2019 (3) TMI 1369 - AT - Central Excise

CENVAT Credit - input services - services rendered for preparation of returns relating to ESI/EPF Contribution for the man-power supply and bills raised by the job worker - period from Sept. 15 to Jun. 17 - Held that - It is seen that the invoices issued by the Man-power Recruitment and Supply Agency includes the service charges as well as service tax on such charges. The said charges are part of charges paid for Man-power Supply. When the appellants have already paid service tax to the service provider, the same is eligible as input services for the appellants - disallowance of credit not justified. CENVAT Credit - service tax paid on rent for the job workers premises - Held that - The invoices show that the rent has been paid by the job worker. In that case, the appellants cannot avail credit of the service tax paid on such rent - credit not allowed. Appeal allowed in part.

Summary

Issues:
1. Disallowance of credit on service tax paid for ESI/EPF Contributions.
2. Denial of credit on service tax paid on rent for job workers' premises.

Analysis:
1. The appellants availed Cenvat credit on service tax paid for services related to ESI/EPF Contributions. The department contended that these services were not eligible for credit as they were not directly connected to the manufacturing activity. However, the invoices included service charges for ESI/EPF Contributions, making them part of the charges paid for Man-power Supply. The Tribunal held that since the appellants had already paid service tax on these charges to the service provider, the credit was eligible as input services. The disallowance of credit on such charges was deemed unjustified and was set aside.

2. Another issue involved the denial of credit on service tax paid for the rent of job workers' premises. The department argued that since the invoices were issued only to the job worker, the credit was not eligible for the manufacturer. The Tribunal agreed with this contention, stating that if the rent was paid by the job worker, the manufacturer could not avail credit on the service tax paid for such rent. Therefore, the credit in respect of the rent for job workers' premises was disallowed.

In conclusion, Appeal No. E/42397/2018 was allowed with consequential reliefs, while Appeal No. E/42398/2018 was partly allowed with consequential reliefs. The Tribunal found in favor of the appellants regarding the disallowance of credit on service tax paid for ESI/EPF Contributions but upheld the denial of credit on service tax paid for the rent of job workers' premises.