2016 (8) TMI 282 - AT - Central Excise

Availability of cenvat credit on the services availed by job worker exclusively manufacturing the goods on behalf of respondent. Benefit of exemption under Notification No. 214/86-CE dated 25.3.1986 available or not Held that cenvat credit available. Decision in the case of MRF Ltd. (2014 (1) TMI 822 - CESTAT CHENNAI) is applicable to the facts of this case wherein this Tribunal has examined the Rule 3 of Cenvat Credit Rule 2004 for availing the credit on the service availed by the job worker under Notification 214/86-CE dated 25.3.1986 decided against the Revenue.

Summary

Issues:
1. Whether the respondent is entitled to avail credit on services used by the job worker exclusively manufacturing goods on behalf of the respondent under Notification No. 214/86-CE dated 25.3.1986.

Analysis:
The Revenue appealed against the Commissioner (Appeals) decision allowing the respondent to avail credit on services like manpower and recruitment supply agency service and security service used by the job worker exclusively manufacturing goods for the respondent. The adjudicating authority initially denied the credit and imposed duty, interest, and penalty. The Commissioner (Appeals) examined Rule 3 of Cenvat Credit Rules, 2004 and allowed the credit. The Revenue challenged this decision.

The Revenue argued, citing past Tribunal decisions, that credit on security services availed by the job worker is not entitled to the principal manufacturer. On the other hand, the respondent argued that as per Notification No. 214/86-CE dated 25.3.1986, the job worker exclusively manufactures goods on behalf of the respondent, justifying the credit availed on the disputed services. The respondent also relied on other Tribunal decisions supporting their position.

The issue revolved around interpreting Rule 3 of Cenvat Credit Rules, 2004, which allows credit on services used by a job worker availing exemption under Notification 214/86-CE dated 25.3.1986 for manufacturing intermediate products. The Tribunal clarified that if the job worker avails this exemption, the principal manufacturer is entitled to avail credit on services used by the job worker. Previous decisions cited by the Revenue were deemed inapplicable as they did not consider this specific provision. The Tribunal referenced a case where it was held that there is no requirement for services to be received and utilized within the factory for credit eligibility.

Ultimately, the Tribunal found the decision in the case of MRF Ltd. applicable to the current case, upholding the Commissioner (Appeals) decision to allow the credit on services used by the job worker under Notification 214/86-CE dated 25.3.1986. The Tribunal dismissed the Revenue's appeal, stating no infirmity in the impugned order and upholding the credit availed by the respondent on the disputed services.