2017 (7) TMI 716 - AT - Central Excise

CENVAT credit - input services - whether the appellants are eligible to Cenvat credit of the service tax paid of input services claimed to have been used in or in relation to the manufacture of finished goods at their carton division? - Held that - the flexible division where their head office also situated was undisputedly destroyed in fire in the year 2005. Therefore, all their manufacturing activities had been shifted to their carton division and accordingly the appellant had availed credit of the services received in the carton division between the periods October 2007 to December 2008 - The appellant had produced all the relevant record/ documents relating to the use of input services with the chartered accountant and got it verified. Thus, in absence of any contrary evidence, I do not find any reason not to accept that input services has been used and utilized in their carton division after destruction of the flexible division in 2005, when there has been no other manufacturing unit of the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of Cenvat credit for input services used in the manufacture of finished goods at the carton division.

Analysis:
The case involved two appeals against an order passed by the Commissioner (Appeals) regarding the availing of Cenvat credit for input services. The appellant had claimed credit on various services used in their carton division, even though the invoices were in the name of their old head office located in the flexible division. The Tribunal remanded the matter to ascertain the actual use of services in the carton division. The appellant argued that after a fire incident in 2005, all activities were shifted to the carton division, and services were indeed used there. The Chartered Accountant certified the use of services in the carton division. The Revenue, however, supported the findings of the Commissioner (Appeals).

Upon review, the main issue was whether the appellant was entitled to Cenvat credit for the services claimed to be used in the carton division. The Tribunal noted that the services were used in the carton division after the destruction of the flexible division in 2005. Despite invoices being issued in the name of the old head office, payments were made from the new head office at the carton division. The Chartered Accountant's certificate confirmed the use of services in the carton division. With no contrary evidence presented, the Tribunal accepted that the services were indeed utilized in the carton division, especially since no other manufacturing unit was functional. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential relief as per the law.

Overall, the judgment clarified the eligibility of Cenvat credit for input services used in manufacturing finished goods at a specific division, emphasizing the importance of actual utilization rather than mere invoicing details.