2015 (2) TMI 190 - AT - Service Tax

Cenvat Credit - Denial of input service credit in the hands of Job worker who is availing the benefit of exemption notification no. 8/2005 ST and 214/86 CE and did not pay Central Excise duty and service tax on the job work goods cleared by them to the principal manufacturer who suffered duty on the final product - Held that - In this case the appellant is a job worker and the final product which they supplied to the principal manufacturer has suffered duty. Therefore, the issue is to be examined in the scenario whether the final product has suffered duty or not. As per Notification 214/86 the job worker can receive the goods from the principal manufacturer without payment of duty and also procure the inputs on payment of duty and can avail the credit. He is also entitled to clear the goods without payment of duty to the principal manufacturer who cleared the final goods on payment of duty. The same treatment has been given by the Notification 8/2005 (ibid). In these circumstances, as it is an admitted fact that the final products which have been processed by the appellant have suffered duty, therefore, appellants are entitled to take the credit of the input service. - Decided in favour of assessee.

Summary

Issues:
Appeal against denial of input service credit for Goods Transport Agency service and Business Auxiliary Service by a job worker.

Analysis:
The appellant, a job worker, availed the services of Goods Transport Agency and Business Auxiliary Service during job work activities without paying Central Excise duty on goods cleared to the principal manufacturer. The Revenue contended that job workers are not required to pay duty or Service Tax, thus not entitled to Cenvat credit on the services. The appellant argued citing Notifications 214/86-C.E. and 8/2005, claiming entitlement to credit as the final products supplied to the principal manufacturer incurred duty. The Revenue opposed, stating that as a job worker providing exempted services, credit should not be allowed.

Upon hearing both sides, the Tribunal considered the scenario where the final product supplied by the appellant to the principal manufacturer had indeed suffered duty. Referring to Notifications 214/86 and 8/2005, which allow job workers to receive goods without duty payment, procure inputs with duty payment, and clear goods without duty payment to the manufacturer, the Tribunal concluded that since the final products processed by the appellant incurred duty, they were entitled to take credit of the input service.

The impugned order denying the input service credit was set aside, and the appeal was allowed with consequential relief.