2024 (2) TMI 1300 - AT - Central Excise

CENVAT Credit - input services - refilling of gases from bulk containers to retail containers and conversion from liquid state to gaseous state amounts to manufacture or not - credit availed on input services has been denied alleging that the appellant has not been able to establish nexus of the input services with the manufacturing activity - HELD THAT - When the services qualify as input services, the credit ought to be allowed unless there is discrepancy in the payment of Service Tax or in regard to the documents. There is no such dispute in this case. In the present case, the services availed are in the nature of inward and outward transportation of the goods. This is essential services for the manufacturing activity. Further, there is no requirement for an assessee to furnish one-to-one co-relation of the input services and the credit availed. There are no merits in the view taken by the Adjudicating Authority in denying the credit availed on input services. Recently, the Larger Bench in the case of M/s. Ramco Cements Limited Vs. Commissioner of Central Excise, Puducherry 2020 (6) TMI 794 - CESTAT CHENNAI had held that the credit availed on outward transportation services is eligible when the freight charges are included in the taxable value. The disallowance of credit on input services and the confirmation of the demand in this regard without basis are requires to be set aside - Appeal allowed.

Summary

Issues:
The judgment involves the issue of denial of CENVAT Credit on input services to the appellant by the Department, specifically focusing on the activity of refilling various gases in liquid states from bulk containers into smaller containers and whether this activity amounts to manufacture.

Summary:
The Appellant, a manufacturer of various gases, availed CENVAT Credit on duty paid on inputs and Service Tax paid on input services as per the CENVAT Credit Rules, 2004. The Department contended that the refilling of gases from bulk containers to retail containers does not amount to manufacture, leading to the denial of credit on input services. The Show Cause Notice raised a demand of Rs.29,26,868/- for the credit availed on input services. The Original Authority dropped the demand on inputs but confirmed the demand on input services. The appellant appealed to the Tribunal challenging the denial of credit on input services.

The appellant argued that the input services used were in relation to the manufacturing activity, including inward and outward transportation of goods. The Department claimed that the appellant failed to establish a nexus between the services and the manufacture of excisable goods. The Tribunal examined the issue and found that the services qualified as input services under the CENVAT Credit Rules, 2004. The Adjudicating Authority's denial of credit on input services was deemed unjustified as there was no discrepancy in payment or documentation. The Tribunal cited a previous case to support the eligibility of credit on outward transportation services when freight charges are included in the taxable value.

Consequently, the Tribunal set aside the impugned order disallowing the credit of Rs.29,26,868/- on input services. However, the reversal of Rs.1,81,758/- by the appellant on exempted goods was sustained. The appeal was allowed with consequential relief, if any, as per law.