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GOVERNMENTOFINDIAMINISTRYOFFINANCE

OFFICEOFTHEASSISTANTCOMMISSIONEROFCENTRALEXCISE
, ,

RANIPETDIVISION,SIPCOTINDUSTRIALCOMPLEX,RANIPET632403
C.No.

Dated:
NOTICETOSHOWCAUSE

SUB:CentralExciseIncorrectavailmentofInputServiceTaxCredit
onineligibleservicesM/s.LAPROSSEngineeringLimited,
PulivalamRegarding.
**************
M/s.LAPROSSEngineeringLimited,PulivalamVillage,BanavaramPost632505
[hereinafterreferredtoasM/sLAPROSS]areregisteredwithCentralExciseRegistration
No.AABCL0606RXM001 for the manufacture of Aluminium Castings falling under Chapter
76ofCentralExciseTariffAct,1985.Theyavailcenvatcreditofdutypaidoninputs,capital
goodsandinputservicesundertheCenvatCreditRules,2004.
2.
On perusal of documents, it was noticed that M/s. LAPROSS have been availing,
apart from the credit of the duties paid on the inputs and the capital goods used in or in
relation to the manufacture of their final products and the service tax paid on the input
servicesreceivedbythem,alsotheservicetaxpaidontheservicewhichappearstobenot
coveredbythedefinitionforinputservice.
3.
Duringthecourseofverificationoftheiraccounts,itwasfoundthattheyhadavailed
CENVATcreditoftheServiceTaxontheGoodsTransportServiceusedforthetransportof
goodsfromtheirfactorytotheircustomersbytreatingitasaninputservicevideAnnexureto
thisNotice.
4.

AsperRule2(l)ofCENVATCreditRules2004inputservicemeansanyservice,
(i)usedbyaprovideroftaxableserviceforprovidinganoutputservice,

(ii) used by the manufacturer, whether directly or indirectly, in or relation to the

manufactureoffinalproductsandclearanceoffinalproductsuptotheplaceofremoval,

2
andincludesservicesusedinrelationtosettingup,modernization,renovationorrepairsofa
factory, premises of provider of output service or an office relating to such factory or
premises, advertisement or sales promotion, market research, storage upto the place of

removal,procurementofinputs,activitiesrelatingtobusiness,suchasaccounting,auditing,
financing,recruitmentandqualitycontrol,coachingandtraining,computernetworking,credit
rating, share registry and security, inward transportation of inputs or capital goods and
outwardtransportationuptotheplaceofremovalbutexcludes
5.
The definition of input service does not cover any activity beyond the place of
removal in so far as it relates to clearances of goods. In the instant case, the assessees
haveusedtheservicesofGoodsTransportfordeliveryoffinishedgoodsfromtheirfactoryto
the place of customers which is not allowed after the place of removal. Thus wherever
deliveryismadeattheplaceofthecustomers,theplaceofremovalbeingthefactorygateof
the manufacturer, the service of Goods Transport used for dispatch of goods, is not
acceptableasaninputserviceforavailingcredit.ItappearsthattheCENVATcreditavailed
bytheassesseesonServiceTaxpaidtowardsGoodsTransportisnotinorder.
6.
As per Rule 14 of Cenvat Credit Rules, 2004, where the CENVAT credit has been
taken and utilized wrongly, the same along with interest shall be recovered from the
manufacturerandtheprovisionsofSections11Aand11AAshallapplymutatismutandisfor
effectingsuchrecoveries.
7.
AsperSubsection(5)ofSection11AofCentralExcise,Act,1944where,duringthe
courseofanyaudit,investigationorverification,itisfoundthatanydutyhasnotbeenlevied
or paid or has been shortlevied or shortpaid or erroneously refunded for the reason
mentionedinclause(e)ofsubsection(4)ie.,contraventionofanyoftheprovisionsofthis
Act or of the rules made there under with intent to evade payment of duty, but the details
relating to the transactions are available in the specified record, then in such cases, the
Central Excise Officer shall within a period of five years from the relevant date, serve a
noticeonthepersonchargeablewiththedutyrequiringhimtoshowcausewhyheshould
not pay the amount specified in the notice along with interest under Section 11AA and
penaltyequivalenttofiftypercentofsuchduty.
8.
It appears that M/s. LAPROSS have contravened the provisions of Rule (I) of
Cenvat Credit Rules, 2004 in as much as they have wrongly taken and utilized the cenvat
credit on the impugned service which does not fall within the ambit of definition for input
service as per the said Rule and thereby rendered themselves for invokation of extended
provisovideSubsection5ofSection11AoftheCentralExciseAct,1944.

9.
Therefore,M/s.LAPROSSEngineeringLimited,Banavaramareherebyrequiredto
show cause to the Assistant Commissioner of Central Excise, Ranipet Division, Ranipet
within30DaysofreceiptofthisNoticeastowhy

3
[i]

anamountofRs.1,47,405/(RupeesOneLakhFortySevenThousandFour
Hundred and Five only) being the irregular service tax credit availed and
utilized vide Annexure to this Notice should not be demanded from them
under Rule 14 of CENVAT Credit Rules 2004 read with Section 11A of
CentralExciseAct,1944

[ii]

interestontheamountmentionedat(i)aboveshouldnotbedemandedfrom
themunderRule14ofCENVATCreditRules2004readwithSection11AA
ofCentralExciseAct,1944and

[iii]

penalty should not imposed on them under Rule 15(2) of CENVAT Credit
Rules2004,readwithSection11AC(1)(a)oftheCentralExciseAct,1944.

10.
M/s. LAPROSS are required to produce at the time of showing cause, all the
evidencesuponwhichtheyintendtorelyuponinsupportoftheirdefence.Theyarefurther
requiredtoclearlystateintheirwrittenreplyastowhethertheywishtobeheardinperson
beforethecaseisadjudicated.
11.
If no reply is received within thirty days from the date of receipt of this Notice or
having replied, if they fail to appear in person before the Adjudicating Authority when the
case is posted for hearing, the issue will be decided based on the evidences available on
record.
12.
As provided under Subsection (11)(a) of Section 11 A of the Central Excise Act,
1944,thepresentcasewhichseemstobecoveredunderClause(a)ofsubsection(1)ofthe
said Section, has to be decided wherever possible within a period of six months from the
dateofservingofthenotice.Itisaccordinglyrequestedthatareplywithinthirtydaysofthe
receipt of this notice may be filed to enable the Adjudicating Authority to complete the
adjudicating proceedings within the time limit prescribed. It may please be noted that no
extensionoftimelimitforfilingofreplywillbeordinarilypermitted.
ASSISTANTCOMMISSIONER
To
M/S.LAPROSSEngineeringLimited,
PulivalamVillage&Post,
Banavaram632505.
Copyto
TheSuperintendentofCentralExcise,
SholingurForwardSector,Ranipet.
CHECKLISTFORSTATEMENTOFDEMAND
NAMEOFTHEASSESSEE:
M/s.LAPROSSENGINEERINGPRIVATELIMITED,
PULIVALAMVILLAGE&POST,BANAVARAM632505.
Sl.No.
Description
1
Whether any previous SCN against the party
on the same issue has been issued or not. If
anypreviousSCNhasbeenissued,thedetails
thereofandresultofadjudication,ifadjudicated
shouldbefurnished
2
LastdateofserviceofSCN
3
Whether extended period invokable. If so, the
facts and allegations of fraud, collusion or any
willful misstatement or suppression of facts or
contravention of any of the provisions of the
Central Excise Act or the Rules made there

Result
No.

04.10.2015
Yes. During the course of audit, it
was found that the assessees
have wrongly taken and utilized
the input service tax credit on the
Goods Transport Service for

4
5
6
7
8
9

under with intent to evade payment of duty, transportofgoodsfromthefactory

should be mentioned in specific and precise gate to the place of customers
terms.
whichisnotaninputservice.Thus,
they have contravened the
provisions of Rule (I) of Cenvat
Credit Rules, 2004 and rendered
themselves for invocation of
extendedprovisovideSubsection
5ofSection11AofCentralExcise
Act,1944.
Relied upon documents, whether enclosed or
Yes.Enclosed.
not
Duty calculation chart and annexure duly
Yes.
authenticatedenclosedornot
IfSCNisbasedonauditobjection,copyofthe SCNisbasedonauditobjection,
audit objection and compliance report thereof copyofwhichisenclosed.
enclosedornot
ConfirmwhetherappropriateRules/Sectionand
Yes.
Penalprovisionscorrectlyquoted
If breach of any Notification/Circular/Trade
Notapplicable
Notice is alleged, whether copy of the same
enclosedforreadyreference
If demand relates to irregular availment of
Notapplicable
CENVAT Credit, confirm whether duty
particulars of invoices/documents, authenticity
of the documents has been got verified from
theoriginatingRangeornot.
2

10
11
12
13

14

Whether ER1 is being submitted monthly or

Monthly.Verified.
quarterly and whether returns for the relevant
periodhavebeenfinalized
If demand relates to classification dispute Demand relates to irregular
whether declaration filed under Rule 173B availment and utilization of input
checkedandcopyenclosedforreadyreference servicetaxcredits.
If demand relates to valuation issue, whether
Do
pricedataenclosed
Ifthereisanyadditionalconsideration,whether
Notapplicable
evidence given to establish that it should form
partofassessablevalue.Ifitrelatestointerest
on advance, etc. confirm whether relevant
evidence has been adduced to establish that
advancestakenresultedinloweringtheprices
orhaveanyeffectonfixationofprices/lowering
theprices
Whether all information and evidence relevant
Yes
for sustainability of the SCN have been
furnished

15
16

Whether there is any case law relating to the

issueinvolvedintheSCNeitherinfavourofthe
departmentoragainst.Ifso,detailsthereof
Any other relevant point considered to be
mentioned

Nil

[R.ARASU]
SUPERINTENDENT