2015 (8) TMI 1310 - AT - Central Excise

Cenvat credit of Service tax - invoice dated 31.10.2008 issued by M/s INTERARCH Building Products (P) Ltd. - invoices pertains to the period prior to obtaining the Central Excise registration i.e. on 14.11.2008 - Held that - for taking of cenvat credit on the input service, the requirement of the said Rule is that the input service has to be received by the manufacturer of final product on or after the 10th day of September 2004. On perusal of the Cenvat Credit Rules, 2004, it reveals that no restrictions have been imposed providing for not taking the cenvat credit prior to obtaining the central excise registration. Therefore, in absence of any specific prohibitions contained in the Cenvat Statue to that effect, cenvat credit cannot be denied to the appellant. With regard to the observations of the lower authorities that no transitional provisions having been provided in respect of input services in Rule 3(2) of the Cenvat Credit Rules, 2004, and thus, taking of credit is not in conformity with the said Rules, I am of the view that the said sub-rule has no application in the case of capital goods or service tax for the reason that the goods or services are not in relation to the raw material or input that is specifically used for manufacture of the exempted/ dutiable final product. Therefore, in absence of specific mention of input service in the said Rule, Cenvat Credit of Service Tax paid on the taxable service is permissible under Rule 3(1) of the said rules. - Decided in favour of assessee

Summary

Issues:
Dispute over availing cenvat credit on service tax prior to obtaining Central Excise registration.

Detailed Analysis:
The appellant, engaged in manufacturing steel tubes, availed duty exemption under Notification No. 214/86. The Central Excise Department disputed the cenvat credit of service tax taken by the appellant based on invoices issued before obtaining Central Excise registration. The disputed credit amounting to Rs. 8,21,940 was disallowed and confirmed in the impugned order.

Analysis of Arguments:
The appellant's advocate argued that the service tax paid on construction services for the new factory building was taken after the commencement of production activities, in line with Rule 3(1) of the Cenvat Credit Rules. The advocate cited precedents to support the claim that credit cannot be denied based on sub-rule (2) of the rules.

Respondent's Submission:
The respondent reiterated that taking cenvat credit before obtaining Central Excise registration and commencing manufacturing activities was contrary to the Cenvat Statute, as the appellant was exempted from paying Central Excise duty during the construction phase.

Judicial Interpretation:
The Tribunal analyzed Rule 3(1) of the Cenvat Credit Rules, which allows manufacturers to take credit on input services received after a specified date. The Tribunal noted the absence of restrictions on taking credit before obtaining Central Excise registration. It held that denial of cenvat benefit was not in line with the statute.

Decision and Rationale:
The Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. It emphasized that denial of cenvat benefit on the disputed services was not in conformity with the Cenvat statute. The decision was based on the absence of specific prohibitions and supported by precedents cited by the appellant's advocate.

Conclusion:
The judgment clarified the eligibility of manufacturers to avail cenvat credit on service tax paid on taxable services, even if taken before obtaining Central Excise registration. The decision highlighted the importance of adherence to statutory provisions and precedent in resolving disputes over cenvat credit.