2015 (1) TMI 34 - AT - Service Tax

Cenvat credit - Nexus with manufacturing activity - Held that - Range officer has committed a mistake and at least after taking decision of filing an appeal, another verification could have been conducted. As there was no such verification conducted, Revenue is contesting the verification report of Range officer without saying as to why that was not accepted. Further, refund has been sanctioned after pre-audit by the officer of higher rank of Central Excise. In these circumstances, the grounds taken by Revenue that respondent did not produce sufficient evidence does not appear to be sufficient for filing appeal. In any case, prima facie, the services cannot be said to have been utilized for different purposes and have a nexus with manufacture. - Decided against Revenue.

Summary

Issues:
1. Refund sanctioned without proving nexus between manufacture and services for Cenvat credit.

Analysis:
The judgment revolves around the issue of a refund of &8377; 5,61,552/- sanctioned to the respondent without establishing a nexus between the services for which Cenvat credit was taken and the manufacturing activities. The Appellate Tribunal was presented with a verification report by the Range officer, indicating that the services claimed for refund were used in relation to manufacturing activities. The report was accepted, and the respondent was not required to provide additional evidence. The Revenue contested this decision, arguing that another verification should have been conducted before sanctioning the refund. However, the Tribunal noted that no further verification was carried out, and the refund was sanctioned after pre-audit by a higher-ranking Central Excise officer. The Tribunal found that the Revenue's grounds for appeal, stating that the respondent did not produce sufficient evidence, were not substantial. Moreover, prima facie, the services were deemed to have a nexus with manufacturing activities, as they could not be said to have been utilized for different purposes.

In conclusion, the Tribunal rejected the appeal filed by the Revenue, as it did not find any merit in the grounds presented. The judgment emphasizes the importance of establishing a nexus between the services claimed for refund and the manufacturing activities when seeking Cenvat credit. The decision underscores the significance of verification reports and pre-audit processes in determining the eligibility for refunds in such cases.