2018 (3) TMI 691 - AT - Central Excise

CENVAT credit - input service - Man-power supply service - case of appellant is that once the service tax was paid and the invoices issued indicating the payment of such service tax, the appellant are eligible to take credit of the service tax paid as the said services are used in or in relation to manufacture of finished goods - the amount which the service provider paid whether to be consider as a deposit or service tax for deciding the eligibility of credit? - Held that - the issue is more or less settled in the case of Commissioner of Central Excise, Ahmedabad-III Versus Nahar Granities Ltd. 2014 (5) TMI 57 - GUJARAT HIGH COURT , where it was held that a manufacturer would be entitled to avail the cenvat credit in respect of the inputs used for the manufacture of a final product or in providing taxable service of the excise duty specified in First Schedule to the Excise Tariff Act - appeal allowed - decided in favor of appellant.

Issues:
- Applicability of Notification 30/2012-ST dated 20.06.2012 on availing CENVAT credit.
- Eligibility of service recipient to avail credit of service tax paid by service provider.
- Interpretation of Rule 4(7) of the Cenvat Credit Rules, 2004.
- Consideration of service tax paid by service provider as a deposit.
- Application of judicial precedents in similar cases.

Analysis:

1. Applicability of Notification 30/2012-ST dated 20.06.2012 on availing CENVAT credit:
The case involved a dispute regarding the applicability of Notification 30/2012-ST dated 20.06.2012 on the availing of CENVAT credit by the appellant. The appellant argued that the notification's apportionment of service tax liability between the service provider and the service recipient did not affect the eligibility of the service recipient to claim credit. The tribunal analyzed the notification's provisions and concluded that the appellant's eligibility for credit should not be impacted by the apportionment mentioned in the notification.

2. Eligibility of service recipient to avail credit of service tax paid by service provider:
The central issue revolved around the eligibility of the service recipient to claim credit for the service tax paid by the service provider. The appellant contended that since they received services for which the service tax was paid by the provider, they should be entitled to avail the credit. The tribunal examined the legal provisions and judicial precedents cited by the appellant, including the judgment of the Hon'ble Gujarat High Court in a similar case. Ultimately, the tribunal agreed with the appellant's argument and held that the service recipient could claim credit for the service tax paid by the provider.

3. Interpretation of Rule 4(7) of the Cenvat Credit Rules, 2004:
The appellant also relied on Rule 4(7) of the Cenvat Credit Rules, 2004, to support their claim for availing credit of the service tax paid. The tribunal considered the provisions of the rule, particularly the condition related to the indication of the service tax amount in the invoice for credit eligibility. The tribunal examined the invoices issued by the service provider and concluded that since the entire service tax amount was indicated in the invoice, the appellant met the conditions specified in Rule 4(7) for claiming the credit.

4. Consideration of service tax paid by service provider as a deposit:
A crucial aspect of the case was whether the service tax paid by the service provider should be considered as a deposit or as actual service tax for determining the eligibility of the service recipient to claim credit. The tribunal referred to the judgment of the Hon'ble Gujarat High Court in a relevant case, which clarified the nature of such payments. Based on the legal principles established in the judgment, the tribunal determined that the service tax paid by the provider should not be treated as a deposit, thereby supporting the appellant's claim for credit.

5. Application of judicial precedents in similar cases:
The tribunal extensively discussed and applied judicial precedents, including the judgment of the Hon'ble Gujarat High Court and a decision of the Tribunal on a similar issue. By analyzing these precedents, the tribunal provided a legal framework for resolving the dispute in the present case. Ultimately, the tribunal relied on the established legal principles from the precedents to rule in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief, if any, as per law.

In conclusion, the judgment by the Appellate Tribunal CESTAT AHMEDABAD addressed multiple legal issues related to the eligibility of a service recipient to claim CENVAT credit for service tax paid by the provider. Through a detailed analysis of legal provisions and judicial precedents, the tribunal ruled in favor of the appellant, emphasizing the importance of the actual payment of service tax and the issuance of invoices for determining credit eligibility.

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