2013 (11) TMI 506 - AT - Service Tax

Denial of input service credit - Activity of job work undertaken by assessee under Notification No.214/1986-CE - Held that - when the final product has suffered duty, there is no bar on availment of CENVAT credit on inputs/input services by job workers - Following decision of Sterlite Industries (I) Ltd Vs Commissioner of Central Excise Pune 2004 (12) TMI 108 - CESTAT, MUMBAI and Polycab Industries Vs Commissioner of Central Excise, Daman 2010 (6) TMI 156 - CESTAT, AHMEDABAD , applicant has made out a case for waiver of predeposit. - Stay granted.

Summary

Issues:
- Denial of input service credit on job work activity under Notification No.214/1986-CE.

Analysis:
The judgment deals with the issue of denial of input service credit to the applicant for job work activity under Notification No.214/1986-CE. The Revenue contended that since the job worked goods did not suffer any duty, the applicant was not entitled to the credit, leading to the confirmation of the demands. However, the applicant argued that since the final products had indeed suffered duty, they should be allowed to avail input service credit, citing precedents such as Sterlite Industries (I) Ltd and Polycab Industries cases. The applicant sought a stay on the demands.

The opposing view presented by the Revenue was that the Sterlite Industries case was not directly applicable to the present situation as it involved different rules and focused on the availment of CENVAT credit on inputs only. Despite this, the Tribunal analyzed the submissions from both parties and found that the common rationale in the decisions referred to was that when the final product had incurred duty, there should be no restriction on job workers availing CENVAT credit on inputs or input services. This principle had been upheld by the larger Bench of the Tribunal in the Sterlite Industries case and in the Polycab Industries case.

Consequently, the Tribunal concluded that the applicant had established a case for the waiver of predeposit. As a result, the requirement of predeposit for the impugned demands was waived, and the recovery of the same was stayed during the pendency of the appeals. The judgment was pronounced and dictated in open court by the Tribunal.