CENVAT credit on subcontracted erection and installation services cannot be denied merely because the purchase order omits the subcontractor's name.

CENVAT credit on service tax paid to sub-contractors for erection, commissioning and installation work could not be denied where the input services were shown to be linked to the output service. The Tribunal held that execution through a sub-contractor, by itself, is not a valid ground to refuse credit, and the omission of the sub-contractor's name from the purchase order is not a mandatory or sufficient basis for disallowance. On the facts, the lower authority's reasons were found unsustainable, and the credit was held admissible.

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Issues: Whether CENVAT credit on service tax paid to sub-contractors engaged for erection, commissioning and installation work could be denied on the ground that the work was carried out through another person and the sub-contractor's name was not reflected in the purchase order.

Analysis: The appeal concerned denial of credit relating to services used in execution of the appellant's output service. The Tribunal found that the appellant had furnished correlation between the input services and the output services, and that the mere fact that the work was subcontracted could not justify denial of credit. It further held that the absence of the sub-contractor's name in the purchase order was not a mandatory or legally sufficient basis to disallow credit. On the facts, the reasons recorded by the lower authority were held to be unsustainable.

Conclusion: CENVAT credit could not be denied on these grounds and the appellant was entitled to the credit.

Ratio Decidendi: Where input services are demonstrably linked to the output service, credit cannot be denied merely because the work was executed through a sub-contractor or because the purchase order does not name the sub-contractor.

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