Tribunal allows credit for paints used in dual capacity, setting aside Revenue objection

The Tribunal allowed the appeal, finding that the appellant, engaged in both manufacturing and service provision, was justified in availing credit for paints cleared to themselves for providing services. The Tribunal rejected the Revenue's objection, stating that the appellant's dual capacity allowed for credit use without a one-to-one correlation. The impugned order was set aside, and the appeal was allowed with consequential relief on 20/09/2019.

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Issues:
Availment of credit for paints cleared by the manufacturer for providing maintenance and repair services.

Analysis:
The appellant, engaged in manufacturing paints and providing maintenance services, cleared paints for a contract with HPCL. They paid excise duty on the paints and availed credit for the duty paid. The dispute arose regarding the credit availed by the appellant for paints cleared to themselves for providing services at HPCL. The appellant argued that being paint manufacturers, they were entitled to credit even if they cleared paints to themselves. The Revenue objected, claiming that the credit was not exclusively used for service tax payment but also for excise duty on cleared paints. The appellant contended that once entitled to credit, no one-to-one correlation was required, citing various Tribunal decisions to support their position.

The Tribunal found that the appellant acted in dual capacity as a manufacturer and service provider. They cleared goods on duty payment as a manufacturer and availed credit for further use in service tax or excise duty payment. The Tribunal rejected the Revenue's contention and allowed the appeal, stating that the appellant's actions were justified. The impugned order was set aside, and the appeal was allowed with consequential relief. The decision was pronounced in open court on 20/09/2019.

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