Commissioner of Central GST and Central Excise Vs Dish TV India Limited (Bombay High Court)
The Bombay High Court dismissed an appeal filed by the tax department against an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) which had set aside a service tax demand raised on account of alleged wrongful availment of Cenvat Credit on imported smart cards. The assessee, engaged in providing broadcasting services, imported smart cards and availed Cenvat Credit on the countervailing duty paid. These smart cards were sent free of cost to a set-top box (STB) manufacturer for pairing and testing before being inserted into STBs, which were later purchased by the assessee. The department alleged that the smart cards were cleared “as such” without reversal of credit under Rule 3(5) of the Cenvat Credit Rules, 2004, contending that the activity did not qualify as job work and amounted to manufacture. CESTAT allowed the assessee’s appeal, holding that the pairing and testing of smart cards constituted permissible job work or further processing under Rule 4(5)(a), and therefore did not require reversal of credit. The High Court agreed, observing that no manufacturing activity was carried out on the smart cards and that the processing undertaken was essential for their end use. It held that Rule 4(5)(a) was wide enough to cover such testing and pairing, and that credit need not be reversed in such cases. The Court found that the issues raised were factual and had been adequately examined by the Tribunal, and that no substantial question of law arose for consideration. Consequently, the appeal was dismissed.
