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CENVAT Credit: Input to Output

CENVAT Credit Upheld for Input Services

A recent ruling has confirmed that CENVAT credit cannot be denied for input services used for output service. The decision underscores the principle that such credit is a substantive right and cannot be denied due to the nature of the service.

A business that has availed input services for an output service. You've claimed CENVAT credit for the service tax paid on these input services. But the authorities are questioning your claim, arguing that such services are not eligible for CENVAT credit. This was the scenario in a recent case. The court, however, ruled in favor of the business. It held that CENVAT credit cannot be denied for input services used for output service. The court emphasized that the credit is a substantive right under Rule 3(1) of the CENVAT Credit Rules, 2004, and cannot be denied due to the nature of the service. So, if you're in a similar situation, keep this ruling in mind. It underscores your right to claim CENVAT credit, regardless of the type of service you've availed.

Court Name : CESTAT Ahmedabad

Parties : Ifb Industries Limited Vs C.S.T.

Decision Date : 28 July 2023

Judgement ref : Service Tax Appeal No. 12551 of 2013-SM

Final Order No. A/ 11622 /2023

DATE OF HEARING: 28.03.2023

DATE OF DECISION: 28.07.2023

RAMESH NAIR

This appeal is directed against Order-In-Appeal dated 31.05.2013

whereby Commissioner (Appeals) upheld the demand of Cenvat Credit of Rs.

4, 06,163/- and corresponding interest and penalty. The appellant being

aggrieved with the said impugned order filed the present appeal.

2. Shri Pulak Kumar Saha, Learned Chartered Accountant appearing on

behalf of the appellant submits that the appellant is a branch of IFB

Industries Limited. Through this branch the appellant are providing the

repair & maintenance service to the individual customer of IFB Industries

Limited on which they are paying service tax, they are also availing cenvat

credit and various expenditures incurred in respect of Advertisement

expense, Telephone bills, Bank charges, Insurance etc. These services were

used for providing output service, therefore, the cenvat credit is rightly

availed by the appellant. The lower authorities have denied the cenvat credit only on the ground that since the appellant’s service unit is part of their Goa unit, therefore, they cannot separately operate as independent service provider. Hence, the cenvat credit cannot be availed.

2.1 He submits that as regard the payment of service tax by the appellant

branch is not under dispute therefore, the credit should not be denied.

3. Shri Ajay Kumar Samota, Learned Superintendent (AR) appearing on

behalf of the Revenue reiterates the finding of the impugned order.

4. I have carefully considered the submissions made by both sides and

perused the records. I find that even though the appellant service tax

registration is on the common PAN based but the appellant have taken

separate registration for their Ahmedabad service branch. They are also

discharging service tax on the output service of repair and maintenance of

equipment and appliances of IFB Industries Limited. Therefore, once the

department has 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. Accordingly, in my considered view, the appellant

is entitled for the cenvat credit amount of Rs. 4,06,163/.

5. Hence, the demand of such cenvat credit and corresponding interest

and penalty are set aside. Appeal is allowed in above terms.

(Pronounced in the open court 28.07.2023)

RAMESH NAIR

MEMBER (JUDICIAL)

---------------------------------------------------------------------------

Customs, Excise & Service Tax Appellate Tribunal

West Zonal Bench At Ahmedabad

REGIONAL BENCH- COURT NO. 3

Service Tax Appeal No. 12551 of 2013-SM

(Arising out of OIA-99-2013-STC-SKS-COMMR-A-AHD dated 31/05/2013 passed by

Commissioner of Service Tax-SERVICE TAX - AHMEDABAD)

Ifb Industries Limited ……..Appellant

202 Maruti Crystal Opposite Rajpath Club

S G Highway Bodakdev

AHMEDABAD

GUJARAT

VERSUS

C.S.T.-Service Tax – Ahmedabad ……Respondent

7 th Floor, Central Excise Bhawan, Nr. Polytechnic

Central Excise Bhavan, Ambawadi,

Ahmedabad, Gujarat - 380015

APPEARANCE:

Shri Pulak Kumar Saha, Chartered Accountant appeared for the Appellant

Shri Ajay Kumar Samota, Superintendent (AR) for the Respondent

CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR

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CENVAT Credit Upheld for Input Services

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<img src="https://thakurani.sgp1.digitaloceanspaces.com/media/editor_images/e7187d85-19c3-4f5c-adaa-877a4d4c44f5.jpg"> A business that has availed input services for an output service. You've claimed CENVAT credit for the service tax paid on these input services. But the authorities are questioning your claim, arguing that such services are not eligible for CENVAT credit. This was the scenario in a recent case. The court, however, ruled in favor of the business. It held that CENVAT credit cannot be denied for input services used for output service. The court emphasized that the credit is a substantive right under Rule 3(1) of the CENVAT Credit Rules, 2004, and cannot be denied due to the nature of the service. So, if you're in a similar situation, keep this ruling in mind. It underscores your right to claim CENVAT credit, regardless of the type of service you've availed. <img src="https://thakurani.sgp1.digitaloceanspaces.com/media/editor_images/2793d491-08ec-4138-9444-34997299f553.jpeg"> Court Name : CESTAT AhmedabadParties : Ifb Industries Limited Vs C.S.T.&nbsp;Decision Date : 28 July 2023Judgement ref : Service Tax Appeal No. 12551 of 2013-SM Final Order No. A/ 11622 /2023 DATE OF HEARING: 28.03.2023DATE OF DECISION: 28.07.2023 RAMESH NAIR This appeal is directed against Order-In-Appeal dated 31.05.2013 whereby Commissioner (Appeals) upheld the demand of Cenvat Credit of Rs.4, 06,163/- and corresponding interest and penalty. The appellant being aggrieved with the said impugned order filed the present appeal. 2. Shri Pulak Kumar Saha, Learned Chartered Accountant appearing on behalf of the appellant submits that the appellant is a branch of IFB Industries Limited. Through this branch the appellant are providing the repair &amp; maintenance service to the individual customer of IFB IndustriesLimited on which they are paying service tax, they are also availing cenvat credit and various expenditures incurred in respect of Advertisement expense, Telephone bills, Bank charges, Insurance etc. These services were used for providing output service, therefore, the cenvat credit is rightly availed by the appellant. The lower authorities have denied the cenvat credit only on the ground that since the appellant’s service unit is part of their Goa unit, therefore, they cannot separately operate as independent service provider. Hence, the cenvat credit cannot be availed. 2.1 He submits that as regard the payment of service tax by the appellant branch is not under dispute therefore, the credit should not be denied. 3. Shri Ajay Kumar Samota, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. I have carefully considered the submissions made by both sides and perused the records. I find that even though the appellant service tax registration is on the common PAN based but the appellant have taken separate registration for their Ahmedabad service branch. They are also discharging service tax on the output service of repair and maintenance of equipment and appliances of IFB Industries Limited. Therefore, once the department has 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. Accordingly, in my considered view, the appellant is entitled for the cenvat credit amount of Rs. 4,06,163/. 5. Hence, the demand of such cenvat credit and corresponding interest and penalty are set aside. Appeal is allowed in above terms. (Pronounced in the open court 28.07.2023) RAMESH NAIR MEMBER (JUDICIAL) ---------------------------------------------------------------------------Customs, Excise &amp; Service Tax Appellate TribunalWest Zonal Bench At AhmedabadREGIONAL BENCH- COURT NO. 3Service Tax Appeal No. 12551 of 2013-SM(Arising out of OIA-99-2013-STC-SKS-COMMR-A-AHD dated 31/05/2013 passed by Commissioner of Service Tax-SERVICE TAX - AHMEDABAD)Ifb Industries Limited ……..Appellant202 Maruti Crystal Opposite Rajpath ClubS G Highway BodakdevAHMEDABADGUJARATVERSUS C.S.T.-Service Tax – Ahmedabad ……Respondent7 th Floor, Central Excise Bhawan, Nr. PolytechnicCentral Excise Bhavan, Ambawadi,Ahmedabad, Gujarat - 380015APPEARANCE:Shri Pulak Kumar Saha, Chartered Accountant appeared for the Appellant Shri Ajay Kumar Samota, Superintendent (AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR

<img src="https://thakurani.sgp1.digitaloceanspaces.com/media/editor_images/e7187d85-19c3-4f5c-adaa-877a4d4c44f5.jpg"> A business that has availed input services for an output service. You've claimed CENVAT credit for the service tax paid on these input services. But the authorities are questioning your claim, arguing that such services are not eligible for CENVAT credit. This was the scenario in a recent case. The court, however, ruled in favor of the business. It held that CENVAT credit cannot be denied for input services used for output service. The court emphasized that the credit is a substantive right under Rule 3(1) of the CENVAT Credit Rules, 2004, and cannot be denied due to the nature of the service. So, if you're in a similar situation, keep this ruling in mind. It underscores your right to claim CENVAT credit, regardless of the type of service you've availed. <img src="https://thakurani.sgp1.digitaloceanspaces.com/media/editor_images/2793d491-08ec-4138-9444-34997299f553.jpeg"> Court Name : CESTAT AhmedabadParties : Ifb Industries Limited Vs C.S.T. Decision Date : 28 July 2023Judgement ref : Service Tax Appeal No. 12551 of 2013-SM Final Order No. A/ 11622 /2023 DATE OF HEARING: 28.03.2023DATE OF DECISION: 28.07.2023 RAMESH NAIR This appeal is directed against Order-In-Appeal dated 31.05.2013 whereby Commissioner (Appeals) upheld the demand of Cenvat Credit of Rs.4, 06,163/- and corresponding interest and penalty. The appellant being aggrieved with the said impugned order filed the present appeal. 2. Shri Pulak Kumar Saha, Learned Chartered Accountant appearing on behalf of the appellant submits that the appellant is a branch of IFB Industries Limited. Through this branch the appellant are providing the repair & maintenance service to the individual customer of IFB IndustriesLimited on which they are paying service tax, they are also availing cenvat credit and various expenditures incurred in respect of Advertisement expense, Telephone bills, Bank charges, Insurance etc. These services were used for providing output service, therefore, the cenvat credit is rightly availed by the appellant. The lower authorities have denied the cenvat credit only on the ground that since the appellant’s service unit is part of their Goa unit, therefore, they cannot separately operate as independent service provider. Hence, the cenvat credit cannot be availed. 2.1 He submits that as regard the payment of service tax by the appellant branch is not under dispute therefore, the credit should not be denied. 3. Shri Ajay Kumar Samota, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. I have carefully considered the submissions made by both sides and perused the records. I find that even though the appellant service tax registration is on the common PAN based but the appellant have taken separate registration for their Ahmedabad service branch. They are also discharging service tax on the output service of repair and maintenance of equipment and appliances of IFB Industries Limited. Therefore, once the department has 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. Accordingly, in my considered view, the appellant is entitled for the cenvat credit amount of Rs. 4,06,163/. 5. Hence, the demand of such cenvat credit and corresponding interest and penalty are set aside. Appeal is allowed in above terms. (Pronounced in the open court 28.07.2023) RAMESH NAIR MEMBER (JUDICIAL) ---------------------------------------------------------------------------Customs, Excise & Service Tax Appellate TribunalWest Zonal Bench At AhmedabadREGIONAL BENCH- COURT NO. 3Service Tax Appeal No. 12551 of 2013-SM(Arising out of OIA-99-2013-STC-SKS-COMMR-A-AHD dated 31/05/2013 passed by Commissioner of Service Tax-SERVICE TAX - AHMEDABAD)Ifb Industries Limited ……..Appellant202 Maruti Crystal Opposite Rajpath ClubS G Highway BodakdevAHMEDABADGUJARATVERSUS C.S.T.-Service Tax – Ahmedabad ……Respondent7 th Floor, Central Excise Bhawan, Nr. PolytechnicCentral Excise Bhavan, Ambawadi,Ahmedabad, Gujarat - 380015APPEARANCE:Shri Pulak Kumar Saha, Chartered Accountant appeared for the Appellant Shri Ajay Kumar Samota, Superintendent (AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR

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CENVAT Credit Upheld for Input Services