ORDER
P.G. Chacko, Member (J)
1. The lower authorities have denied CENVAT credit amounting to over Rs. 12 lakhs to the assessee for the period Jan’05 to Aug’06 and have also imposed on them a penalty of Rs. 5000/-. After examining the records and hearing both sides, we note that the credit denied to the assessee is of the service tax paid on GTA service availed by the assessee for transporting raw materials from the supplier’s premises to their (assessee’s) job worker’s premises as also transporting finished goods from the job worker’s premises to the assessee’s depots/dealer’s premises. It appears that the finished goods which was manufactured by the job worker out of the above raw material on the assessee’s account were cleared from the job worker’s factory to the depots/dealers. Duty on the goods was paid by the job worker. According to the Revenue, only the job worker could avail CENVAT credit of input service tax. According to the appellants, they were entitled to the benefit inasmuch as the burden of duty paid by the job worker was ultimately borne by them. Counsel for the appellants and SDR for the Revenue have reiterated the rival contentions.
2. After considering the submissions, we note that the Revenue’s case is founded on the wording of Rule 3(1) of the CENVAT Credit Rules. It is submitted that only the manufacturer of finished goods can avail the benefit of CENVAT credit on inputs and input services. According to the Revenue, job worker is the manufacturer, who is entitled to the benefit.
3. According to the assessee, they are the principal manufacturer who, ultimately, shared the duty burden on the goods. After considering these submissions, we are of the prima facie view that the appellants are entitled to waiver of predeposit and stay of recovery inasmuch as, in the ultimately analysis, the whole exercise is revenue-neutral. The substantive issue will be considered at final hearing stage.
(Dictated and pronounced in open court)
