2015 (11) TMI 828 - AT - Central Excise

Business auxiliary services - CENVAT Credit - Job works - Held that - It is not disputed by the Revenue at the end of job worker that they are not required to pay service tax. It is also not in dispute that the job worker has not paid the service tax. In these circumstances, whatever service tax has been paid by the appellant to the job worker, appellant is entitled to take Cenvat Credit. Consequently, the appellant was not required to reverse the same. On objection by the audit party, the appellant has reversed the Cenvat credit, they are entitled to take refund on the same. - appellant is entitled to claim refund of service tax reversed by them paid on job work charges. - impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection by lower authorities.

Analysis:
The appellant, a manufacturer of motor vehicle parts, sent semi-finished goods for electroplating to a job worker who paid service tax under business auxiliary services. The appellant claimed Cenvat Credit on the service tax paid by the job worker. An objection was raised during an audit, leading the appellant to reverse the Cenvat Credit on job charges and subsequently file a refund claim, which was rejected by both lower authorities.

The appellant argued that since the job worker had paid service tax, which was accepted by the department, and there was no dispute regarding the payment, the appellant was entitled to claim the Cenvat Credit and the refund. The appellant contended that if the department did not dispute the service tax payment by the job worker, the same could not be disputed at the appellant's end.

On the contrary, the Revenue argued that one of the job workers was not required to pay service tax on job work goods, which meant the appellant was not entitled to take Cenvat Credit.

After hearing both parties, the Tribunal noted that the Revenue did not dispute that the job worker was not required to pay service tax and had not paid it. Therefore, the Tribunal held that the appellant was entitled to take the Cenvat Credit on the service tax paid to the job worker, and the appellant was not required to reverse the same. Consequently, the Tribunal ruled in favor of the appellant, allowing the refund claim and setting aside the impugned order.

In conclusion, the Tribunal held that the appellant was entitled to claim a refund of the service tax reversed by them on job work charges, and the appeal was allowed with any consequential relief.