2018 (2) TMI 537 - AT - Central Excise

Availment of CENVAT credit of taxes paid on various services between April 2013 and September 2013 - Held that - The production undertaken by their job-worker requires use of certain capital goods which, similar to that used in their own premises, are supplied on contracts entered into with providers entered by the appellant. Rule 4 of CENVAT Credit Rules, 2004 does not limit the availment to such as are received only at the manufacturer s premises. The denial of CENVAT credit as upheld in the impugned order is without authority of law and is set aside. Appeal is allowed.

Summary

Issues:
1. Availment of CENVAT credit on services between April 2013 and September 2013.
2. Interpretation of rule 2(l) of CENVAT Credit Rules, 2004.
3. Applicability of rule 4 of CENVAT Credit Rules, 2004.
4. Location restriction for availing CENVAT credit.
5. Legality of the impugned order-in-appeal.

Analysis:
The case involved M/s Larson & Toubro being proceeded against for availing CENVAT credit on various services between April 2013 and September 2013. The issue centered around the eligibility of the services under the amended rule 2(l) of CENVAT Credit Rules, 2004, which defines 'input service'. The original authority found most services eligible except for 'supply of tangible goods service' at premises other than that of the appellant, leading to a demand of `6,91,918. This decision was upheld in the impugned order-in-appeal dated 12th August 2015.

During the appeal, the appellant argued that the production undertaken by their job-worker required the use of capital goods supplied under contracts entered into by the appellant, similar to those used in their own premises. They contended that rule 4 of CENVAT Credit Rules, 2004 did not restrict availment to goods received only at the manufacturer's premises. Additionally, they argued that the locational prescription for goods was not applicable to services utilized in the manufacturing process.

The Tribunal, after considering the statutory framework, found that the denial of CENVAT credit as upheld in the impugned order was not supported by law. The Tribunal set aside the impugned order and allowed the appeal. This decision clarified that the location restriction for availing CENVAT credit did not apply to services utilized in the manufacturing process, providing relief to the appellant.

In conclusion, the Tribunal's judgment provided a significant interpretation of the CENVAT Credit Rules, 2004, particularly regarding the eligibility of input services and the applicability of location restrictions. The decision highlighted the importance of aligning the interpretation of rules with the practicalities of manufacturing processes, ensuring fair treatment for taxpayers availing CENVAT credit.