2013 (8) TMI 1034 - AT - Service Tax

Summary

Issues involved:
The issues involved in the judgment are related to the availment of Cenvat credit on input services used in the manufacture of goods on job work basis and cleared without payment of duty, specifically focusing on the applicability of Rule 6(1) of Cenvat Credit Rules, 2004 and the eligibility of the appellant to claim such credit.

Comprehensive Details:

Issue 1: Availment of Cenvat credit on input services for job work basis
The appellant, engaged in pharmaceutical manufacturing, availed Cenvat credit on input services, particularly 'Manpower Recruitment or Supply Agency Services', used exclusively for producing goods for a company under exemption. The Revenue contended that since the goods were exempted, the credit availed was irregular under Rule 6(1) of Cenvat Credit Rules, 2004. Proceedings were initiated for recovery of the credit availed with interest and penalty under Rule 15 of Cenvat Credit Rules. Both lower authorities confirmed the demand and penalties.

Issue 2: Applicability of precedent decisions
The appellant relied on the decision of the Larger Bench of the Tribunal in the case of Sterlite Industries (I) Ltd. v. CCE, Pune, which allowed Cenvat credit for inputs used in manufacturing goods on job work basis. It was held that the final products emerging from such inputs are not exempt as they are used in the manufacture of final products subject to duty. Additionally, the decision in Aurangabad Auto Engg. Pvt. Ltd. v. CCE, Aurangabad affirmed the applicability of the Sterlite Industries Ltd. case to input services as well. Considering the precedent decisions, the Tribunal concluded that the appellant is entitled to the Cenvat credit of Service Tax paid on input services used in goods manufactured on job work basis and cleared without duty payment under Notification No. 214/86-C.E.

In conclusion, the Tribunal allowed both appeals, citing the precedent decisions and ruling in favor of the appellant regarding the availment of Cenvat credit on input services for goods manufactured on job work basis and cleared without payment of duty.