2012 (6) TMI 370 - AT - Central Excise

Claim of CENVAT Credit of Service Tax paid denied - service received has no nexus with the manufacture at all Held that - The services have been obtained for the purpose of conducting audit of the process and change of raw material suitably presented to GTZ to receive the grant so that the company can phase out the process, which cause depletion of ozone in the atmosphere - the activity undertaken by the appellant was to implement the national plan and ensure that the appellant follow the provisions of Ozone Depleting Substances (Regulation & Control) Rules, 2000 - the whole activity has a direct nexus with the manufacture and manufacturing process and is with the objective of reduction of emission of Ozone Depleting Substances in favour of assessee.

Summary

Issues:
Admissibility of CENVAT Credit for Service Tax paid by the appellant related to conducting audit for project compliance with National CTC Phase Out Plan under Ozone Depleting Substances (Regulation & Control) Rules, 2000.

Analysis:
The appellant, engaged in manufacturing Dye Intermediate, availed CENVAT Credit for Service Tax charged by a firm for conducting audit and preparing a report to comply with the National CTC Phase Out Plan under the Ozone Depleting Substances Rules. The Revenue denied the benefit, contending that the Service Tax paid was not used in or in relation to the manufacturing process. The lower authorities upheld this view, emphasizing the necessity of establishing a nexus between the input service and the final product's manufacture.

The CENVAT Credit Rules define input service as any service used directly or indirectly in or in relation to the manufacture of final products. In this case, the services were obtained to conduct an audit, modify the production process, and comply with the National Plan to phase out Ozone Depleting Substances. The appellant's activities aimed at implementing the national plan and ensuring compliance with relevant rules, indicating a direct nexus between the services availed and the manufacturing process.

The Tribunal found that the Revenue's argument, stating the service had no connection with the manufacturing process, was incorrect. The Tribunal concluded that the appellant's actions were directly linked to the reduction of emission of Ozone Depleting Substances, aligning with the objective of the National Plan. Consequently, the Tribunal set aside the Revenue's decision, allowing the appeal and granting relief to the appellant.