Case Law Details
Commissioner of Customs Vs Jeans Knit (P) Ltd (CESTAT Bangalore)
Introduction: The Customs Excise and Service Tax Appellate Tribunal (CESTAT) in Bangalore has recently ruled on refund claims of unutilized CENVAT credit, specifically concerning Service Tax paid on various input services. The Commissioner (A) had previously found that these input services were used in or in relation to the manufacture of finished goods. This article provides an in-depth analysis of the case and the CESTAT’s decision to uphold the refund.
Background of the Case: The case, titled “Commissioner of Customs vs. Jeans Knit (P) Ltd,” revolves around the refund claims of unutilized CENVAT credit for input services on which Service Tax was paid. The key issue is whether these input services were genuinely related to the manufacture of finished goods.
The Commissioner’s Decision: The Commissioner (A) had initially dismissed the appeals filed by the Revenue concerning Customs Appeal No.456 to 459 and 1146/2011, stating that the input services were indeed used in or in relation to the manufacture of finished goods. However, the Revenue challenged this decision on the grounds that the input services were not legally and properly used in manufacturing.
The Respondent’s Argument: The respondent, Jeans Knit (P) Ltd, argued that they were eligible to claim CENVAT credit on the input services and were rightly entitled to the refunds under Rule 5 of the Cenvat Credit Rules, 2004. They pointed out that in earlier periods, where refund claims were rejected, the Tribunal had ruled in their favor. They also cited a change in the definition of ‘input service’ that expanded the scope for availing credit. Additionally, they referred to a judgment by the High Court of Karnataka in a similar case.
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