By TIOL News Service

MUMBAI, DEC 29, 2017: IN terms of an arrangement that the appellant had with M/s Volkswagen India Pvt. Ltd., for manufacture of their cars, they installed some of the plant and machinery at the premises of the latter and having incurred expenses of premium on insurance of these, availed the CENVAT credit of Rs.2,50,923/-for the period from 2008-09 to 2010-11.

The original authority denied the CENVAT credit on the ground that the CCR, 2004 does not contain any provision for such availment.

Since the Commissioner (Appeals)upheld that order, the appellant is before the CESTAT.

The Member (Judicial) extracted the finding of the appellate authority which reads -

"Hence what has to be decided is that whether the service is related to manufacturing activities are not of the manufacturing unit at Aurangabad, whether the said services that essential for manufacturing activity to take place, whether the appellant is mandated by law to undertake to send activity and whether the cost of the input service would ultimately form part of the cost of the final product or not of the Aurangabad plant. Since what is on record leads to harnesses in the negative to these questions, hence I order that credit availed on insurance premium services of plant and machinery not installed at the manufacturing unit of the appellant at Aurangabad would not be admissible to them."

- and observed thus:

++ Though the first appellate authority has articulated the appropriate questions, the impugned order is woefully short of any studied finding on any of them. By no stretch, can it be held to be a reasoned conclusion of ineligibility.

++ On the contrary, both the authorities seem to have been guided by what they have concluded to be a deficiency in the rules pertaining to availment of the CENVAT credit. The show cause notice, too, does not seek any response on the above questions from the appellant. Any finding on such questions would, therefore, not be consistent with the principles of adjudication.

Concluding that the order of denial of CENVAT credit does not appear to be sustainable in law, the same was set aside and the appeal was allowed.

(See 2017-TIOL-4584-CESTAT-MUM)