CENVAT credit of service tax — Input Services — Service rendered at customer site by subcontractor engaged by assessee — Part of payment received from customer by assessee paid to sub-contractor — Service tax paid on full payment from customer — Held: Service charge paid to sub-contractor has to be treated as paid towards services received by assessee qualifies as input service — assessee was entitled to take credit of service tax paid by such sub-contractors. Availment of CENVAT credit — Manuf<

Availment of CENVAT credit — Manufacturer also providing service — No separate account is required for credit of duty taken on input and input services — Credit taken of excise duty could be used for payment of service tax on services provided by assessee — Rule 3 of CENVAT Credit Rules, 2004.

The service centre of the respondents appointed two engineering firms to undertake repair services at the customer’s site. The said firms raised invoices on the respondents including service tax, who in turn after availing credit raised invoices on the customers for service charges plus service tax. Accordingly, the respondents took credit of service tax paid amounting to Rs.6,80,291 at their manufacturing unit and utilised the same for payment of excise duty. The Revenue contended that the services rendered by the engineering firms had no nexus with the services said to have been rendered by the respondents and therefore no credit can be taken of service tax paid by the firms. The respondents inter alia submitted that the services rendered by the engineering firms were input services in respect of services ultimately rendered by them to the ultimate customers. Moreover, the assessee was entitled to utilise CENVAT credit amount for the purpose of paying excise duty or the service tax, since the assessee was holding centralised registration.

Held:

The Tribunal held that the service tax paid by the engineering contract firms was rightly taken as credit by the respondents. Further, it was held that there was no violation in utilising the credit from the common kitty for payment of excise duty on goods manufactured and cleared by the respondents and for paying service tax on the services provided by the respondents.