2018 (5) TMI 1514 - AT - Central Excise

CENVAT credit - input services - denial on account of nexus - Held that - there is no clarity as to whether what was sent through courier were only samplers or the manufactured goods under the guise of samples; and in any case, if the dispatch was of the goods then, it will have a different consequence - there is no clarity as to whether what was sent through courier were only samplers or the manufactured goods under the guise of samples; and in any case, if the dispatch was of the goods then, it will have a different consequence - it is proper to remit this issue back to the file of the adjudicating authority with a further direction to the appellant to clarify its stand ie., what was sent was courier were samples or manufactured goods and then it is for the adjudicating authority to give a finding after considering the same in accordance with law - appeal allowed by way of remand.

Summary

Issues:
1. Availing Cenvat credit on services not related to manufacturing.
2. Denial of Cenvat credit on courier services for outward transportation.

Analysis:
1. The appellant, engaged in manufacturing, availed Cenvat credit on services, but the Revenue claimed some services were unrelated to manufacturing, leading to a Show Cause Notice (SCN) for recovery, interest, and penalty. The appellant contended correct credit availed, leading to partial relief in Orders-in-Original and Commissioner (Appeals) decisions. The appellant challenged the rejection of credit for courier services used for sending samples, arguing it falls under Rule 2(l) of CCR, 2004. The appellant relied on legal precedents and circulars to support their claim. The Revenue argued against interference with the Commissioner (Appeals) findings.

2. During the hearing, it was debated whether the courier services were for samples or manufactured goods. The Tribunal found lack of clarity on this issue and remitted it back to the adjudicating authority for clarification. The appellant's consultant argued against questioning ISD credit liability, while the Revenue supported the Commissioner (Appeals) direction to verify relevant documents. The Tribunal noted that the eligibility of credit was not questioned by the authority and upheld the appellate authority's findings and directions.

In conclusion, the Tribunal remitted the issue of courier services back to the adjudicating authority for clarification, while upholding the Commissioner (Appeals) findings on ISD credit verification. The case was disposed of accordingly.