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2017 (11) TMI 759 - AT - Central ExciseCENVAT credit - input service - Man-power supply service - N/N. 30/2012-ST dated 20.06.2012 - Held that - the appellant though required to pay 75% of the service tax liability, on receiving the man-power supply service from the service provider, however, initially the entire amount of service tax was paid by the service provider and later recovered from the appellant by indicating the same in the invoice - the amount which the service provider paid whether to be consider as a deposit or service tax for deciding the eligibility of credit has been more or less settled by the Hon ble Gujarat High Court in Nahar Granites Ltd. 2014 (5) TMI 57 - GUJARAT HIGH COURT , where it was held that the amount of service tax paid by the service provider cannot be considered as a deposit - appeal allowed - decided in favor of appellant.
Issues Involved:
Appeal against order-in-appeal passed by Commissioner of Central Excise - Availment of CENVAT credit for service tax paid by service provider - Interpretation of Notification 30/2012-ST - Eligibility of credit for service recipient - Applicability of Rule 4(7) of Cenvat Credit Rules, 2004 - Consideration of service tax payment by service provider as deposit - Judgment of Hon'ble Gujarat High Court in Commissioner of Central Excise Ahmedabad III Vs Nahar Granites Ltd. - Application of Rules 3 and 4 of Cenvat Credit Rules, 2004 - Entitlement to CENVAT credit for inputs used in manufacturing final product - Impact of supplier's payment of excise duty on eligibility for credit. Analysis: The case involved an appeal against an order-in-appeal passed by the Commissioner of Central Excise regarding the availment of CENVAT credit for service tax paid by a service provider. The appellant, engaged in manufacturing excisable goods, had availed CENVAT credit for service tax paid by the service provider for manpower supply services used in manufacturing finished goods. The dispute arose from the interpretation of Notification 30/2012-ST, which required the appellant to pay 75% of the service tax liability as the service recipient. The appellant argued that they were eligible for credit regardless of whether the service provider paid the entire service tax amount, citing the judgment of the Hon'ble Gujarat High Court in a similar case. The appellant contended that the service tax payment by the service provider should not be considered a deposit and that they were entitled to credit as the services were used in manufacturing. The appellant referenced Rule 4(7) of the Cenvat Credit Rules, 2004, which outlined conditions for availing credit on reverse charge mechanism payments, emphasizing that credit could be claimed once the service tax amount was indicated in the invoice. The Tribunal noted that the service provider initially paid the entire service tax, later recovered from the appellant through invoices. Referring to the Gujarat High Court judgment, the Tribunal highlighted the entitlement to CENVAT credit for inputs used in manufacturing final products, even if the supplier paid excise duty under a mistaken belief. Applying the principles from the Gujarat High Court judgment to the case, the Tribunal found no merit in the lower order and set it aside. The appeal was allowed, granting consequential relief as per the law. The decision emphasized the importance of fulfilling conditions for availing CENVAT credit and clarified that the payment of service tax by the service provider, when indicated in the invoice, should not hinder the recipient's eligibility for credit. The analysis underscored the significance of legal precedents and statutory provisions in determining credit entitlement and upheld the appellant's right to claim credit for service tax paid by the service provider.
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