CENVAT on Input Services - Will the controversy end with Ultratech decision?

A well-analysed article.
It is pertinent to note that the Apex Court in the case of Maruti Suzuki Ltd was dealing with definition of "input" under Rule 2(k) of C.Ex.Rules 2002.The CENVAT credit on "input service" is being allowed only from 10-9-2004 under CENVAT Credit Rules 2004.So the Supreme Court had no occasion to consider the definition of "input service" in its judgment.Therefore,the argument that the decision of Maruti Suzuki case impliedly overruled the Coca Cola decision of Bombay High Court is rather contrived and specious.The recent Bombay HC decision in the case of Ultratech Cement Ltd, distinguished the Maruti Suzuki case and thus overruled the Sundaram Brake Lining decision of the Tribunal, Chennai Bench.
Considering the pointlessness of this protracted litigation it is high time the Board reiterates its clarificatory "Press Release" dated 12-8-2004 by way of circular and put the whole issue at rest.

Chakravarthi

bommakantichakravarthi bommakantichakravarthi 08/11/2010

 

with due respect to the HC, this decision is erroenous
how come credit of audit and accounts service is allowable and garden maintainance service not

Any expenditure allowed under Income Tax shall be one in connection with business and thus, related credit shall be allowed

MANDEEP KAUR KHURANA 08/11/2010

 

sir, the basic power to frame the rules to the central govt. comes from the provisions of the act, enacted by the Parliament of India and the intention of the provisions of clauses (xvia)&(xviaa)of the Section 37(2)of the Central Excise Act, 1944 only to provide the credit of duty and service tax used in, or in relation to the manufacture of excisable goods. The concept enlarged by insertions in CCR, 2004, for use in or in relation to business was never incorporated in the statute itself. The CESTAT (LB) decision in Vandana Global case is an apt interpretation of the basic mandate given by the Parliament. In my humble opinion, we are deviating from the right path.

RYS

mahesh khemka 08/11/2010

 

clauses (xvia)&(xviaa)of the Section 37(2)of the Central Excise Act, 1944 are not definitive but illustrative. 37(2) begins with the phrase 'without prejudice to the generality of the foregoing power'. That is, power of the Govt. to make rules to carry into effect the purpose of the Act. Therefore, the CCR provisions in question are well within the powers.

08/11/2010