2012 (6) TMI 425 - AT - Central Excise

Cenvat Credit - Input service of photography - manufacture of colour picture tube - held that - there is no scope to hold that the/photography service was (essential and inevitable as well as indispensable for manufacture of picture tube. - Credit denied - however penalty redeuced.

Summary

Issues:
Claim for set off of service tax against excise duty liability for photography service denied by authorities below.

Analysis:
The appellant claimed set off of service tax paid as a recipient of photography service against excise duty liability, which was denied by both the adjudicating authority and the First Appellate Authority. The adjudicating authority found that the photography service claimed by the appellant was not used in the manufacture of the final product, i.e., colour picture tube. The First Appellate Authority also concluded that photography of plants had no direct or indirect role in relation to the manufacture of the picture tube. The show cause notice highlighted that the appellant had not used the photography service in or in relation to the manufacture or clearance of their final product. Despite the opportunity for defense, the appellant failed to provide evidence to rebut the findings of the authorities below.

The Tribunal, after hearing both sides and considering the findings of the authorities, concluded that the photography service was not essential, inevitable, or indispensable for the manufacture of the picture tube. Therefore, the first appellate order confirming the adjudication was upheld. The appellant's argument that there was no wilful intention to cause loss to revenue was considered for waiving the penalty. The penalty imposed for the wrong availment of credit was initially Rs.10,000, but it was reduced to Rs.1,000, considering that while there was a contravention of the law, the appellant's conduct did not warrant the maximum penalty. The appeal was partly allowed, confirming the adjudication but reducing the penalty amount.

In summary, the appellant's claim for set off of service tax against excise duty liability for photography service was denied by the authorities below, as it was found that the photography service was not used in or in relation to the manufacture of the final product. Despite the appellant's submissions, the Tribunal upheld the decision, emphasizing that the photography service was not essential for the manufacture of the picture tube. The penalty imposed for the wrong availment of credit was reduced from Rs.10,000 to Rs.1,000 due to the appellant's conduct not warranting the maximum penalty.