M/S. Gestamp Sungwoo Automotive vs Commissioner Of Central Excise, ...
- CitationAppeal No.242/2013 (M-IV), dated 14.11.2013 passed by the Commissioner of Central Exci
Ratio decidendi
The rule this decision rests on
The Tribunal's reasoning rests on the following propositions, in the order taken. Service tax paid on a taxable service that is integrally connected with the manufacture of the appellant's goods, where the value of that service was included in the assessable value of the goods and duty was paid on the aggregate value, is available as Cenvat credit to the manufacturer; the denial of such credit is not sustainable where the nexus between the service and the manufacturing activity is established and the revenue does not dispute that the service was provided and tax suffered. Service tax paid on housekeeping or cleaning services utilised for maintenance of the manufacturing area is admissible as Cenvat credit, since maintenance of a clean industrial environment in the factory is an obligation under the Factories Act and the service therefore has the requisite connection with manufacture. Where a manufacturer has availed only 50% of the capital goods credit in the year of acquisition, and the 100% credit in that year was not admissible under the law, the manufacturer is liable to pay interest on the erroneously availed 50%; interest is payable on the credit wrongly taken in the year of acquisition, notwithstanding that it was reversed. Where the manufacturer has reversed 50% of the capital goods credit and the revenue does not dispute that reversal, no further reversal of the balance 50% is required.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-in-Appeal No.242/2013 (M-IV), dated 14.11.2013 passed by the Commissioner of Central Excise (Appeals), Chennai]
M/s. GESTAMP SUNGWOO AUTOMOTIVE (CHENNAI) PVT. LTD. APPELLANT
Versus
COMMISSIONER OF CENTRAL EXCISE, CHENNAI-IV RESPONDENT
Appearance:
For the Appellant Shri M. Karthikeyan, Adv.
For the Respondent Shri K.P. Muralidharan, AC (AR)
CORAM:
Honble Shri D.N. Panda, Judicial Member
Date of hearing/decision 27-10-2015
FINAL ORDER NO. 41592 / 2015
On behalf of the appellant, it is submitted that there are three issues involved in this appeal. First issue relates to service tax paid in respect of certain work carried out through the job worker. There is no dispute by Revenue that taxable service was provided to the appellant and that suffered service tax. The tax so suffered was paid by appellant and claimed that as Cenvat credit. But department's contention is that service tax ought to have been paid by job worker and appellant was not entitled to Cenvat credit. 1.2 Dispute is on the very narrow compass. When there is an integral connection between the service tax paid in respect of service availed with the manufacturing activity of the appellant, denial of benefit of Cenvat credit of service tax paid is inconceivable. Appellant explains that the job worker has returned the goods on challan availing appropriate exemption benefit. There is no dispute on the valuation of the goods. Appellant further explains that value of services was included in the assessable value of the goods manufactured by the appellant and was paid on the aggregate value of the goods consisting cost of manufacture as well as services. The excess duty paid was subject to set off of Cenvat credit of service tax paid. In view of the inextricable link established between the services as well as manufacture of output, appellant succeeds on this count.
2. The second dispute relates to Housekeeping Services utilised for maintenance of the manufacturing area. There should not be dispute on such aspect because it is obligation of employer under the Factories Act to keep the industrial environment clean in the factory. Cenvat credit of the tax paid on Cleaning Services entitles the appellant to Cenvat credit thereof. Therefore, appellant also succeeds on this count. 3.1 The third count of demand relates to interest levied on the claim of 100% capital goods credit in the year of acquisition. Appellant says that availing 50% of the credit in the year of acquisition of capital goods credit, the other 50% was reversed since it has realized that it is not entitled to take credit thereof in the year of acquisition but in subsequent year. 3.2 Revenue's contention is that 100% capital goods credit not being admissible in the year of acquisition of capital goods, the appellant committed error in law. Therefore, not only it has to reverse the credit but also shall pay interest. 3.3 Revenue's contention is correct as is the law relating to capital goods credit. Appellant is, therefore, Appellant is directed to pay the interest amount as demanded by Revenue on the erroneous credit of 50% of capital goods credit availed in the year of acquisition. 3.4 Reversal of 50% of the capital goods credit having been made and not disputed by Revenue, no further reversal is required in so far as the balance 50% is concerned.
4. Appeal is allowed to the extent indicated above.
(Dictated and pronounced in open court)
(D.N. PANDA) JUDICIAL MEMBER
ksr 30-10-2015
DRAFT Remarks
I II III
Date of dictation 27.10.2015
Draft Order - Date of typing 28.10.2015
Fair Order Typing 30.10.2015
Date of number and date of dispatch 30.11.2015
2 E/40369/2014
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