2012 (11) TMI 1033 - AT - Central Excise

CENVAT Credit - Services received by the appellant for auditing the CTC National Phase Out Plan and putting the same in CTC usage - 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 - Following decision of M/s Sujal Dye Chem Industries Versus CCE Ahmedabad 2012 (6) TMI 370 - CESTAT, AHMEDABAD - Decided in favour of assessee.

Summary

Issues:
Admissibility of CENVAT Credit for Service Tax charged by a specific firm for audit services related to the CTC National Phase Out Plan.

Analysis:
The appellant, engaged in manufacturing Dyes Intermediates, availed CENVAT Credit of Service Tax charged by a firm for audit services related to the CTC National Phase Out Plan. The revenue authorities contended that the credit was inadmissible as it lacked a direct nexus to the manufacturing process. Both lower authorities upheld this view, imposing a demand, interest, and penalty equivalent to the availed credit.

The appellant did not appear, but a written submission was considered. The Departmental Representative (D.R.) argued that the services were ineligible for credit as they were advisory in nature. The issue revolved around the nexus between the services received and the activities conducted by the appellant. A previous Bench decision was cited, emphasizing the importance of establishing such a nexus for credit eligibility.

The Tribunal analyzed the purpose of the services, which involved auditing the process and changing raw materials to comply with environmental regulations. The activity aimed to implement the National Plan and reduce ozone-depleting substances. Despite the Service Tax being paid for obtaining the services, the Tribunal found a direct nexus between the services, manufacturing process, and environmental objectives. Consequently, the Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellant.

The Tribunal concluded that the revenue's stance on the lack of connection between the services and manufacturing process was incorrect. The decision highlighted the importance of the activity's objective in reducing emissions of ozone-depleting substances. As a result, the impugned order was deemed unsustainable, leading to its setting aside and granting relief to the appellant. The decision was based on the established nexus between the services received, manufacturing process, and environmental objectives, ensuring the admissibility of the CENVAT Credit in question.