- Compulsorily availment of exemption not made applicable to service tax (CCE Vs. Federal Mogul TPR India Ltd., Bangalore 2016 (42) S.T.R. 427 (Kar.)
- Background:Assessee engaged in activity of chrome plating on job work basis. Job work charges exempted from ST if excise duty paid on final products by principal manufacturer. The assessee did not claim ST exemption, availed credit and charged service tax on job work charges. Manufacturer claimed credit of service tax charged by job worker. Department contended that exemption needs to be claimed compulsorily by job worker.
- Issue: Is it compulsory to claim unconditional exemption under service tax law?
- Decision: Sec5A(1A) of Central Excise Act requires compulsory availment of unconditional exemption.This section has not been made applicable to Finance Act, 1994. Also, there is no specific provision akin to Section 5A(1A) in Finance Act. Hence, no compulsion to claim exemption under ST law.
Comment: Notification No. 25/2012-ST contains similar exemption. This judgment is expected to bring an end to unnecessary disputes requiring compulsory availment of exemption notification.Many times it may be beneficial not to claim exemption especially in cases where it results in breakage of Cenvat chain.
ADVANCE RULLING
- No service tax on Incentives/Volume discounts received from media owner (M/s AKQA MEDIA INDIA PVT LTD 2016-TIOL-14-ARA-ST)
- Background: Media agency providing services to advertisers charging appropriate service tax. Media vendors (where advertisement displayed) pay incentive/volume discounts at the end of period.
- Issue: Whether ST is applicable on incentive given by media owner to media agency?
- Decision:Held thatin absence of any contractual obligation between Applicant and Media Owners, the incidental receipt of incentives/volume discounts shall not be considered as consideration for providing any service. It is gratuitous payment, not liable to service tax.
TRIBUNAL
- Credit is not deniable of duty paid on inputs even if process carried out on these inputs does not amounts to manufacture (Jindal StanlessSteerway Ltd Vs CCE, Raigad 2016 (335) E.L.T. 57 (Tri-Mumbai)
- Background: Assessee had availed credit of duty paid on inputs on which process carried out does not amounts to manufacture. Department contended that credit cannot be taken as the process carried out is not manufacturing.
- Issue: Whether Credit could be taken even if there is no manufacturing?
- Decision: It was held that as per Rule 16 of CER, 2002 credit is not deniable on duty paid input even if process carried out on these inputs does not amount to manufacture and same can be utilized for the payment of duty on the processed goods.
- Duty paid on inputs used in repair and maintenance of the capital goods which further used in the manufacturing of goods is eligible to credit (Ganga KishanSahkariChini Mills Ltd. Vs CCE, Meerut. 2016 (335) E.L.T. 99 (Tri.- ALL.)
- Background: Appellant availed credit of duty paid on inputs used in repair and maintenance of capital goods. Department contented that inputs are not being used in the manufacturing of excisable goods and hence credit cannot be taken.
- Issue: Whether credit is eligible on inputs used in repairing of capital goods?
- Decision: It was held that no final product can be manufactured without repair and maintenance and up keep of capital goods and hence inputs required for up keep and maintenance of capital goods are eligible for credit.