2019 (9) TMI 242 - AT - Service Tax

CENVAT Credit - processing of certain goods by job work items at hands of job workers providing services to the appellant - HELD THAT - There is no dispute that the said material is used in provision of the services on which the appellants are paying Service Tax - The SCN seeks to deny the credit on the ground that the activity undertaken by the appellant is not manufacturing but repair of goods and thus, no credit on input can be allowed. It ignores the fact that the appellants are also a service provider and said goods are used in provision of said services in which the appellants are discharging the Service Tax liability. In these circumstances, there is no merit in denial of CENVAT credit to the appellants - credit allowed. Demand of Duty - irregular availment of CENVAT Credit - HELD THAT - Irrespective of the facts whether the credit is allowed of denied, the second demand amounts to double jeopardy, hence, is not sustainable and is therefore, set aside. Appeal allowed - decided in favour of appellant.

Summary

Issues:
1. Denial of CENVAT Credit
2. Demand of duty against utilization of CENVAT Credit

Analysis:
1. The appellant, engaged in providing services of "Repair and Maintenance Services" and "Erection Commissioning and Installation Services," was involved in the repair and re-salvaging of Ammonia Super Heaters. The appellant utilized job workers for certain processes, and the Revenue sought to deny CENVAT Credit on Excise Duty paid by the job workers. The appellant argued that since they are paying service tax and using the goods in providing services, they are entitled to take credit of the Excise Duty and Service Tax paid. The Tribunal noted that the denial of CENVAT Credit was unjustified as the goods were indeed used in providing services for which the appellant was discharging Service Tax liability. The Tribunal allowed the appeal against the denial of CENVAT Credit (E/70/2011).

2. A separate issue arose concerning a Show Cause Letter demanding duty against the utilization of the denied CENVAT Credit, leading to a situation of double jeopardy for the appellant. The Tribunal found this demand unsustainable and set it aside, emphasizing that regardless of the final decision on CENVAT Credit availability, demanding duty on the same credit amount would amount to double jeopardy. Consequently, the appeal against the demand of duty against the utilization of CENVAT Credit (ST/526/2011) was allowed. The Tribunal's decision highlighted the principle of avoiding double jeopardy in tax matters and upheld the appellant's position regarding the utilization of CENVAT Credit.