2018 (10) TMI 1469 - AT - Central Excise

CENVAT Credit - N/N. 30/2012-ST dated 30.06.2012 - appellant had availed input service credit on Manpower Supply Services rendered by M/s. V. K. Contractors, a proprietary firm who had paid service tax on 100% value of taxable services instead of 25% - Held that - The issue involved in this case is no more res integra as the same has already been addressed to and answered by this very Bench of the CESTAT in the case of M/s. Superfil Products Pvt. Ltd. Vs. Principal Commr. of C. Ex., Chennai-I 2017 (4) TMI 953 - CESTAT CHENNAI , where it was held that There could no dispute that service tax leviable has been fully paid. This fact will therefore satisfy the requirement of Rule 3 ibid and particularly, when such tax liability has been passed on to the appellant and they have also made payment thereof to the service provider, there can be no denial to them of such cenvat credit - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of input service credit on Manpower Supply Services contrary to Notification No. 30/2012-ST.
- Allegation of ineligible credit availed by the appellant.
- Confirmation of proposals in Show Cause Notice.
- Imposition of penalty under Rule 15(2) of the CENVAT Credit Rules, 2004.
- Rejection of appeal by the Commissioner of G.S.T. & Central Excise (Appeals-I), Chennai.
- Interpretation of Notification No. 30/2012-S.T. and Rule 3 of CENVAT Credit Rules, 2004.

Analysis:
1. The appellants were engaged in the manufacture of various parts falling under different chapters of the Central Excise Tariff Act. The Department found that they availed input service credit on Manpower Supply Services from a firm that paid service tax on 100% value instead of 25% as per Notification No. 30/2012-ST. A Show Cause Notice was issued alleging the ineligibility of the credit and proposing recovery along with interest and penalty.

2. The lower adjudicating authority confirmed the proposals and imposed a penalty under Rule 15(2) of the CENVAT Credit Rules, 2004. The appeal before the Commissioner of G.S.T. & Central Excise (Appeals-I), Chennai, was rejected, leading to the appellant appealing to the CESTAT Chennai.

3. During the hearing, the appellant's advocate argued that a previous case had addressed a similar issue and ruled in favor of the appellant. The Revenue, however, supported the findings of the lower authorities.

4. The Member (Judicial) of CESTAT Chennai analyzed the previous ruling and found that the notification only provided for the distribution of tax liability between the service recipient and provider. The Member emphasized that as long as the tax liability had been discharged and passed on to the appellant, they were eligible for the credit as per Rule 3 of the CENVAT Credit Rules, 2004.

5. The Member concluded that the previous ruling applied to the current case, and since the Revenue failed to produce any contradictory judgments, the impugned order was deemed unsustainable. Consequently, the Member allowed the appeal with consequential benefits as per the law.

6. The judgment highlights the importance of understanding the specific provisions of tax laws and rules governing credit eligibility, emphasizing the need for compliance with statutory requirements while interpreting notifications and rules to determine the applicability of credits in indirect tax matters.