2015 (4) TMI 1143 - AT - Central Excise

Reversal of cenvat credit - demand of duty, interest and penalty - job work - manufacture of auto parts, components - manpower supply services - security services - Held that - the decision in the case of Sterlite Industries (I) Ltd. vs. CCE Pune 2004 (12) TMI 108 - CESTAT, MUMBAI relied upon where it was held that job worker is entitled to take Cenvat credit on inputs / input services if job work goods has been used by the principal manufacturer in manufacture of final product and on the said goods, the principal manufacturer has discharged duty liability. In the definition of input service as per Rule 2(l) of Cenvat Credit Rules, 2004, security service forms inclusive part of the definition and no nexus is required by the respondent for availing Cenvat credit on security service - cenvat credit allowed - appeal allowed - decided in favor of assessee.

Summary

Issues:
- Entitlement of Cenvat credit on inputs supplied by principal manufacturer
- Entitlement of Cenvat credit on job work goods
- Entitlement of Cenvat credit on manpower supply services
- Entitlement of Cenvat credit on security services

Entitlement of Cenvat Credit on Inputs Supplied by Principal Manufacturer:
The case involved a respondent engaged in manufacturing auto parts and undertaking job work on behalf of principal manufacturers. The respondent availed Cenvat credit on inputs received for their own use and job work goods. The Revenue contended that the respondent was not entitled to Cenvat credit on inputs supplied by the principal manufacturer. The adjudicating authority disallowed the credit, leading to duty demand, interest, and penalties. The Commissioner (Appeals) set aside the adjudication order, prompting the Revenue to appeal. The learned AR argued that Cenvat credit should be denied on job work goods where the principal manufacturer could claim the credit. However, the respondent's counsel cited a precedent where it was held that a job worker could take Cenvat credit on inputs if the principal manufacturer discharged duty on the final product made using those inputs. The tribunal upheld the respondent's entitlement to Cenvat credit on inputs and manpower services, as per the precedent and Cenvat Credit Rules.

Entitlement of Cenvat Credit on Security Services:
The issue of entitlement to Cenvat credit on security services was also raised. The Revenue argued that there was no nexus between security services and the manufacturing activity, thus the credit should be denied. In response, the respondent's counsel pointed out that security services met the definition of Rule 2(l) of the Cenvat Credit Rules, 2004, making them eligible for the credit. The tribunal examined the definition of input services under the rules and concluded that no specific nexus was required for availing Cenvat credit on security services. Consequently, the tribunal held that the respondent was entitled to take Cenvat credit on security services. The tribunal found no fault in the impugned order and dismissed the Revenue's appeal.

In summary, the tribunal ruled in favor of the respondent, upholding their entitlement to Cenvat credit on inputs, job work goods, manpower supply services, and security services based on relevant legal precedents and the Cenvat Credit Rules.