2023 (12) TMI 177 - AT - Service Tax

Denial of CENVAT Credit - nexus of output service with the input services availed - services availed from sub-contractor - HELD THAT - It is found that the Commissioner (Appeals) has given no logical justification for denying the CENVAT Credit. One of the reason given by the Commissioner (Appeals) is that the work of installation has been carried out by somebody else on behalf of the appellant. It is not understood as to how this can be a reason for denying the CENVAT Credit. Obviously when the work is sub contracted a different person will carry out the work. Another reason given is that he does not find any name of the sub-contractor in the purchase order. It is not mandatory for the appellant to provide the name of the sub-contractor in the purchase order. There are no justification for denial of CENVAT Credit - the appellant has given details of co-relation of the input services and the out put services and the reasons given by the Commissioner (Appeals) for denying the credit are without any merit. The impugned order is set aside - The appeal is allowed.

Summary

Issues: Denial of CENVAT Credit

Issue 1: Denial of CENVAT Credit
The appeal was filed against the denial of CENVAT Credit by M/s. J R Fiber Glass industries. The appellant contended that they are registered as a manufacturer and service provider, availing services of sub-contractors for machine installation. The denial of credit for services availed from sub-contractors was challenged, with detailed correlation provided between output and input services.

Details for Issue 1:
The Commissioner (Appeals) acknowledged that the appellant is a manufacturer of excisable goods and an output service provider of "Erection, commissioning and installation service." The appellant claimed credit for service tax paid by sub-contractors assisting in the work. However, the Commissioner concluded that since the appellant did not directly receive the services, they were not entitled to the CENVAT Credit. The Commissioner's reasoning for denial lacked logical justification, citing reasons such as work being carried out by others on behalf of the appellant and absence of sub-contractor names in purchase orders, which was deemed irrelevant. The Commissioner's decision was overturned as the appellant's correlation between input and output services was deemed valid, leading to the allowance of the appeal.

Conclusion:
The impugned order denying CENVAT Credit was set aside, and the appeal was allowed by the Appellate Tribunal CESTAT AHMEDABAD.