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May 2011

(2011) 21 STR 695 (Tri.-Mumbai) — Multi Organics Pvt. Ltd. v. Commissioner of Central Excise, Nagpur.

By Puloma Dalal, Jayesh Gogri Chartered Accountants
Reading Time 2 mins
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Job worker paid service tax on the services rendered to the principal manufacturer — Processed goods used for manufacture of final product and duty paid on finished goods — CENVAT credit allowed by preferring later decision of the two contradictory decisions.

Facts:
The assessee appealed against the denial of CENVAT credit of the service tax paid by their job worker in the common order of the Commissioner (Appeals). However, the said order held the demand to be time-barred and also refrained from imposing penalty u/s. 11AC. This was challenged in the Revenue’s appeal.

Held:
The Tribunal observed that the Department relied on Bombay Dyeing & manufacturing Co. Ltd. v. Commissioner, [2001 (135) ELT 1392 (Tribunal)] which is contradictory to the decision relied on by the appellants in SPIC (HCD) Ltd. v. Commissioner of Central Excise, Chennai, [2006 (201) ELT 386 (Tri- Chennai)] for granting CENVAT credit for the service tax paid by the job worker. According to one of the well-established tenets of judicial discipline, where there are contradictory decisions of two Coordinate Benches, the later one would prevail. Therefore the view taken in the SPIC (HCD) Ltd. would be appropriate precedent. The assessee’s appeal for CENVAT credit of service tax paid by job worker to be allowed. Consequently, the Revenue’s appeal was dismissed.

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