Cenvat credit on input services upheld where prior final orders bind department, leading to cancellation of related demand and penalties.

Denial of Cenvat credit on specified input services was overturned because identical issues in the assessee's earlier and later periods were finally decided in the assessee's favour and the department did not appeal those orders; the Tribunal applied the principle that final orders operate as binding precedent and the department cannot take a contrary stance for the same assessee. Consequently the primary demand based on disallowed credit was held unsustainable, and associated interest and penalty contingent on that demand were also set aside; the appeal allowed with consequential relief.

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Issues: Whether the denial of CENVAT credit availed on input services (C&F agents, renting of office/godown after sale, and AMC of computers and air conditioners) and consequent demand, interest and penalty is sustainable.

Analysis: The Tribunal examined the departmental orders and tribunal decisions for earlier and subsequent periods concerning the same assessee and identical issue. The analysis focusses on (a) whether the impugned disallowance departs from earlier departmental and tribunal rulings which have attained finality, and (b) whether the services in question were used in relation to manufacture and thus eligible for CENVAT credit under the legal framework comprising Rule 14 and Rule 15(1) of the Cenvat Credit Rules, 2004 and Sections 11A and 11AA of the Central Excise Act, 1944. The Tribunal noted that identical issues were decided in favour of the assessee in the appellant's own matters for previous and subsequent periods, those decisions have not been appealed by the department and have attained finality (as evidenced by RTI). Having regard to settled principle that the department cannot adopt contrary stands on the same issue for the same assessee and that past final orders and tribunal rulings operate as binding precedent for the matter at hand, the Tribunal held that the impugned order diverges from those binding conclusions. In consequence, the primary demand based on denial of CENVAT credit could not be sustained; once the demand is held unsustainable, interest and penalty contingent on that demand cannot subsist.

Conclusion: The impugned order insofar as it denies CENVAT credit on the specified input services and confirms demand, interest and penalty is set aside; the appeal is allowed in favour of the assessee with consequential relief, if any, as per law.

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