2019 (1) TMI 713 - AT - Service Tax

CENVAT Credit - input services - Repair and Maintenance of Automatic Dispensing Machines installed at the dealer s premises - place of removal - Held that - It is an admittedly position that until the activity undertaken by Automatic Dispensing Machines to desired mix colour, the goods are manufactured by the appellant are not marketable. Unless until the goods are not marketable, they are not excisable. Therefore, any activity/services availed by the assessee till the product become excisable is entitled for input services credit in terms of Rule 2 (l) of Cenvat Credit Rules, 2004. The service availed by the appellant before the stage the paint becomes marketable, the appellant is entitled to avail cenvat credit on Repair & Maintenance Service of Automatic Dispensing Machines which enables their product marketable consequently excisable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of Cenvat Credit on Repair and Maintenance of Automatic Dispensing Machines installed at the dealer's premises.
2. Interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004 regarding availing services beyond the place of removal.
3. Application of judicial precedents to determine the eligibility of Cenvat Credit.

Analysis:

Issue 1: Denial of Cenvat Credit on Repair and Maintenance
The appellant, a manufacturer of paints, appealed against the denial of Cenvat Credit on Repair and Maintenance of Automatic Dispensing Machines installed at the dealer's premises. The authorities contended that the services were availed beyond the place of removal, making the appellant ineligible for Cenvat Credit under Rule 2(l) of the Cenvat Credit Rules, 2004.

Issue 2: Interpretation of Rule 2(l)
The Revenue argued that since the Automatic Dispensing Machines were installed beyond the place of removal, Cenvat Credit could not be availed as per Rule 2(l) of the Cenvat Credit Rules, 2004. However, the appellant's counsel referenced a previous decision where Cenvat Credit was allowed, emphasizing that the Revenue cannot take a contrary decision based on judicial precedents.

Issue 3: Application of Judicial Precedents
The appellant's counsel relied on the decision of the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Hyderabad vs. Novapan Industries Ltd., highlighting that the Revenue cannot adopt a contrary position in subsequent decisions. The Appellate Tribunal observed that until the goods manufactured by the appellant become marketable, they are not excisable. Therefore, any services availed before the goods are marketable are entitled to input services credit under Rule 2(l) of the Cenvat Credit Rules, 2004.

In the judgment, the Tribunal held that the appellant was entitled to avail Cenvat Credit on Repair & Maintenance Services of Automatic Dispensing Machines as these services enabled the product to become marketable and subsequently excisable. The impugned order denying the Cenvat Credit was set aside, and the appeal was allowed with consequential relief, if any.