2015 (9) TMI 1464 - AT - Central Excise

Cenvat credit - cenvat credit availed on duties and tax, paid on inputs, input services and capital goods received in the factory for use in or in relation to manufacture of the said final product - issue receipt of the input service in the factory of the appellant under the cover of service tax invoice - Held that - since the tax paid character of the service and its receipt is not in dispute, I am of the view that cenvat credit cannot be denied to the appellant in absence of any specific/ stipulations contained in the cenvat statute. Further, the jurisdictional authorities at the recipient s end are not competent to question the activities provided by the supplier of the tangible goods i.e. M/s. AEPL whether amounts to manufacture or it is a service. Since the service tax paid by the contractor M/s. AEPL has been accepted by the Jurisdictional Central Excise Authorities of the supplier. The tax so paid is eligible for cenvat benefit to the appellant in view of the judgment of Hon ble Supreme Court in the case of CCE vs. MDS Switchgear Ltd. 2008 (8) TMI 37 - SUPREME COURT . - Decided in favour of appellant

Summary

Issues:
Appeal against Commissioner (Appeals) order upholding cenvat credit and penalty imposition.

Analysis:
The appellant, engaged in manufacturing, availed cenvat credit based on services provided by M/s. AEPL for installing a nitrogen gas plant. Central Excise Authorities disputed the classification of the service as manufacturing, leading to demand confirmation and penalty imposition. The appellant argued that Rule 3 allows cenvat credit for service tax paid on input services received, complying with Cenvat Credit Rules. The appellant cited the case of CCE vs. MDS Switchgear Ltd. to support their stance.

The Revenue contended that denial of cenvat benefit was in line with the cenvat statute. The Tribunal noted no dispute on service receipt and tax payment, concluding that cenvat credit cannot be denied without specific stipulations. The authorities at the recipient's end lacked jurisdiction to question the supplier's activities. Referring to the MDS Switchgear Ltd. case, the Tribunal emphasized that tax paid by the contractor, accepted by the supplier's authorities, entitles cenvat benefit to the appellant. The Tribunal set aside the impugned order, allowing the appeal in favor of the appellant.

This judgment clarifies the entitlement to cenvat credit based on service tax paid on input services received, emphasizing compliance with Cenvat Credit Rules. It highlights the limitations on authorities at the recipient's end to question the supplier's activities and the significance of tax acceptance by the supplier's authorities. The case law reference reinforces the appellant's position on cenvat credit eligibility, leading to the appeal's success and the impugned order's reversal.