2025 (7) TMI 1406 - AT - Central Excise

CENVAT credit of the service tax on various services - eligible input services or not - service as job work received by the appellant - management service and factory compliance service - compliance like PF ESI Etc. of the employee. CENVAT Credit - services were used by the appellant s job workers whose services are exempt under notification 25-2012-ST dated 20.06.2012 - HELD THAT - The issue was examined and decided by this Tribunal in the appellants own case in Hindustan Unilever I 2017 (10) TMI 843 - CESTAT CHENNAI where it was held that credit of service tax paid on the job-charges as well as on various reimbursable expenses by the job-workers is admissible to the appellants since the job-work activities are directly in relation to manufacture of final products. Compliance like PF ESI Etc. - HELD THAT - The issue pertaining to compliance like PF ESI Etc. were examined in Hindustan Unilever II 2018 (5) TMI 448 - CESTAT CHENNAI where it was held that The said services stand availed by the appellant in respect of compliance with their statutory industrial obligations like payment of ESI and PF renewal of licence and obtaining permission etc. through a private agency called Aparajitha Corporate Services. The lower authorities have denied the credit that the same are for the welfare of the individual employee and as such ineligible input services. The impugned order is set aside - appeal disposed off.

Summary

ISSUES:

Whether CENVAT credit on service tax paid for services such as godown rent, godown maintenance, loading and unloading, diesel purchase for genset, DG hire charges, electricity charges, and factory compliance is admissible to the principal manufacturer when such services are used by job workers whose services are exempt under Notification No. 25/2012-ST dated 20.06.2012.Whether services related to statutory compliance like PF, ESI, and factory compliance qualify as input services eligible for CENVAT credit.Whether the extended period of limitation is invocable for demand of duty and penalty in absence of conscious and deliberate suppression or mis-statement.

RULINGS / HOLDINGS:

The Tribunal held that CENVAT credit of service tax paid on input services used by job workers is admissible to the principal manufacturer, even if such job-work services are exempt under Notification No. 25/2012-ST, as the credit pertains to input services "used in the manufacture of intermediate products by a job-worker" and received by the manufacturer for use in or in relation to manufacture of final product.Services related to statutory compliance such as PF, ESI, and factory compliance are considered input services eligible for CENVAT credit, as they pertain to the manufacturing activity and are not excluded under Rule 2(l) of the Cenvat Credit Rules.The demand for duty and penalty is barred by limitation unless there is evidence of conscious and deliberate suppression of facts or mis-statement, and in the absence thereof, the extended period is not invocable.

RATIONALE:

The legal framework applied includes Rule 3 read with Rule 2(l) of the Cenvat Credit Rules, 2004, which defines input services and governs admissibility of CENVAT credit on services used in manufacturing activities.Precedent decisions of the Tribunal in the appellant's own case (Hindustan Unilever–I and Hindustan Unilever–II) were followed, which held that principal manufacturers are entitled to avail credit on services used by job workers, even if the job-work services are exempt under Notification No. 25/2012-ST.Reliance was placed on various judgments affirming that credit cannot be denied to the principal manufacturer for service tax paid by job workers, including cases where services are exempt or not required to be paid by the job workers themselves.The Tribunal noted absence of any superior court ruling modifying or annulling the precedent decisions, thereby adhering to judicial discipline to follow binding precedents.