2024 (6) TMI 759 - AT - Central Excise

CESTAT allows CENVAT credit on scientific technical consultancy services despite revenue's technology trading claims

CESTAT Ahmedabad allowed the appeal regarding denial of CENVAT credit on scientific technical consultancy services. The revenue denied credit claiming ... CENVAT Credit - input services - Scientific & technical consultancy services - denial of credit on the ground that since the appellant have carried out the trading of technology, hence, not provided any output service - HELD THAT:- In the present case, the Cenvat Credit on Scientific & technical consultancy services were denied and ordered to be recovered in terms of Rule, 14 on the ground that since the appellant have carried out the trading of technology, hence, not provided any output service. Therefore, they are not eligible for Cenvat Credit on scientific and technical consultancy services. The very same issue has been considered by this Tribunal in the appellant’s own case UNIMED TECHNOLOGIES LTD VERSUS C.C.E. & S.T. -VADODARA-II [2023 (12) TMI 1324 - CESTAT AHMEDABAD] where it was held that 'it cannot be correct to say that the service provided by the SPIL was not used by the appellant. The revenue’s argument is that the entire service was provided on the date of invoice is totally fallacious and illogical. Thus, we hold that the appellants received and consumed the service while they were participating in the development of technology by supervising and monitoring the same.' Accordingly, following the Tribunal’s decisions in the appellant’s own case, the appellant are entitled for the Cenvat Credit on scientific and Technical consultancy services. Accordingly, impugned order is set aside - appeal allowed. Issues:1. Denial of Cenvat Credit on scientific and technical consultancy services for trading technology.2. Admissibility of Cenvat Credit for output service.3. Interpretation of input service and export of services.4. Settlement of issue based on previous Tribunal decisions.Analysis:The case involved the appellant engaged in manufacturing pharmaceutical products and providing various services under the Finance Act, 1994. The appellant availed Cenvat credit on duty paid on inputs and service tax on input services. However, during an audit, it was found that the appellant wrongly utilized Cenvat credit on scientific and technical consultancy services for non-taxable services, i.e., trading technology. A Show Cause Notice was issued, leading to an Order-In-Original confirming the demand of Cenvat credit, penalty, and interest. The appellant appealed, arguing that previous Tribunal decisions settled the issue of admissibility of Cenvat credit for similar cases.The appellant contended that denial of Cenvat credit was based on the premise that the output service was merely trading technology, not a service, hence ineligible for Cenvat credit. Referring to previous Tribunal orders in their case, the appellant argued that the issue was settled, and they should be allowed the credit. The revenue, represented by the Assistant Commissioner, reiterated the findings of the impugned order.Upon considering the submissions, the Tribunal noted that the issue had been previously addressed in the appellant's case. The Tribunal analyzed the nature of the input service, export of services, and the appellant's involvement in supervising and monitoring the development of technology. It was observed that the appellant's active participation in the development process constituted the use of the service, making them eligible for the credit. The Tribunal emphasized that the services were not merely exported without utilization by the appellant.Based on the Tribunal's findings in the appellant's previous cases and the active involvement of the appellant in utilizing the input services, the impugned order denying the Cenvat credit was set aside, and the appeal was allowed. The Tribunal held that the appellant was entitled to the Cenvat credit on scientific and technical consultancy services, aligning with the decisions in the appellant's previous cases. The judgment was pronounced in favor of the appellant on 04.06.2024.