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2023 (9) TMI 283 - AT - Central ExciseCENVAT Credit - service tax paid by a job worker on returning the goods that has been sent to him for galvanizationNature of transaction - provision of service or manufacturing activity - HELD THAT - The same issue was considered by Ahmadabad Bench of this Tribunal in the case of C.C.E. S.T. -VAPI VERSUS KRIS FLEXIPACKS PVT LTD (VICE-VERSA) 2023 (7) TMI 943 - CESTAT AHMEDABAD where reliance was placed in the case of COMMISSIONER OF CENTRAL EX. CUS., SURAT-III VERSUS CREATIVE ENTERPRISES 2008 (7) TMI 311 - GUJARAT HIGH COURT where it was held that The Tribunal is justified in holding that if the activity of the respondent-assessee does not amount to manufacture there can be no question of levy of duty, and if duty is levied, Modvat credit cannot be denied by holding that there is no manufacture. As the issue is squarely covered by the above decision of this Tribunal in favour of the appellant, there are no merits in the impugned order and set aside the same - appeal allowed.
Issues Involved:
1. Whether the appellant was entitled to avail CENVAT credit on service tax paid by the job worker. 2. Whether the job worker was required to pay service tax on galvanization which amounted to manufacture. 3. Whether the demand of recovery of inadmissible CENVAT credit along with interest and penalty was justified. Summary: Issue 1: Entitlement to Avail CENVAT Credit on Service Tax Paid by Job Worker The appellant contended that the job worker paid service tax on the job work service, and the department collected and assessed the service tax. However, the Commissioner (Appeals) held that the process amounting to manufacture or production of goods falls under the category of the Negative list, i.e., exempted/non-taxable services, hence service tax is not leviable. The appellant failed to present a credible defense for overturning the inadmissible CENVAT Credit availed on job charges. The adjudicating authority rightly confirmed the demand for recovery of inadmissible CENVAT Credit along with interest and imposed an equal penalty. Issue 2: Requirement of Service Tax Payment on Galvanization The appellant availed CENVAT credit in respect of the service tax paid by a job worker on returning the goods sent for galvanization. Since galvanization amounted to manufacture, the job worker was not required to pay service tax on these clearances. A show cause notice was issued to the appellant to demand and recover inadmissible CENVAT credit amounting to Rs.14,29,376/- availed during January 2016 to April 2016, along with interest and penalty under the relevant provisions of the CENVAT Credit Rules, 2004 and the Central Excise Act, 1944. Issue 3: Justification of Demand for Recovery of Inadmissible CENVAT Credit The Assistant Commissioner disallowed the CENVAT credit of Service Tax amounting to Rs.14,29,376/- wrongly availed by the party and confirmed the demand for recovery of the same. The demand for interest and penalty equivalent to the amount of duty was also confirmed. The Commissioner (Appeals) dismissed the appeal filed by the appellant, leading to the present appeal. Tribunal's Decision: The Tribunal referred to the decision in the case of Commissioner of Central Excise & Service Tax, Vapi Vs M/s Kris Flexipacks Pvt. Ltd., where it was held that if the assessment at the supplier's end has been accepted without objection, the same cannot be disputed at the recipient's end for availment of CENVAT credit. The Tribunal found that the issue is squarely covered by this decision in favor of the appellant. Consequently, the impugned order was set aside, and the appeal was allowed. Conclusion: The appeal was allowed, setting aside the impugned order, based on the precedent that CENVAT credit cannot be disputed at the recipient's end if the supplier's duty payment was accepted without objection.
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