Appellant entitled to claim CENVAT credit on service tax paid by job worker, including material cost.

The appellant was entitled to avail CENVAT credit on service tax paid by the job worker for job work, including material cost. The Member (Judicial) held that the appellant could claim the credit regardless of the service provider's payment correctness. Since the service provider opted to pay tax on the entire value, including material cost, without exemption, the appellant was allowed to avail the credit. The decision emphasized the service provider's discretion in choosing the tax payment method under service tax law, leading to the appellant's eligibility for the credit. The impugned order was overturned, and the appellant's appeal was successful.

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Issues:
Whether the appellant is entitled to avail CENVAT credit on service tax paid by the job worker for job work including material cost.

Analysis:
The case involved the appellant engaged in manufacturing excisable goods and paying excise duty, with job work done by a job worker who paid service tax on the entire value of the service, including the material cost. The department denied the CENVAT credit on the service tax attributed to the material cost, citing exemption Notification No. 12/2003-ST.

Appellant's Argument:
The appellant's counsel argued that the appellant rightfully availed the CENVAT credit, emphasizing that the recipient cannot question the correctness of service tax payment by the service provider. Several judgments were cited to support this position.

Revenue's Position:
The Deputy Commissioner representing the Revenue reiterated the findings of the impugned order.

Decision and Reasoning:
After considering the submissions and records, the Member (Judicial) concluded that the appellant is entitled to the CENVAT credit. The decision was based on two main points: firstly, the appellant is entitled to the credit regardless of the service provider's payment correctness, and secondly, the service provider is required to pay service tax on the gross value of the service, including the material cost. The Member highlighted that the service provider's choice to pay tax on the entire value, including material cost, without opting for exemption, allows the recipient to avail the credit. Unlike the Central Excise Act, the service tax law does not compel availing exemption notification, giving the service provider the liberty to choose the tax payment method. Therefore, the service tax paid on the gross value, including material cost, cannot be disputed, and consequently, the appellant's eligibility for CENVAT credit stands. The impugned order was set aside, and the appeal was allowed.

This detailed analysis of the judgment clarifies the issues involved, the arguments presented by both sides, and the reasoning behind the decision, ensuring a comprehensive understanding of the legal aspects discussed in the case.

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