Agrawal Metal Works Pvt. Ltd. Vs Commissioner of Central Goods Respondent & Service Tax and Central Excise (CESTAT Delhi)
The appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi concerned a dispute relating to Cenvat credit and the treatment of job work activities undertaken by the appellant. The appellant is engaged in the manufacture of Copper, Brass, and Phosphor Bronze sheets, strips, foils and similar products falling under tariff headings 7409 and 7410 of the First Schedule to the Central Excise Tariff Act, 1985. In addition to manufacturing its own products, the appellant also undertakes job work conversion for customers.
An Excise Audit was conducted for the period covering the financial years 2016–17 and 2017–18. During the audit, the department took the view that the job work activity carried out by the appellant constituted an “exempted service.” According to the audit observations, the appellant had availed Cenvat credit on common input services used both for manufacturing dutiable excisable goods cleared on payment of duty and for providing what the department described as “exempted service” in the form of job work manufacturing. The audit further noted that the appellant did not maintain separate accounts for the receipt, consumption, and inventory of input services used in job work activities. As a result, the department concluded that the appellant was required to pay an amount equal to 7.5% of the value of the alleged exempted job work services provided during the period from December 2016 to June 2019.
