2014 (6) TMI 418 - AT - Central Excise

CENVAT Credit - whether the appellant is eligible to take CENVAT credit of the service tax paid on input services availed at the job-worker s premises - Held that - services were availed at the job-worker s premises in or in relation to the manufacture of excisable goods arising at the intermediate stage. There is also no dispute that the appellant has borne the incidence of such service tax taxation. If that be so we do not understand how the appellant can be denied the benefit of inputs/input services tax credit. Input services defined in Rule 2(l) of the CENVAT Credit Rules includes various services which are used in or in relation to the manufacture of dutiable final products whether directly or indirectly and the scope term is very wide as held by the Hon ble Bombay High Court in the case of Coca Cola India Pvt. Ltd. (2009 (8) TMI 50 - BOMBAY HIGH COURT). Further we observe that when the same services were availed in appellant s own factory premises the adjudicating authority has granted them the benefit of CENVAT credit. If that be so merely because the services were availed at job-worker s premises there is no reason why the same should be denied. - Stay granted.

Summary

Issues:
1. Recovery of ineligible CENVAT credit amount
2. Demand for interest and penalty under CENVAT Credit Rules
3. Eligibility of CENVAT credit on services availed at job-worker's premises

Analysis:
1. The judgment pertains to an appeal against an Order-in-Original directing the recovery of an ineligible CENVAT credit amount of Rs.53,34,824 from the appellant, M/s Larsen & Toubro Ltd., along with interest and penalty imposed under Rule 14 and Rule 15 of the CENVAT Credit Rules, 2004. The appellant contested the order, claiming entitlement to the credit as the services availed at the job-worker's premises were used in the manufacture of intermediate goods. The appellant relied on the broad interpretation of input services under Rule 2(l) of the CENVAT Credit Rules, citing a precedent from the Hon'ble Bombay High Court. The appellant sought a stay on the recovery. The Additional Commissioner representing the Revenue supported the adjudicating authority's decision.

2. The key issue for consideration was the eligibility of the appellant to claim CENVAT credit on service tax paid for services availed at the job-worker's premises. The Tribunal noted that the services were used in or in relation to the manufacture of excisable goods at the intermediate stage, and the appellant had borne the service tax incidence. Referring to the wide scope of input services under Rule 2(l) and the precedent set by the Hon'ble Bombay High Court, the Tribunal found no reason to deny the credit solely based on the location of service availing. Noting that the same services availed at the appellant's own factory premises had been granted credit, the Tribunal held that the appellant had established a prima facie case for the grant of stay. Consequently, the Tribunal granted an unconditional waiver from pre-deposit of dues and stayed the recovery during the appeal's pendency.

This judgment highlights the importance of considering the broad interpretation of input services under the CENVAT Credit Rules and ensuring consistent treatment of credit eligibility based on the nature of services utilized in the manufacturing process, irrespective of the location of service availing.