2015 (9) TMI 1482 - AT - Central Excise

Denial of CENVAT credit - job work - whether the denial of CENVAT credit on the ground that the service tax was not liable to be charged on the job work in terms of Notification No.8/2005-ST, dated 01.03.2005 justified? - Held that - the Notification No.8/2005-ST, dated 01.03.2005 provides option to the job worker either to avail the exemption or to pay the service tax on the job work activities. In the present case, the job worker has opted to pay the service tax and upon payment of service tax, the same was passed on to the respondent through valid documents prescribed under CENVAT credit scheme. Since on the basis of the proper documents, the respondent has taken the CENVAT credit, the same cannot be denied on the ground that the job work activities were exempted from payment of service tax in terms of the above Notification - denial of credit not justified - appeal dismissed - decided against Revenue.

Summary

Issues: Appeal against order allowing service tax credit on job work activities.

The judgment pertains to an appeal by the Revenue against an order passed by the ld. Commissioner (Appeals) in favor of the respondent, allowing service tax credit on job work activities. The respondent, engaged in manufacturing iron and steel products, availed service tax credit on briquetting during a specific period. The Central Excise Department disallowed the CENVAT credit on the grounds that service tax was not chargeable on the job work as per Notification No.8/2005-ST, dated 01.03.2005.

Upon hearing the Departmental Representative for Revenue and the advocate for the appellant, the Tribunal examined Notification No.8/2005-ST, which provides the job worker with the option to either avail exemption or pay service tax on job work activities. In this case, the job worker chose to pay service tax, which was then passed on to the respondent with valid documents under the CENVAT credit scheme. The Tribunal noted that since the respondent had taken CENVAT credit based on proper documentation, the denial of credit on the grounds of job work activities being exempt from service tax was unwarranted.

Consequently, the Tribunal found no fault in the order passed by the ld. Commissioner (Appeals) and dismissed the appeal filed by Revenue. The judgment emphasizes the importance of proper documentation and adherence to the provisions of relevant notifications in determining the eligibility for availing CENVAT credit on service tax in job work activities.