2011 (6) TMI 171 - AT - Service Tax

Input service credit - Department contended that input services which were used in relation to manufacture of goods on job work basis the input service credit was not admissible to the extent the services used in relation to manufacture of the job-worked goods - The learned Advocate for the appellants submits that these job worked goods were supplied to the principal manufacturer who further used this goods in manufacturing of final product which was cleared on payment of duty which is not in dispute - Therefore the matter is squarely covered by the decision of Larger Bench of this Tribunal in the case Sterlite Industries (I) Ltd. vs. Commissioner of Central Excise Pune 2004 (12) TMI 108 - CESTAT MUMBAI therefore decided in favour of assessee.

Summary

Issues:
Denial of input service credit for manufacturing exempted and dutiable goods.

Analysis:
The appellants appealed against the denial of input service credit for manufacturing exempted and dutiable goods during the disputed period. The dispute arose as the appellants manufactured vehicle parts on job work basis, some of which were cleared without duty payment, while others were cleared with duty payment. The Department contended that input services used in manufacturing job-worked goods were not eligible for credit, leading to a show-cause notice for demand of inadmissible credit, interest, and penalty under the Central Excise Act, 1944. The first appellate authority upheld the adjudication order, prompting the appeal before the Tribunal.

The appellants argued that the job-worked goods were supplied to the principal manufacturer, who used them in manufacturing final products cleared with duty payment, aligning with a precedent set by the Larger Bench of the Tribunal in a specific case. The Tribunal, after hearing the submissions, observed that the goods manufactured on job work basis were cleared without duty to the principal manufacturer, who further used them in manufacturing final products cleared with duty. Consequently, the Tribunal found the decision of the Larger Bench applicable to the case, allowing the appellants to avail CENVAT credit. Therefore, the impugned order was set aside, and the appeal was allowed.

In conclusion, the Tribunal ruled in favor of the appellants, permitting them to claim the input service credit for manufacturing goods cleared without duty payment to the principal manufacturer, who utilized them in manufacturing final products cleared with duty. The decision was based on the precedent established by the Larger Bench of the Tribunal in a similar case, emphasizing the eligibility of the appellants to avail CENVAT credit in the given circumstances.