M/S. Kilburn Chemicals Ltd vs Commissioner Of Central Excise, ...
- CitationAppeal No.TNL-CEX-000-APP-067-12, dated 16.10.2012 passed by the Commissioner of Centr
Ratio decidendi
The rule this decision rests on
Where the adjudicating and appellate authorities pass a summary order that fails to bifurcate the quantum of Cenvat credit attributable to each separate input service, the adjudication is liable to be set aside, as such failure makes scrutiny at the higher level impossible. Cenvat credit on a service is not admissible where the service has no connection with the manufacture of the final product; security services for a guest house, being unrelated to manufacture, do not attract Cenvat credit. Cenvat credit on erection and commissioning services for wind turbine generators is admissible where the power generated is used in the manufacturing process, since that establishes the vital link between the input service and the manufacture of the final product. Penalty under the Cenvat credit provisions is not leviable where the assessee substantially succeeds on the principal claim and entertained a bona fide belief that the disputed service was part of the power generation activity, with no mala fides shown.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-in-Appeal No.TNL-CEX-000-APP-067-12, dated 16.10.2012 passed by the Commissioner of Central Excise (Appeals), Madurai]
M/s. KILBURN CHEMICALS LTD. APPELLANT
Versus
COMMISSIONER OF CENTRAL EXCISE, TIRUNELVELI RESPONDENT
Appearance:
For the Appellant Shri S. Venkatachalam, Adv.
For the Respondent Shri L. Paneerselvan AC (AR)
CORAM:
Honble Shri D.N. Panda, Judicial Member
Date of hearing/decision 27-08-2015
FINAL ORDER NO. 41103 / 2015
A summary order has been passed by both the authorities below without bifurcating the quantum of Cenvat credit attributable to different input services, if any. It is only recorded that the appellant claims Cenvat credit on Security Services rendered at Guest House of the appellant situated in Kolkatta and Erection and Commissioning Services of two Wind Turbine Generators situated in Sankaran Koil Taluk and Tirunelveli Taluk. Recording that these services were no way connected with the manufacture of the final product of the appellant in respect of the factory situated at Tuticorin, the authorities disallowed the service tax paid on such services. When the authorities fail to bifurcate the quantum of credit attributable to each service that poses difficulty for scrutiny at the higher level. This ground alone is enough to set aside the adjudication. However, inquiry was made into various aspects of the claim. . So far as the Cenvat credit on Security Services on Guest House is concerned that is no way related to manufacture, for which, assessee shall not get the Cenvat credit thereon. So far as Erection and Commissioning Services is concerned, that has a direct bearing on the power generation. Even though the power generated at a place was availed to use the same in the manufacture, that establishes a vital link between input or input service used and manufactured. Accordingly, appellant is entitled to the Cenvat credit on the Erection and Commissioning Services availed.
2. So far as penalty is concerned, in view of the decision above, penalty shall not be levied on the Cenvat credit because the appellant substantially succeeds on the Erection and Commissioning Service. Appellants bonafide belief was that Security Services was part of power generation activity. Noticing no malafide, there shall be no penalty even on this service. Thus, Appeal is allowed to the extent indicated above. (Dictated and pronounced in open court)
(D.N. PANDA) JUDICIAL MEMBER
ksr 06-09-2015
DRAFT Remarks
I II III
Date of dictation 27.08.2015
Draft Order - Date of typing 31.08.2015
Fair Order Typing 06.09.2015
Date of number and date of dispatch 07.09.2015
4 E/40191/2013
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free