2015 (7) TMI 623 - AT - Central Excise

Denial of CENVAT Credit - Security Service, Telephone Service and Manpower Service - Nexus with input service - Held that - According to proviso to Rule 3, a manufacturer or purchaser of final product can take credit of duty paid on any input service received by him. Unlike in the case of inputs where credit can be taken only when it is received in the factory, in respect of input service there is no such restriction. Under the circumstances, the credit is admissible to the appellant so long as he is a manufacturer or purchaser of final products and such final products are liable to duty and cleared on payment of duty. Further it can also be said that such input services have been used in or in relation to a manufacture of final product. Therefore credit is admissible - Decided in favour of assessee.

Summary

Issues:
1. Availment of Cenvat credit on service tax paid on Security Service, Telephone Service, and Manpower Service not used in the manufacturing unit but in other units.
2. Denial of credit by the Department leading to show cause notices, demand confirmation, interest, and penalty imposition.
3. Appeal against the denial of credit and imposition of penalties.

Analysis:
The appellants, manufacturers of Rotogravure Printing Machineries and Lamination Machineries, were audited by the Department, revealing that they had availed credit of service tax on services not used in their manufacturing unit but in other units. The Department issued show cause notices proposing to deny credit amounting to Rs. 54,882 and Rs. 15,125 for different periods. Lower authorities confirmed the demand, along with interest and penalties.

The appeals were taken up for final decision without the requirement of pre-deposit, as the issue was common in both appeals. The appellants had taken credit for services provided to different units located in Bommasandra, justifying it by stating that all goods manufactured eventually reach the main unit for duty payment. The learned counsel argued for the admissibility of credit based on the billing location and final clearance of goods from the main unit.

On the other hand, the Department contended that services were specific to individual units not paying duty, making the credit inadmissible. The Tribunal analyzed the provisions, noting that unlike with inputs, there is no restriction on the location of service receipt for availing credit. As long as the appellant is a manufacturer of final products liable for duty, and the services are used in or related to manufacturing, the credit is permissible. Consequently, the appeals were allowed, granting relief to the appellants.

In conclusion, the Tribunal ruled in favor of the appellants, allowing the Cenvat credit on services utilized in various units, emphasizing the applicability of credit to manufacturing activities related to final products liable for duty payment.