2017 (6) TMI 464 - AT - Service Tax

Tribunal overturns Commissioner order on Cenvat Credit demand, emphasizes tax acceptance and job worker assessment.

The Tribunal allowed the appeal, setting aside the Commissioner's order that confirmed a demand for Cenvat Credit with interest and penalty. The Tribunal ... Cenvat Credit - Levy of service tax on job-work - The Revenue felt that the process at the job workers end involved complete manufacture of excisable goods and Service Tax was not applicable in terms of N/N. 08/2005-ST dt. 01.03.2005 as amended by the Notification No.19/2005-ST dt.07.06.2005 - whether the assessment at the end of supplier/job worker can be contested or reopened at the receiving end? - Held that: - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE & CUSTOMS Versus MDS SWITCHGEAR LTD. [2008 (8) TMI 37 - SUPREME COURT ], where it was held that quantum of duty already determined by the jurisdictional officers of the supplier unit cannot be challenged by revenue in charge of recipient unit. N/N. 8/2005-ST is a conditional notification and its availment was not mandatory - the job workers were not obliged to avail the said exemption. Appeal allowed - decided in favor of appellant. Issues:Appeal against demand of Cenvat Credit for payment of Service Tax to job workers for manufacturing intermediate products.Analysis:The appellant availed Cenvat Credit against Service Tax paid to job workers for manufacturing intermediate products. Revenue contended that job workers' process constituted complete manufacture of excisable goods, hence Service Tax was not applicable. Show cause notice issued, demand of Rs. 4,59,579/- confirmed with interest and penalty. Appellant's appeal rejected, leading to the current appeal.Arguments - Appellant:Appellant supplied Tin Sheets to job workers for coating and printing, received coated sheets to manufacture containers for tea packing. Job workers paid bills with Service Tax, appellant availed Cenvat Credit. Appellant argued job workers' assessment by different authorities cannot be questioned. Referred to relevant case laws supporting their position.Arguments - Revenue:Revenue supported the Commissioner's findings, citing a relevant case law.Judgment:Tribunal found show cause notice premise flawed, Commissioner erred in not considering settled law that assessment at job workers' end cannot be challenged at receiving end. Cited Supreme Court case emphasizing Department's acceptance of Service Tax without protest prevents denying Cenvat Credit. Tribunal also highlighted a case where Department's failure to inform about non-applicability of Service Tax on final products precluded denying Cenvat Credit. Noted Notification No.8/2005-ST was not mandatory, job workers not obliged to avail exemption. Ld. Commissioner's order set aside, appellant's appeal allowed.