2015 (9) TMI 1463 - AT - Central Excise

Cenvat credit - availed input service credit towards service tax on full value of crushing charges paid for the entire crushing quantity of iron ore - short receipt of 2258.110 M.T. of iron ore - Held that - the crushing charges charged by the job workers are confirming to the definition of input service . Further the said service having been received by the appellant and duly accounted for based on the valid service tax invoice the statutory requirements contained in the cenvat statute had been duly complied with for taking the cenvat credit. Further it is found that there is no stipulation or embargo created in the cenvat statute in dealing with such an event for denial of cenvat benefit. Therefore denial of cenvat credit is not in conformity with the Cenvat Credit Rules. - Decided in favour of appellant

Summary

Issues: Denial of cenvat credit and penalty upheld by Commissioner (Appeals) - Short receipt of iron ore affecting eligibility for cenvat credit.

In this case, the appellant appealed against the order passed by the Commissioner (Appeals) upholding the denial of cenvat credit of a specific amount along with an equal penalty. The dispute arose from the appellant availing input service credit for service tax on crushing charges paid for iron ore. The Department contended that due to a shortfall in the receipt of iron ore, the appellant was ineligible for cenvat credit related to the shortage quantity. The show cause notice led to an adjudication order confirming the proposals, which was further upheld by the Commissioner (Appeals), prompting the appeal before the Tribunal.

The appellant's counsel argued that Rule 3 of the Cenvat Credit Rules, 2004 allows manufacturers to claim cenvat credit for input services received, which had not been disputed by the Department. Therefore, the denial of cenvat benefit was deemed unjustifiable. On the contrary, the respondent's counsel supported the findings of the impugned order, asserting that the service tax demand confirmation aligned with the cenvat statute.

After hearing both counsels and examining the records, the Tribunal found that the crushing charges met the definition of "input service," and the appellant had received and accounted for the service appropriately with valid service tax invoices, complying with cenvat statute requirements for claiming cenvat credit. The Tribunal noted the absence of any provision in the cenvat statute allowing denial of cenvat benefit in such circumstances. Consequently, the Tribunal concluded that the denial of cenvat credit was not in accordance with the Cenvat Credit Rules, setting aside the impugned order and ruling in favor of the appellant.