2014 (11) TMI 313 - AT - Service Tax

Cenvat Credit - Scope of input services - Manufacturing Activity carried out by the job worker - Revenue denied the credit to the assessee as his is neither the manufacturer nor the service provider - GTA Service - Sales Promotion Services - Held that - Manufacture of the goods is carried out by the job workers, and excise duty liability also discharged by them. The Cenvat Credit is relatable to the goods which is manufactured and the person who is manufacturing the goods. Therefore, the Cenvat Credit in respect of inputs service relatable to the manufacture of goods can only be availed by the actual manufacturer and not by anyone else. The respondent, since not undertaking any manufacturing activity nor they discharging the excise duty liability cannot be entitled to take Cenvat Credit merely on the basis that invoices of input service is in their name and payment of service invoices made by them. As regards the loan licence concept it is for the purpose of Drug Act. However, as regards the concept of manufacture, availment of Cenvat Credit, discharging of excise duty liability there is no separate provision in respect of pharmaceutical goods manufactured on loan licence basis by some other manufacturer. As per Central Excise provision irrespective of ownership of the goods, the person who undertakes the manufacturing of the goods shall only be considered as manufacturer. Therefore, the respondent by any stretch of imagination is not the manufacturer of the goods in the present case. If this is so, then the respondent is also not entitled for Cenvat Credit in respect of any services relatable to the goods which is not manufactured by the respondent but manufactured by the job workers. respondent is not entitled for the Cenvat Credit in respect of GTA, Sales Promotion, etc. - Decided in favour of Revenue.

Issues:
1. Availment of Cenvat Credit on input services related to goods manufactured by loan licensees.
2. Interpretation of the term "manufacturer" under Cenvat Credit Rules.
3. Entitlement to Cenvat Credit for input services by the respondent.
4. Time-barred demand for the extended period.

Analysis:

Issue 1: Availment of Cenvat Credit on input services related to goods manufactured by loan licensees
The appellant (Revenue) contested the allowance of Cenvat Credit to the respondent for GTA and Sales Promotion services related to goods manufactured by M/s. Elvina Pharmaceuticals and M/s. Simchem Pvt. Ltd. The appellant argued that since the job workers discharged excise duty and carried out the manufacturing process, the respondent, not being the actual manufacturer, was not entitled to the credit.

Issue 2: Interpretation of the term "manufacturer" under Cenvat Credit Rules
The crux of the dispute revolved around defining the term "manufacturer" under the Cenvat Credit Rules. The appellant contended that as per Central Excise law, the loan licensees were the manufacturers for all purposes, including the availment of credit. Conversely, the respondent argued that since the goods were manufactured on their behalf, they qualified as the manufacturer and were entitled to the Cenvat Credit.

Issue 3: Entitlement to Cenvat Credit for input services by the respondent
The Tribunal analyzed the definitions of "final products," "input," and "input services" under the Cenvat Credit Rules to determine the entitlement to Cenvat Credit. It was concluded that only the actual manufacturer, responsible for manufacturing the goods and discharging excise duty, could avail the credit for input services related to the manufactured goods. The respondent, not undertaking manufacturing activities or discharging excise duty, was deemed ineligible for the credit.

Issue 4: Time-barred demand for the extended period
Regarding the time-barred demand, the Tribunal noted that neither the adjudicating authority nor the Commissioner (Appeals) had addressed the issue of invoking the extended period. The matter was remanded to the original adjudicating authority to decide the limited issue of time bar, ensuring the respondent had a fair opportunity to present their case on this aspect.

In conclusion, the Tribunal held that the respondent was not entitled to the Cenvat Credit for GTA, Sales Promotion services, etc., and remanded the case for a specific determination on the time-barred demand. The judgment provided a detailed analysis of the legal provisions and precedents to clarify the eligibility criteria for availing Cenvat Credit in cases involving manufacturing activities carried out by loan licensees on behalf of another entity.

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