M/S. U.V. Boards Ltd vs Cce, Chennai Ii
- CitationAppeal No. 201/2013
Ratio decidendi
The rule this decision rests on
The denial of CENVAT credit on a service charge tied to a bank guarantee cannot be sustained on a mechanical basis where the business necessity of availing banking services is evident and the tax component of the service has not been examined; the authorities must verify the service tax involved with the banker before disallowing the credit.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
(Arising out of Order-in-Appeal No. 201/2013 (M-II) dated 4.10.2013 passed by the Commissioner of Central Excise (Appeals), Chennai)
M/s. U.V. Boards Ltd. Appellant
Vs.
CCE, Chennai II Respondent
Appearance
Shri M.S. Krishna Kumar, Advocate, for the Appellant Shri B. Balamurugan, AC (AR) for the Respondent
CORAM
Honble Shri D.N. Panda, Judicial Member
Date of Hearing / Decision: 05.03.2015
Final Order No. 40193 / 2015
Learned counsel states that to provide guarantee by the banker in favour of the appellant, there was certain service charge incurred by M/s. Uniply Industries which is verifiable making enquiry with the banker. That Uniply Industries stood as guarantor for the appellant and issued a debit note to the appellant to meet the cost of the guarantee service. He therefore submits that this being attributable to the business, there should not be denial of input service credit.
2. Both the authorities below did not appreciate such factual aspect. However, entire amount of CENVAT credit disallowed was deposited during pendency of the appeal before learned Commissioner (Appeals).
3. Revenue supports the adjudication.
4. Heard both sides and also perused the records.
5. Availing of the bankers service in the business world is inevitable. Therefore, banking and financial services provided to the appellant through a guarantor may not be ruled out. Usually when guarantee is provided that has always been supported by a guarantor. It was left open to examine by the authorities below from the banker to ascertain the amount of service tax involved. Without such examination mechanical disallowance of CENVAT credit is unwarranted.
6. Appreciating the need of business to avail bank guarantee, appeal is allowed and stay application is disposed of. (Dictated and pronounced in open court)
(D.N. Panda) Judicial Member
Rex
2
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