2017 (9) TMI 1659 - AT - Central Excise

CENVAT credit - Input services - services provided to job workers while doing their job worker - Rule 4(5) of CCR - Held that - none of the rules prescribes that the input services on which credit is to be availed have to be used within the premises of the person manufacturing the goods - It is not in doubt that the said services are used in the premises of the job worker who is doing job work on the goods being manufactured by the appellant. Thus it is apparent that the said services have been used for the manufacture of the final product cleared by the appellant though indirectly - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of credit of service tax for services provided to job workers.

Analysis:
The appellants filed an appeal against the denial of credit of service tax for services provided to their job workers. The appellants argued that they were operating under Rule 4(5) of Cenvat Credit Rules and had supplied services like Fork lift, Crane, Hydra, and DG set to their job workers, paying for these services and availing credit for the service tax paid. They relied on a Tribunal decision in MRF Ltd. where credit was allowed under similar circumstances. On the other hand, the Ld. AR relied on the grounds of review.

Upon reviewing the submissions, it was noted that the review was ordered based on Rule 9(5) of Cenvat Credit Rules and the definition of input service in Rule 2(1) of Cenvat Credit Rules, 2004. The decision of the Hon'ble Apex Court in Maruti Suzuki was also considered. It was highlighted that none of these rules stipulated that input services for availing credit must be used within the premises of the manufacturer. The Maruti Suzuki decision emphasized the necessity of establishing that input services are used in or in relation to the manufacture of the final product. In this case, the services were used at the job worker's premises, indirectly contributing to the manufacture of the final product cleared by the appellant. The Tribunal's decision in MRF Ltd. was found to be relevant and supportive.

The Tribunal's observation in the MRF Ltd. case was referred to, emphasizing that the definition of input services does not mandate that services must be received and utilized within the factory premises. Rule 3 of the CENVAT Credit Rules specifically allows credit for tax paid on any input service used in the manufacture of intermediate products by a job worker. The Tribunal adopted the principle established in the case of Maharashtra Seamless Ltd. and held that there was no reason to deny Cenvat credit for security services utilized by the appellant at the job workers' premises and paid for by the appellant.

As a result of the detailed analysis and consideration of relevant legal provisions and precedents, the appeal was dismissed, with the judgment pronounced in court on 28/09/2017.