2016 (3) TMI 64 - AT - Central Excise

Cenvat credit on the disputed services disallowed - assessee had availed Cenvat credit of service tax paid by various job workers on business auxiliary services, which according to the Revenue is not leviable to service tax. - Held that - Since service providers are registered with the Service Tax Department and service tax paid by them were accepted and retained as statutory dues by the jurisdictional Service Tax authorities, the same cannot be denied at the recipient s end on the ground that the said service is not liable to payment of service tax. Since the respondent herein has taken cenvat credit of service tax on such service, on the strength of valid and proper invoice, evidencing payment of service tax, taking of such credit is in conformity with the Cenvat statute. With regard to transfer of cenvat credit by the respondent from its DTA Unit to EOU Unit, the Commissioner (Appeals) has allowed the cenvat credit by placing reliance on the decision of the Tribunal in the case of WOCO Motherson Elastomers Ltd. vs. CCE, Noida (2008 (5) TMI 61 - CESTAT NEW DELHI ), wherein it has been held that transfer of cenvat credit availed on capital goods only, has been barred by the CBEC from being transferred to an EOU from a DTA Unit and not the credit availed in respect of the inputs. - Decided in favour of assessee

Summary

Issues Involved:
- Disallowance of Cenvat credit on banking and financial services
- Disallowance of Cenvat credit on courier services
- Disallowance of Cenvat credit on canteen facility maintenance
- Disallowance of Cenvat credit on job work activities
- Transfer of Cenvat credit from DTA Unit to EOU Unit

Analysis:

1. Disallowance of Cenvat credit on Banking and Financial Services:
The Revenue contested the disallowance of Cenvat credit on banking and financial services, arguing that the services were beyond the place of removal and hence not admissible for credit. However, the Tribunal held that such services fall under the definition of input service and have been utilized for business purposes, making the Cenvat credit valid under Rule 2(l) of the Cenvat Credit Rules, 2004.

2. Disallowance of Cenvat credit on Courier Services:
The Revenue raised an issue regarding the disallowance of Cenvat credit on courier services, claiming that there was no nexus with the manufacture of excisable goods. However, citing precedents, the Tribunal upheld the Cenvat credit on courier services, stating that they are integrally connected to the business of the manufacturer/service provider, as established in previous judgments.

3. Disallowance of Cenvat credit on Canteen Facility Maintenance:
Regarding the disallowance of Cenvat credit on canteen facility maintenance, the Tribunal referred to a judgment of the Hon'ble Karnataka High Court, emphasizing that when canteen facilities are provided due to statutory obligations like under the Factories Act, the expenses incurred are considered in fixing the price of the final product. Therefore, the Tribunal allowed the Cenvat credit on such services.

4. Disallowance of Cenvat credit on Job Work Activities:
The Revenue contested the Cenvat credit availed on job work activities, arguing that the services were exempt from service tax. However, since the service providers were registered and the tax was accepted by the authorities, the Tribunal ruled that the credit taken by the recipient was valid based on proper invoices and compliance with the Cenvat statute.

5. Transfer of Cenvat credit from DTA Unit to EOU Unit:
The issue of transferring Cenvat credit from a DTA Unit to an EOU Unit was raised, and the Tribunal upheld the transfer based on a previous decision that barred the transfer of credit on capital goods only, not on inputs. The Tribunal allowed the transfer of Cenvat credit in this case.

In conclusion, the Tribunal dismissed the Revenue's appeal, finding no infirmity in the impugned order passed by the Commissioner (Appeals) and upholding the validity of the Cenvat credit claimed by the respondent on various services and activities.