ble CESTAT order dated 24.08.2011 in the case of the same assessee.

16. The issue of Cenvat Credit availed on Chartered accountant service

has already been decided by the vide 010 No. 44/DC/Dem/2010 dated 18.02.2011.

Further, Commissioner(Appeals-V), vide CIA No. 05 /2013 (Ahd-1) CE/ AK/ Commr

(A) Ahmedabad dated 28/ 29.01.2013 has allowed Cenvat Credit on Outdoor

Catering Service as per the condition laid down by the CESTAT order dated

24 08.2011. The said OIA has been accepted by the Department on

26.02.2013/27.02.2013.

7

17. In the case of Cenvat Credit availed by the assessee amounting to

Rs.333/- and Rs.4722/- availed on Tour Operator Service and Motor Vehicle Service

respectively, the assessee has not come forward with any evidence to show that the

said services were used in or in relation with the production of goods. As regards

the repair of the vehicles, it was not clear that the said services were in or in relation

of production of goods as they have not produced any evidence to that effect. In fact,

in the Para 13 of 010 No. 44/DC/Dem/2010 dated 18.02.2011 itse!f, it is stated that

that the invoices submitted for Motor Vehicle services issued by M/s.Parsoli Motors

are in the name of M/s.Cadmach Machinery Pvt.Ltd situated at A-1-3706-GIDC,

Phase-4, Vatva, Ahmedabad whereas the appellant's unit is situated at Plot

No.3604/3605, Phase-IV, GIDC, Vatva, Ahmedabad and no evidence has been

produced to show that these services were used by the assessee for promotion of

goods. Therefore, I hold that the assessee is not eligible to avail Cenvat Credit of

Rs.333/- and Rs.4722/- in respect of Tour Operator and Motor Vehicle Services and

required to be recovered with interest.

18. As regards the Cenvat Credit relating to Exhibition Service, the Cv assessee submitted copy of Invoice No.PE/2009/Electricity Connection/063 dated

31.03.2010 raised by FICCI for PHARMAceutical EXPO 2009 (Concurrent with 61 st

Indian Pharmaceutical Congress December 11-13, 2009, copy of duty paid invoice

dated 09.12.2009, receipt of payment of Rs.3,41,930/- by FICCI, New Delhi, copy of

refund of TDS Rs.824/- from FICCI, Transport Receipt and invoice showing return of

the goods sent for exhibition. Therefore, I hold that the assessee has produced

evidence of goods removed for exhibition and subsequently return of the goods and

accordingly, allow the Cenvat Credit of Rs.8137/- on Exhibition Service availed by

the assessee.

19. Regarding the Cenvat Credit availed on Air Travel Agency for Rs.4819/-, I find

that the assessee has not produced any evidence on record regarding the nature of

work for which the journey was undertaken. A certificate dated 20.11.2013 by Vice

President of the company stating that as per the policy of the organization, they are

not incurring any air travel expenses of any employee other than for business

purposes and copies of a few purchase orders having at outside Gujarat does not

form any evidence that they have used the said services in or in relation to the

manufacture/production of the goods. In the absence of any evidence that the said

services were used in or in relation to the manufacture/production of the goods, I

hold that the assessee is not eligible to avail Cenvat Credit on the said service also

and required to be recovered with interest.

20. On the basis of CESTAT Order No.A/10637 & 10638NVZB/AHD/2013 &

M/12285 & 12286/VVZB/AHD/2013 dated 06.05.2013, the admissibility of Cenvat

8

Credit involved in this case has been quantified and I hold that the assessee is not

eligible for Cenvat Credit of Rs.333/- towards Tour Operator Service, Rs.4722/-

towards Repair and Maintenance Service/Motor Vehicle Service, and Rs.4819/-

towards Air Travel Agency Services totally amounting to Rs.9,874/- as the said

services were not used in or in relation to the manufacture/production of the goods

and therefore not fall within the definition of input Services as per Rule 2(1) of

Cenvat Credit Rules, 2004.

21. As per the provisions of Rule 9(6) of the Cenvat Credit Rules, 2004 the

burden of proof regarding the admissibility of the Cenvat Credit shall be upon the

manufacturer or provider of output service taking Cenvat Credit. Thus, the assessee

was required to ascertain the admissibility of the Credit. They had failed to do so and

did not disclose it to the department either in their ER-1 Returns or in any other

manner that they have taken credit on the above said services. The assessee,

therefore, contravened the provisions of Rule 2 and 9 of the Cenvat Credit Rules,

2004 with intent to evade payment of duty in as much as they had resorted to taking

Cenvat Credit which was inadmissible to them. Therefore, I hold that they are liable

to penalty in terms of the provisions of Rule 15(1) of the Cenvat Credit Rules, 2004.

22. Further, the assessee had informed vide their letter dated 15.03 2013 that

they had reversed the amount of Rs.18011/-. The Range Superintendent was asked

to verify the details vide this office letter dated 26.12.2013. The Superintendent,

Range I, Division-II, vide his letter dated 28.01.2014 has informed that the assessee

has debited an amount of Rs.18011/- from R.G.23A Pt.11 vide entry No.2317 dated

01.01.2014.

Accordingly, I pass the following order:-

ORDER

23.(1) I disallow Cenvat Credit to the tune of Rs.9,874/- (Rupees nine thousand

eight hundred seventy four only) in respect of Cenvat Credit availed by them on Tour

Operator Service, Repair & Maintenance/Motor Vehicle Service and Air Travel

Agency Service as discussed in above paras and order for recovery of the same

under the proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule

14 of the Cenvat Credit Rules, 2004. As the amount has already been reversed by

the assessee vide entry No.2317 dated 01.01.2014, I appropriate Rs.9874/- (Rupees

nine thousand eight hundred seventy four only) under the provisions of Section

11A(1) of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules,

2004.

23(2) I impose penalty of Rs,9.874/- (Rupees nine thousand eight hundred seventy

four only) upon M/s. Cadmac Mchinery Co.Pvt.Ltd, Ahmedabad, under the

provisions of Rule 15(1) of the Cenvat Credit Rules, 2004.

23(3) I order to recover interest at the prescribed rates from M/s.Cadmac Mchinery

Co.Pvt.Ltd, Ahmedabad, on the said wrongly availed Cenvat Credit in terms of the

provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of

Central Excise Act, 1944 applicable during the relevant period now Section 11AA of

the Central Excise Act, 1944.

(Ruchi Bisht) Assistant Commissioner,

Central Excise, Division-II, Ahmedabad-I

F. No V.84/3-33/Dem/2010 Date;28.1.2014. To, M/s. Cadmach Machinery Co. Pvt. Ltd., 3904/5, Phase IV, GIDC, Vatva, Ahmedabad Copy to Copy to-(1) The Commissioner, Central Excise, Ahmedabad-1 (through DC,

,RRA), Central Excise, Ahmedabad-1. , The Superintendent (Systems), Central Excise, Ahmedabad-1

(3) The Superintendent, AR-I, Div-I!, Central Excise, Ahmedabad-I. (4) Guard file.

Page 1Page 2Page 3Page 4Page 5Page 6Page 7Page 8Page 9