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Exemptions under Service tax are optional unlike Section 5A of the CEA

Service Tax - By: - Bimal jain - Dated:- 10-8-2015 - Dear Professional Colleagues, We are sharing with you an important judgement of the Hon ble High Court of Karnataka in the case of Commissioner of Central Excise Vs. Federal Mogul TPR India Ltd. [2015 (8) TMI 308 - KARNATAKA HIGH COURT] on the following issue: Issue: Whether it is justified on the part of job worker to pay Service tax on its activity despite of Exemption Notification available under the Finance Act, 1994 ( the Finance Act ) an .....

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basis under cover to material movement challans without reversing the Cenvat credit availed thereon. After completion of the process of chrome plating, FMGIL had returned the same to the Respondent under cover of an invoice on payment of Service tax on the value of job work charges. Subsequently on receipt of such job worked goods, FMTPR after undertaking various manufacturing processes cleared the same on payment of duty and accordingly availed Cenvat credit of the Service tax so passed on by F .....

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discharged by the principal manufacturer. Accordingly, the Department denied availment of Cenvat credit to the Respondent, of the amount of Service tax so paid by FMGIL on the ground that FMGIL being a job worker without availing the benefit of Exemption Notification had paid Service tax and thus irregularly passed on the benefit of Cenvat credit to FMTPR. Later on, the demand was upheld by the Ld. Commissioner. However, on appeal being filed to the Hon ble Tribunal, the Hon ble Tribunal decide .....

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n precedent. The applicability of the Exemption Notification shall be subject to the condition stipulated therein i.e., the principal manufacturer discharging the liability of appropriate duty of Excise on the manufactured goods; Mandatory requirement of not to pay the duty of Excise on goods exempted under Section 5(A)(1A) of the Excise Act is not found in Section 93 of the Finance Act; Absence of Section 5A of the Excise Act in Section 83 of the Finance Act, indicates that the provisions of Se .....

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