2017 (5) TMI 1244 - AT - Central Excise

CENVAT credit - job-work - labour charges - courier charges - testing charges - Held that - with regard to job work charges it has been held that once the service tax has been paid and the service has been used in or in relation to the manufacture of final products of the appellant the appellant is rightly entitled to avail CENVAT credit. The appellant is entitled to CENVAT credit on service tax paid on job work as well as on testing; and with regard to bank charges the appellant is at liberty to raise the issue before the adjudicating authority by producing the documentary evidence - matter remitted for quantification of CENVAT credit on the basis of the documents produced by the appellant - appeal allowed by way of remand.

Summary

Issues involved:
- Availment of CENVAT credit on job work charges, courier charges, testing charges, and bank charges
- Rejection of CENVAT credit by the authorities
- Appeal against the Order-in-Original
- Legal sustainability of the impugned order

Analysis:

Availment of CENVAT Credit on Job Work Charges, Courier Charges, Testing Charges, and Bank Charges:
The appellant, engaged in manufacturing steel enclosures, availed CENVAT credit on services like job work labor charges, outward courier services, and testing services. The audit revealed irregular availing of CENVAT credit on these services, leading to a demand for recovery. The appellant argued that they were entitled to the credit based on judicial precedents and statutory provisions. The Tribunal found merit in the appellant's claim regarding job work and testing charges, allowing the CENVAT credit. However, the issue of bank charges was left open for the appellant to substantiate with documentary evidence before the adjudicating authority.

Rejection of CENVAT Credit by the Authorities:
The Commissioner (A) had rejected the appellant's appeal against the Order-in-Original, upholding the denial of CENVAT credit by the Assistant Commissioner. The appellant contended that the impugned order ignored statutory provisions and binding judicial precedents supporting their entitlement to the credit. The Tribunal, after considering submissions and evidence, found in favor of the appellant on the issue of job work and testing charges, remanding the matter for quantification of the credit based on produced documents.

Appeal Against the Order-in-Original:
The present appeal challenged the impugned order passed by the Commissioner (A) that upheld the demand for recovery of wrongly availed CENVAT credit along with interest and penalty imposed under Section 11AC. The Tribunal reviewed the arguments presented by both parties, examined relevant case laws, and concluded that the appellant was entitled to the CENVAT credit on job work and testing charges, thereby allowing the appeal by remanding the matter for further quantification.

Legal Sustainability of the Impugned Order:
The Tribunal assessed the legal sustainability of the impugned order dated 21.11.2014, which rejected the appellant's claim for CENVAT credit on certain services. The appellant argued that the order failed to consider statutory provisions and established judicial precedents supporting their entitlement to the credit. The Tribunal acknowledged the appellant's reliance on relevant case laws and statutory provisions, ultimately ruling in favor of the appellant on specific charges while leaving the issue of bank charges open for further verification.

In conclusion, the Tribunal allowed the appellant's appeal by remanding the matter to the adjudicating authority for quantification of the CENVAT credit on job work and testing charges, emphasizing the need for documentary evidence to support the claim regarding bank charges. The decision highlighted the importance of adhering to statutory provisions and judicial precedents in determining the eligibility for CENVAT credit, ensuring a fair and legally sustainable outcome for the appellant.