2012 (8) TMI 347 - AT - Central Excise

Cenvat credit on various input services - appellant engaged in ship manufacturing activity and providing services for ship repairs and refitting - denial of credit on ground of non-production of original bills/invoices and that ship breaking is exempt from payment of duty - Held that - Observation that ship breaking for which the appellants are exempted from payment of duty seems to be erroneous finding as Central Excise Tariff clearly indicates that new ships are liable to duty and the Service Tax credit that has been denied to the appellant, seems to be on wrong footing. In our view, the entire issue needs to be considered by the adjudicating authority in the light of the fact that the appellant is able to produce invoices and Central Excise Tariff indicates that the finished goods manufactured by the appellant are liable to duty. Matter remitted back.

Summary

Issues:
Denial of CENVAT Credit on various services received by the appellant during a specific period.

Analysis:
The Stay Petition was filed seeking the waiver of duty, interest, and penalty imposed under Rule 15 of CENVAT Credit Rules, 2004. The adjudicating authority confirmed the amounts, stating that the appellant was not eligible for availing CENVAT Credit on services received from November 2009 to January 2010. However, upon hearing both sides, the Tribunal decided to dispose of the appeal and allowed the Stay Petition for waiver of pre-deposit of the amounts involved.

Upon reviewing the submissions and records, the Tribunal noted that the denial of CENVAT Credit was based on specific services received by the appellant, including dredging services, cleaning services, and various others. The Tribunal observed that the appellant, engaged in ship manufacturing and repair services, might be eligible for the CENVAT Credit of Service Tax paid on the mentioned services. Additionally, the denial of credit due to non-production of original bills/invoices was questioned, as the range officer had verified the same, though the certificate was not presented before the adjudicating authority.

The Tribunal found an error in the adjudicating authority's view regarding ship breaking and the duty exemption, emphasizing that new ships are liable to duty as per the Central Excise Tariff. It was suggested that the entire issue should be reconsidered, especially since the appellant could provide invoices and the finished goods manufactured were duty liable. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority for a fresh review, emphasizing the importance of following the principles of natural justice.

In conclusion, the appeal was allowed by remanding it to the adjudicating authority for a reevaluation of the issues at hand, without expressing any opinion on the case's merits.