2011 (10) TMI 318 - AT - Service Tax

Job work for fabricating machinery service tax was demanded under category Business Auxiliary Services - Tax paid & and invoices issued - Revenue contended invoice issued by the job worker are not proper document for availing credit - Held That - Statutory provisions have not been dealt carefully credit has been denied only on technical ground. There is no mention that tax has not been paid even in show cause issued there is no mention that service tax was not paid or service was not received. On merits case do not sustain. Appeal allowed with consequential relief. Proceedings against job worker fail and job workers becomes entitled to refund.

Summary

Issues involved:
- Availment of cenvat credit based on invoices not meeting required details under Rule 4A of Service Tax Rules, 1994 and Rule 9(2) of Central Excise Rules, 2004.
- Interpretation and application of Rule 9(2) of Cenvat Credit Rules, 2004 prior to amendment on 01.3.2007.
- Denial of cenvat credit by lower authorities on technical grounds without considering fulfillment of service requirements and tax payments.

Analysis:
1. The case involved the appellant availing services of a job worker for fabricating machinery, leading to a demand for service tax due to the job worker not registering as a service provider. The appellant claimed cenvat credit based on invoices issued by the job worker, which were deemed improper under Rule 4A of Service Tax Rules, 1994 and Rule 9(2) of Central Excise Rules, 2004.

2. The Revenue contended that the invoices did not meet the required details under Rule 4A of Service Tax Rules, 1994. However, the lower authorities and appellate authority relied on the amended Rule 9(2) of Central Excise Rules to deny the credit, neglecting the pre-amendment requirement for the Assistant Commissioner/Dy. Commissioner to allow credit if satisfied with tax payment and service usage.

3. The adjudicating authority and Commissioner (Appeals) misinterpreted Rule 9(2) of Cenvat Credit Rules, emphasizing details in the invoice that were not mandatory as per the rule's provisions. The denial of credit was based on technicalities rather than considering the fulfillment of service requirements and tax payments, leading to an incorrect application of statutory provisions.

4. The judgment highlighted that the appellant received the services, the job worker paid service tax, and all necessary requirements were met, indicating a lack of grounds for invoking suppression of facts or misdeclaration. The restriction on cenvat credit for delayed duty payment by manufacturers did not apply to service providers, allowing the appellant a reasonable belief in credit entitlement.

5. Ultimately, the impugned order was deemed unsustainable on merit and limitation grounds, leading to the allowance of the appeal with consequential relief for the appellants. The judgment emphasized the need for a review of credit availment if proceedings against the job worker result in a refund entitlement, ensuring compliance with the law.

This detailed analysis of the judgment showcases the issues surrounding cenvat credit availment, the interpretation of relevant rules, and the importance of considering factual fulfillment alongside technical requirements in legal proceedings.