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2013 (12) TMI 382 - AT - Service TaxDenial of CENVAT Credit - Excise duty paid on prototypes - Consulting Engineer's Service - Benefit under Notification No.167/71 - Held that:- any service used by the manufacturer whether directly or indirectly, in or in relation to the manufacture of final products would be eligible for Cenvat Credit. When a manufacturer receives “Consulting Engineer's Service” for the design of the vehicle and utilised those services in the manufacture of prototypes, the usage is in relation to the manufacture of vehicles - Therefore, consulting engineers service which they received from the foreign as well as domestic service provider are in relation to the manufacture of commercial vehicles by the appellant and therefore, the appellant is eligible for the benefit of service tax paid thereon. CBE&C vide order dated 29/11/1973 held that the appellant would be eligible for the benefit of the said notification only when the prototypes manufactured by them get destroyed in the process of testing of the goods or it is scrapped after testing and experimentation is over. It is also on record that the appellant had cleared the prototype goods on payment of duty either for export or for other purposes. If that be so, the prototypes cannot be construed as exempted goods. In such scenario, provisions of Rule 6 (5) of the Cenvat Credit Rule come into play. As per the said Rule, when input services are used both in the manufacture of dutiable goods as also in exempted goods, then the appellant is eligible to avail Cenvat credit of service tax paid on certain specified services manufactured by the said rule. “Consulting Engineers Service” is one of the specified services under sub-rule (5) of the said Rule 6. Viewed from this perspective, the appellant is not required to reverse any credit of the service tax paid on consulting engineers service and we hold accordingly. The adjudicating authority has not considered the issue on merits and therefore, the Revenue's appeal has to be allowed by way of remand and the adjudicating authority is directed to consider whether the appellant is eligible for Cenvat credit of the service tax paid on these services - Decided in favour of assessee by way of remand.
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