Case Law Details
Sabic Innovative Plastics India Pvt Ltd Vs C.C.E. & S.T. (CESTAT Ahmedabad)
Introduction: In the case of Sabic Innovative Plastics India Pvt Ltd Vs. C.C.E. & S.T., the Central Excise and Service Tax Appellate Tribunal (CESTAT) in Ahmedabad addressed a critical issue regarding the eligibility of CENVAT credit for Management Consultancy Services. The appellant, Sabic Innovative Plastics India Pvt Ltd, was subjected to a demand notice, challenging their CENVAT credit in relation to Management Consultancy Services received from a foreign entity.
Detailed Analysis: The core dispute revolved around whether the appellant, while providing taxable services, was also engaged in trading activities. The Revenue contended that the trading activities were exempted services, requiring the appellant to reverse CENVAT credit proportionately under Rule 6(1), Rule 6(2), and Rule 6(3) of the Cenvat Credit Rules, 2004.
However, the appellant argued that Management Consultancy Services fell under Rule 6(5) of the Cenvat Credit Rules, exempting them from the provisions of Rule 6(1), Rule 6(2), and Rule 6(3) of the Cenvat Credit Rules, 2004. Rule 6(5) specified that the credit for certain taxable services would be allowed unless those services were exclusively used in or in relation to the manufacture of exempted goods or providing exempted services.
The Tribunal examined the specific service, Management Consultancy Service, and concluded that it was covered under Rule 6(5). As a result, the CENVAT credit availed on Management Consultancy Services was exempt from the application of Rule 6(1), Rule 6(2), and Rule 6(3) of the Cenvat Credit Rules, 2004. Therefore, no reversal of CENVAT credit was required in this case.
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