By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Whether services provided on job work basis and exempted under Notification No. 8/2005 – ST are considered as “Exempted Services” for the purpose of Rule 6 of CENVAT Credit rules, 2004 requiring reversal of CENVAT Credit? Held, No.
Facts:
The Appellant was engaged in undertaking a job work by way of electroplating/painting on the semi-finished goods and claimed exemption in service tax vide Notification No. 8/2005 – ST. The Appellant availed the credit of service tax on various services so received for their job work and utilised the same for payment of service tax on taxable services provided by them. The Revenue contended that Appellant is providing taxable as well as exempted services hence cannot utilise CENVAT Credit more than 20% of the tax payable in terms of the provisions of Rule 6 of the CENVAT Credit Rules (CCR).
Held:
The Hon’ble Tribunal held that clearances effected in terms of the provisions of Notification No. 8/2005-S.T. cannot be held to be exempted clearance so as to invoke the provisions of Rule 6(2) of CCR. It further held that, this issue is no more res integra and stands decided by the Larger Bench of the Tribunal in the case of Sterlite Industries India Ltd. vs. CCE 2005 (183) ELT 353 (Tri- Mum.)(LB) wherein it was held that if no duty was payable in respect of goods manufactured in terms of Notification No. 214/86, i.e., job work Notification, the final product cannot be held to be exempted so as to attract the provisions of the erstwhile Rule 57CC inasmuch as the Notification No. 214/86 is pari materia to Notification No. 8/2005-S.T., the ratio of the said decision would apply.
Note: Readers may note that, same principal is also applicable in the case of exemption granted in Entry 30(c) of the mega exemption Notification No. 25/2012-ST dated 20-06-2012.
