2013 (12) TMI 908 - AT - Service Tax

CENVAT Credit - Onus to prove destination - Whether the inputs (sugar cane) used by the appellant necessitating security thereof at the cane collection centre suffering service tax on the security service available in this regard shall entitle the appellant to the cenvat credit thereof - Held that - sugar cane collection centre was provided security service for securing such sugar cane which are said to be input of the appellant. This cannot be said to be not in relation to business - No doubt a service when claimed to be eligible to cenvat credit, assessees are obliged to prove that the said service is directly availed at the right destination i.e. either at place of manufacture or place of providing output service. It is necessary for the Revenue officers to safeguard interest of Revenue making scrutiny of claim on the basis of material facts and evidence without passing bald order - Stay granted.

Summary

Issues:
1. Entitlement to cenvat credit on service tax for security service related to inputs (sugar cane) at the collection center.

Analysis:
The appeal in question revolves around the issue of whether the appellant, who used sugar cane as inputs necessitating security at the collection center, is entitled to cenvat credit on the service tax for the security service provided. The adjudicating authority failed to clearly consider the facts presented in the case before proceeding with the decision. The order was deemed erroneous and lacking proper reasoning, a point emphasized by the appellate authority. The importance of a reasoned and speaking order by quasi-judicial authorities is highlighted, as per guidelines from the Apex Court in the case of Jt. Commissioner of Income Tax v. Saheli Leasing & Indus. Ltd.

The material facts from the show cause notice indicate that the sugar cane collection center received security services to safeguard the inputs of the appellant. This arrangement is deemed to be in relation to business. The concern raised by the Revenue regarding whether the secured inputs reached the appellant's factory is noted, although this was not the specific allegation in the show cause notice. It is emphasized that when claiming cenvat credit, assessees must demonstrate that the service was directly availed at the appropriate destination, either the place of manufacture or the place of providing output service. Revenue officers are reminded of the need to scrutinize claims based on material facts and evidence rather than issuing vague orders.

The judgment concludes by allowing both the stay application and the appeal, instead of opting for a remand process. This decision is made to avoid wasteful procedures and to provide a clear resolution to the matter at hand.