2012 (8) TMI 209 - AT - Central Excise

CENVAT credit on stockbroker s service - respondent used the services of a stockbroker for acquiring shares in another company - understanding was that the other company would supply electricity to the respondent subject to the condition that the latter would invest in the former Held that - Electricity was used by the respondent in the manufacture of their final products there is clear nexus between the stockbroker s service and the manufacture of the goods - service clearly fell within the ambit of input service as defined under Rule 2(l) of the CENVAT Credit Rules 2004 credit allowed

Summary

Issues:
- Whether the respondent was entitled to take CENVAT credit on stockbroker's service used for acquiring shares in another company for the purpose of manufacturing excisable products.

Analysis:
The main issue in this appeal before the Appellate Tribunal CESTAT, Bangalore was to determine the eligibility of the respondent to claim CENVAT credit on the stockbroker's service utilized for acquiring shares in another company, which were then used for the production of excisable goods. The Tribunal considered whether the lower authorities were correct in allowing the respondent to avail of the CENVAT credit in this scenario. The respondent did not request a personal hearing and submitted written arguments in support of their position.

The Tribunal noted that the respondent had indeed engaged the services of a stockbroker to acquire shares in another company as per a Memorandum of Understanding between the respondent and the said company. The purpose of this arrangement was for the other company to provide electricity to the respondent, who, in turn, utilized this electricity in the manufacturing process of their final products. The Tribunal emphasized that there was a clear connection between the stockbroker's service and the manufacturing activity, as the electricity obtained through the share acquisition was an essential input for the production process.

Furthermore, the Tribunal highlighted that the stockbroker's service met the definition of 'input service' as outlined in Rule 2(l) of the CENVAT Credit Rules, 2004. The lower authorities had correctly recognized this connection and allowed the CENVAT credit to the respondent. Consequently, the Tribunal upheld the decision of the lower authorities and dismissed the appeal of the department, affirming the respondent's entitlement to claim CENVAT credit on the stockbroker's service used for acquiring shares in another company for the purpose of manufacturing excisable products.