CA Bimal Jain
The Department denied the Cenvat credit on the ground that Shree Cement Ltd. (the Appellant) is not entitled to take Cenvat credit on Service tax on cargo handling service which has been distributed to them by their head office prior to start of production.
The Hon’ble CESTAT, New Delhi, held that a plain reading of Rule 3 and Rule 7 of the Credit Rules clarifies that there would be no restriction if assessee avails Cenvat credit on procurement of inputs/input services prior to start of manufacture. In fact, without procuring some inputs/ inputs services, the Appellant cannot start manufacturing activity. Hence, the Appellant has correctly availed the Cenvat credit of input services prior to initiation of manufacturing activity.
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