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of <h1>High Court overturns Tribunal decision on Cenvat credit, directs detailed reasoning</h1> <h3>COMMISSIONER OF C. EX., PUDUCHERRY Versus CESTAT, CHENNAI</h3> The High Court set aside the Customs, Excise and Service Tax Appellate Tribunal's order regarding Cenvat credit availed by a manufacturer for services ... CENVAT Credit - input service - service received from M/s. Ambit Corporate Finance Ltd., Mumbai, for assisting sale of 5 units of M/s. Bright Brothers Ltd., at various places - case of Revenue is that the above service received by the head office of the 2nd respondent herein, had no nexus with the manufacturing activity of the 2nd respondent. Whether the CESTAT is correct in allowing the said credit without giving any finding as to how the said service qualifies as an input service, but on only the ground that the Commissioner (A) has not ruled out the relevancy of the service? - Held that:- The order of the Tribunal is a non-speaking order, with reference to what is claimed by the 2nd respondent and denied by the Department - Needless to state that CESTAT is the final fact finding authority, and obligated to consider the facts and circumstances of the case and arrive at a conclusion, instead of applying general principles. Going through the material on record, we are of the view that general principles in transfer of Units, have been applied by the Tribunal. The matter is remitted to CESTAT, Chennai, for consideration, on merits - appeal allowed by way of remand. Issues:Challenge to Final Order of Customs, Excise and Service Tax Appellate Tribunal regarding Cenvat credit availed by the manufacturer for services related to the sale of units, nexus of services with manufacturing activity, denial of credit, interest, and penalty imposition, rejection of appeal by Commissioner (Appeals), appeal before CESTAT, Chennai, substantial questions of law raised, interpretation of Rule 2(1) of Cenvat Credit Rules, 2004, non-speaking order by Tribunal, reference to previous legal judgments, remittal of the matter to CESTAT for fresh consideration.Analysis:The judgment involves a challenge to the Final Order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) regarding the availing of Cenvat credit by a manufacturer for services related to the sale of units. The issue revolves around the nexus of the services received with the manufacturing activity of the manufacturer. The Tribunal observed that the services provided by a management consultant to assist in the transfer of units included various aspects such as finding potential buyers and legal advisory services. The Tribunal noted that the relevance of the service was not ruled out by the Commissioner (Appeals), leading to the allowance of the appeal.The appellant raised substantial questions of law related to the interpretation of Rule 2(1) of the Cenvat Credit Rules, 2004 concerning the connection of the services with the manufacturing and clearance of final products. The appellant contended that the service in question did not qualify as an input service under the Rule. The Tribunal's order was deemed non-speaking as it lacked detailed reasons for the decision, merely stating the relevancy of the service in the circumstances of the case.In the judgment, reference was made to previous legal judgments emphasizing the necessity for appellate forums to provide valid reasons, discuss evidence, and give detailed explanations for their decisions. The Tribunal was criticized for applying general principles without thorough examination of the facts and evidence. As a final fact-finding authority, the Tribunal was expected to consider all aspects of the case and provide a reasoned decision.Ultimately, the High Court set aside the Tribunal's order, answering one substantial question of law in favor of the Revenue. The matter was remitted back to CESTAT for fresh consideration with specific reference to the grounds raised by the appellant. The High Court highlighted the importance of detailed reasoning in judicial decisions and directed CESTAT to pass orders in accordance with the law within a specified timeline. The civil miscellaneous appeal was allowed with no costs imposed.
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