The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the discharge of service tax on output service of repair, maintenance of equipment and appliances by the service provider was eligible to avail CENVAT credit.
IFB Industries Limited, the appellant assessee appealed against the order passed by the Commissioner (Appeals) for upholding the demand of CENVAT Credit availed by the assessee and for the imposition of interest and penalty.
Pulak Kumar Saha, the counsel for the assessee contended that the branch the assessee is providing the repair & maintenance service to the individual customer of IFB Industries Limited on which they are paying service tax and they are also availing CENVAT credit and various expenditures incurred in respect of Advertisement expense, Telephone bills, Bank charges, Insurance, etc.
Further submitted that these services were providing output service, therefore, the CENVAT credit was rightly availed by the assessee and the demand raised by the department was not as per the law and liable to be deleted.
Ajay Kumar Samota, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee’s service unit was part of their Goa unit and they cannot separately operate as an independent service provider and thus the CENVAT credit cannot be availed.
The Bench observed that the assessee was discharging the service tax on the output service of repair and maintenance of equipment and appliances and once the department had accepted the payment of service tax on their output service, the CENVAT credit cannot be denied on the input services which are used for providing output service.
A single-member bench comprising Ramesh Nair (Judicial) quashed the demand for CENVAT credit and the penalty while allowing the appeal filed by the assessee.
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