2017 (10) TMI 651 - AT - Central Excise

CENVAT credit - job-work - denial of service tax taken by the appellants in respect of services provided to their job workers while doing their job work - Held that - 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 dismissed - decided against Revenue.

Summary

Issues:
- Appeal filed by revenue to deny credit of service tax taken by the appellants in respect of services provided to their job workers.
- Cross objection filed by the respondent.
- Interpretation of Rule 4(5) of Cenvat Credit Rules.
- Application of Rule 9(5) and Rule 2(1) of Cenvat Credit Rules, 2004.
- Analysis of the decision in MRF Ltd. - 2013 (31) STR 689.
- Examination of the decision of the Hon'ble Apex Court in Maruti Suzuki - 2009 (240) ELT 641 (SC).
- Determination of whether input services have to be used within the premises of the person manufacturing the goods.

Analysis:
The appeal was filed by the revenue seeking to disallow credit of service tax taken by the appellants for services provided to their job workers. The respondent argued that they were operating under Rule 4(5) of Cenvat Credit Rules and had availed credit for services provided at the job worker's premises. The respondent relied on the Tribunal's decision in MRF Ltd., where similar circumstances allowed for the credit. The revenue, on the other hand, relied on grounds of review. The Tribunal, in its analysis, noted that the review was ordered based on Rule 9(5) and the definition of input service in Rule 2(1) of Cenvat Credit Rules, 2004. The Tribunal highlighted that the rules did not specify that input services must be used within the premises of the manufacturer. Referring to the decision in Maruti Suzuki, it was emphasized that input services need to be used in or in relation to the manufacture of the final product. The Tribunal found that the services in question were used at the job worker's premises indirectly contributing to the final product's manufacture. The Tribunal also referenced the decision in MRF Ltd., where it was held that input services need not be received and utilized within the factory premises. Consequently, the appeal was dismissed, and the cross objection was disposed of accordingly.