2018 (5) TMI 1503 - AT - Central Excise

CENVAT credit - input services - GTA Services - Held that - the services are definitely used in bringing of the raw-material directly from the seller to the factory premises of M/s Nirma Limited and used in the manufacture of finished goods, later cleared on payment of duty by the appellant to M/s Nirma Limited. - denial of credit of service tax paid of GTA Service by the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Admissibility of Cenvat credit on service tax paid for GTA services used in job work manufacturing process

Analysis:
The appeal was filed against an order passed by the Commissioner (Appeals-I) Ahmedabad regarding the admissibility of Cenvat credit on service tax paid for GTA services used in the job work manufacturing process for M/s Nirma Ltd. The appellant, engaged in manufacturing detergent on a job work basis, availed Cenvat credit on service tax paid for GTA services used in transporting raw materials received from M/s Nirma Ltd. The dispute arose as the invoices and transporter's challans were addressed to M/s Nirma Ltd, but the consignee address was that of the appellant. Show Cause Notices were issued for recovery of the availed credit, leading to the appeal. The appellant argued that they received the raw materials, processed them into finished goods, and paid duty on the cleared goods to M/s Nirma Ltd. The appellant contended that the service tax paid on GTA services for transporting raw materials to their factory should be admissible as they were the consignee and utilized the services in the manufacturing process.

The Tribunal found that the appellant was indeed engaged in converting raw materials for M/s Nirma Ltd on a job work basis, with the converted materials being cleared on payment of duty to M/s Nirma Ltd. The raw materials were directly sent to the appellant's factory premises for conversion. The appellant availed Cenvat credit on the service tax paid for GTA services used in bringing the raw materials to their factory. The Revenue objected, stating that since the invoices/bills reflected M/s Nirma Ltd's name, the services were rendered to them and not to the appellant. However, the Tribunal disagreed, emphasizing that the services were crucial in bringing raw materials directly to the factory premises for manufacturing finished goods, which were later cleared on duty payment by the appellant to M/s Nirma Ltd. Therefore, the Tribunal set aside the impugned order, allowing the appeal and granting relief to the appellant as per the law. The denial of credit for service tax paid on GTA services by the appellant was deemed incorrect, and the appeal was allowed.