2018 (2) TMI 616 - AT - Central Excise

CENVAT credit - input services - denial on the ground that the appellant has availed cenvat credit on the services which was used beyond the place of removal and these services have no nexus with the manufacturing activity of the appellant - Held that - the facts are not disputed the appellant is a manufacturer as well as output service provider and maintaining a common cenvat credit account for inputs/input services used for manufacturing as well as providing output services. Tribunal in the case of Commissioner of Central Excise, Nashik Vs. Graphite India Ltd. 2017 (2) TMI 155 - CESTAT MUMBAI has held that the cenvat credit availed in common pool cannot be denied to the assessee on the premise that the same has been used for manufacturing activity. The appellant has correctly availed the cenvat credit on the services in question being output service provider - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of cenvat credit by authorities.
2. Nexus of services with manufacturing activity.
3. Availment of services beyond the place of removal.

Analysis:
1. The appellant appealed against the denial of cenvat credit by the authorities. The appellant, engaged in manufacturing excisable goods and providing output services, maintained a common cenvat credit account for inputs used in both activities. The denial was based on the premise that the services availed were beyond the place of removal and lacked nexus with manufacturing. The appellant contended that since the services were related to output services, the denial was unjustified, citing a Tribunal decision supporting their position.

2. The appellant argued that maintaining a common cenvat credit account for both manufacturing and service provision allowed them to avail the credit for services used in output services. The Revenue, however, claimed the services had no connection to manufacturing and were availed beyond the place of removal, justifying the denial. The Tribunal analyzed the provisions and observed that there was no explicit requirement to maintain separate accounts for manufacturing and services, allowing the utilization of a consolidated cenvat account for excise duty and service tax payments.

3. Referring to a Board's letter, the Tribunal confirmed the permissibility of utilizing cenvat credit from a common pool for excise duty and service tax payments. Relying on previous judgments and the Board's guidelines, the Tribunal held that the appellant rightfully availed the cenvat credit for the services in question as an output service provider. Consequently, the impugned order denying the credit was set aside, and the appeal was allowed.