2016 (11) TMI 347 - AT - Central Excise

Denial of CENVAT credit - input service of GTA - transportation of Bio-manure and Cane-seed - the decision in the case of Mawana Sugars Ltd. Vs. Commissioner of Central Excise & Service Tax, LTU, Delhi 2014 (12) TMI 1139 - CESTAT NEW DELHI relied upon by the ld. Counsel - Held that - I find that the Service tax paid on the transportation of Bio-manure and Cane-seed shall become input service to the farmers and not to the manufacturer. The case laws relied upon by the ld. Counsel are related to the input services utilized by the manufacturers whereas in the present case the services are utilized by the farmers and not by the manufacturer appellant. Therefore, I hold that Cenvat credit disputed in the matter before me, is not admissible to the appellant - appeal dismissed - decided against appellant.

Summary

Issues:
1. Admissibility of Cenvat credit on transportation of Bio-manure and Cane-seed.
2. Interpretation of input service for the manufacture of Sugar and Molasses.
3. Applicability of case laws in determining admissibility of Cenvat credit.

Analysis:
1. The appellant was supplying Bio-manure and Cane-seed to Cane Growers, and the Service tax paid on their transportation was availed as Cenvat credit. The Revenue contended that this service did not qualify as an input service for the manufacture of Sugar and Molasses, leading to the issuance of Show Cause Notices demanding alleged ineligible Cenvat credit. The Adjudicating Authority, in the Order-in-Original, denied the Cenvat credit, which was upheld by the Commissioner (Appeals) in the Order-in-Appeal.

2. The appellant argued that the supply of Bio-manure and Cane-seed should be considered part of the inclusive clause of the definition of input. They relied on various case laws to support their claim, emphasizing the nexus of these activities with the business of sugar manufacturers. The Department Representative, however, contended that there was no direct or indirect relationship between these activities and the manufacturing of sugar, thereby opposing the admissibility of input service credit.

3. In analyzing the contentions, the Tribunal considered the nature of the services provided and the beneficiaries. It was observed that the Service tax paid on the transportation of Bio-manure and Cane-seed benefited the farmers, not the manufacturer. The Tribunal distinguished the case laws cited by the appellant, highlighting that those cases involved input services utilized by manufacturers directly, unlike the present scenario where the services were utilized by the farmers. Consequently, the Tribunal concluded that the disputed Cenvat credit was not admissible to the appellant, leading to the dismissal of the appeal.