2013 (9) TMI 1160 - AT - Service Tax

Summary

Issues:
The issue involved is the denial of Cenvat credit on vibrating steel spring screen used by M/s. Hira Industries Ltd. for the activity of crushing iron ore lumps.

Facts:
M/s. Hira Industries Ltd. availed Cenvat credit on vibrating steel spring screen for crushing iron ore lumps. The department contended that the credit is not permissible as the screen was not used for providing the output service. Show cause notices were issued and adjudicated against the appellants. Appeals were filed before the Commissioner (Appeals) who rejected them, leading to the present appeals before the Tribunal.

Appellant's Argument:
The appellant argued that the vibrating steel spring screen is essential for the crushing unit's operation, enabling activities like screening and segregation of ore sizes. They cited a previous order by the Commissioner (Appeals) allowing Cenvat credit on similar items and argued that denial in this case is unjustified.

Revenue's Argument:
The Revenue argued that the vibrating steel spring screen does not qualify as an input under Rule 2(k) of the Cenvat Credit Rules, as the appellants are not engaged in manufacturing activities. Therefore, the credit was rightly disallowed by the lower authority.

Decision:
The Tribunal found that the vibrating steel spring screen is crucial for the screening and segregation of ore sizes in the crushing process. As per Rule 2(k)(ii), goods used for providing any output service are considered inputs. Since the appellants are involved in crushing iron ore lumps, the screening activity is integral to their output service. The Tribunal noted that the Commissioner (Appeals) had previously allowed similar credits for the appellants and another company. Consequently, the denial of Cenvat credit on the vibrating steel spring screen was deemed unsustainable, and the appeals filed by the appellants were allowed.