By TIOL News Service

MUMBAI, JUNE 12, 2014: CENVAT credit of Rs.53.34 lakhs taken on Input Services has been denied by the CCE, Mumbai-II and a penalty has been imposed of Rs.11.55 lakhs along with interest.

Incidentally, the Input Services have been consumed by the job worker of the appellant. The Services are “Supply of Tangible goods service” for use at the job worker's premises. The Tangible goods are “Material handling equipment” for handling of raw material and finished/intermediate products & “Diesel Generator sets” are used for manufacturing activity.

Before the CESTAT, the appellant while seeking waiver of pre-deposit & a stay in the matter submitted that -

+ The appellant had arranged for supply of these tangible goods and paid for the services rendered.

+ Inasmuch as the service has been utilized in the manufacture of intermediate goods at the job-workers premises which were returned to the appellant's factory for further manufacture, the said services come within the purview of input services as defined in rule 2(l) of the CENVAT Credit Rules, 2002.

+ Reliance is placed on the Bombay High Court decision in Coca Cola India Pvt. Ltd. 2009-TIOL-449-HC-MUM-ST wherein it is held that the scope of input services as defined under rule 2(l) of the CENVAT Credit Rules, 2002 is very wide.

The Revenue representative reiterated the findings of the adjudicating authority and pleaded for putting the appellant to terms.

The Bench inter alia observed -

++ There is no dispute about the fact that services were availed at the job-worker's premises in or in relation to the manufacture of excisable goods arising at the intermediate stage.

++ There is also no dispute that the appellant has borne the incidence of such service tax taxation. If that be so, we do not understand how the appellant can be denied the benefit of inputs/input services tax credit.

++ Input services defined in Rule 2(l) of the CCR includes various services which are used in or in relation to the manufacture of dutiable final products, whether directly or indirectly, and the scope of the term is very wide as held in the case of Coca Cola India Pvt. Ltd.

++ When the same services were availed in appellant's own factory premises, the adjudicating authority has granted them the benefit of CENVAT credit. If that be so, merely because the services were availed at job-worker's premises, there is no reason why the same should be denied.

Holding that the appellant had made out a prima facie case for grant of stay, the Bench granted unconditional waiver from pre-deposit of the adjudged dues and stayed recovery.

In passing : See New Allenberry Works 2014-TIOL-732-CESTAT-DEL

(See 2014-TIOL-1017-CESTAT-MUM )