CENVAT Credit Allowable on Inputs Used for Manufacturing of Final Products which are Exempted from Excise Duty: CESTAT Quashes Demand of CENVAT Credit [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the CENVAT Credit demand imposed on the assessee for the manufacturing of final products that are exempted from excise duty. 

Neo Structo Construction Ltd, the appellant assessee was engaged in the Erection Commissioning and Installation Service, Management, Maintenance and Repair Service, Manpower Recruitment and Supply Agency Service, and Goods Transport Agency Service. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand for service tax on Erection Commissioning and Installation Services, Management, Maintenance and Repair Services, Manpower Recruitment, and Supply Agency Services, and demand for reversal of CENVAT Credit availed by the assessee on these services obtained from the sub-contractors. 

Jigar Shah and Amber Kumrawat, the counsels for the assessee contended that the assessee is entitled to the benefit of Notification and pointed out that the assessee are job worker therefore, they are entitled to avail the benefit of Notification which exempts job workers from payment of excise duty subject to conditions. 

Also submitted that the assessee appellant is not liable to pay service tax and is exempt from central excise duty still they are entitled to the CENVAT credit. 

Ashok Thanvi, the counsel for the department contended that since the activity of the assessee did not attract service tax, the appellant could not have availed the CENVAT credit on input service used for their output service in terms of Rule 6(1) and 6(2) of CENVAT Credit Rules, 2004. 

The Bench observed that the assessee is not liable for payment of Central Excise duty and the benefit of CENVAT credit had been allowed. 

The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) quashed the demand of reversal of CENVAT Credit utilized on input service used for their output service rendered by the assessee while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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