2012 (8) TMI 570 - AT - Central Excise

Disallownace of CENVAT credit - job-work charges for grooving - Held that - As it is not disputed that the service provider has paid the service tax and once the service tax has been paid and service has been used in or in relation to the manufacture of the final products of the appellant, the appellant is rightly entitled to avail CENVAT credit - in favour of assessee. Manpower supply services - Held that - As affidavit along with a copy of the muster roll in support of assessee s claim that they have used the labour in or in relation to the manufacture of the final products were not shown or produced before the lower authorities and, therefore, it will be appropriate to remand this matter back to the original adjudicating authority to consider the claim - in favour of assessee by way of remand.

Summary

Issues:
Disallowed CENVAT credit on job-work charges for grooving and manpower supply services.

Analysis:
The case involved an appeal against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals) disallowing CENVAT credit on certain services availed by the appellant, a manufacturer of drills/tools. The lower appellate authority allowed credit on some services but disallowed it on job-work charges for grooving and manpower supply services. The appellant contended that they were entitled to CENVAT credit on these services. The advocate cited relevant tribunal decisions to support the argument that once service tax is paid by the service provider, the recipient should not be penalized. The advocate also submitted an affidavit and muster roll to establish the nexus between the manpower supply and the manufacture of final products.

The Tribunal carefully considered the submissions and found that the issue could be resolved based on whether the service tax was paid by the provider and if the services were used in relation to the manufacture of final products. Regarding job-work charges for grooving, the Tribunal held that the appellant was entitled to CENVAT credit as the service tax was paid by the provider, regardless of any exemption the provider might have been eligible for. Similarly, for manpower supply services, the Tribunal noted that if the labor was used in manufacturing, the appellant could claim CENVAT credit. However, since the supporting documents were not presented before the lower authorities, the Tribunal remanded this specific issue back to the original adjudicating authority for further consideration.

In conclusion, the Tribunal set aside the impugned order, remanding the case back to the adjudicating authority for a fresh review specifically concerning the manpower supply services. The appellant was directed to be given a reasonable opportunity to present their case. The appeal was allowed by way of remand, and the stay application was disposed of accordingly.