2017 (11) TMI 1384 - AT - Central Excise

CENVAT credit - service tax paid by the contractor on asphalting of road in their factory premises and at cargo gate - Revenue is of the view that these services have no nexus with the manufacturing activity of the assessee - interest for the intervening period - Held that - the assessee is not required to pay the interest on canteen automation service as per the decision in the case of Bill Forge Pvt. Ltd. 2011 (4) TMI 969 - KARNATAKA HIGH COURT - the demand of interest is set aside. Cenvat credit - Repairs & Maintenance of Depot - Held that - depot is the place of removal of goods and without place of removal the goods manufactured by the assessee cannot be removed. In that circumstances, the depot is the integral part of the manufacturing activity, therefore, any service availed on depot, the assessee is entitled to avail cenvat credit - credit allowed. Cenvat Credit - asphalting of road - Held that - although the said activity is not taxable but the service provider has paid service tax and as per Rule 3 of the Cenvat Credit Rules, 2004 whatever duty/tax has been paid by the assessee, the assessee is entitled to avail cenvat credit. It is an admitted fact that in this case appellant has paid service tax to the service provider - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interest for the intervening period
2. Cenvat credit on Repairs & Maintenance of Depot
3. Cenvat Credit on asphalting of road

Issue No. (I): Interest for the intervening period:
The assessee contended that they had sufficient balance in their cenvat credit account during the intervening period and had not utilized the cenvat credit taken on canteen automation service. The decision in the case of Bill Forge Pvt. Ltd. was cited to support the argument that no interest is payable in such circumstances. The Tribunal held in favor of the assessee, setting aside the demand for interest on canteen automation service.

Issue No. (II): Cenvat credit on Repairs & Maintenance of Depot:
The Tribunal observed that the depot is integral to the manufacturing activity as it is the place of removal of goods. Without the depot, goods manufactured cannot be removed. Therefore, any service availed at the depot entitles the assessee to avail cenvat credit. The Tribunal upheld the decision of the learned Commissioner (Appeals) to allow cenvat credit on Repairs and Maintenance of the depot, dismissing the appeal filed by the Revenue.

Issue No. (III): Cenvat Credit on asphalting of road:
Although the activity of asphalting of road is not taxable, the service provider had paid service tax. According to Rule 3 of the Cenvat Credit Rules, 2004, the assessee is entitled to avail cenvat credit on any duty or tax paid. The Tribunal noted that the appellant had paid service tax to the service provider and was entitled to avail cenvat credit. It was undisputed that the services provided were exempted services, and as such, the assessee rightfully availed cenvat credit on this service. The Tribunal allowed the appeal filed by the assessee and dismissed the appeal filed by the Revenue.

In conclusion, the Tribunal dismissed the appeal filed by the Revenue and allowed the appeal filed by the assessee, based on the detailed analysis of each issue presented before it.