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2009 (8) TMI 797 - AT - Central ExciseDemand - Cenvat credit - Rule 6(5) of Cenvat Credit Rules 2004 - Circular No. 137/203/07-CX-4 dated 1-10-2007 - the adjudicating Commissioner has made a distinction between taking Cenvat credit and utilization of credit and hence he has applied restriction of 20% in respect of duty paid capital goods and credit on specified services - Decided in favor of the assessee
Issues:
Restriction on utilization of credit in respect of capital goods and specified services under Rule 6(5) of Cenvat Credit Rules, 2004 for producing dutiable and exempted output services. Analysis: The appellant's representative argued that the adjudicating Commissioner wrongly restricted the utilization of credit for capital goods and specified services under Rule 6(5) by applying sub-rule 6(3)(c) of the Cenvat Credit Rules, 2004. The representative contended that sub-rule 6(3)(c) pertains only to input duty credit and does not apply to capital goods credit or credit for specified services covered under sub-rule 6(4) and Rule 6(5) respectively. The representative cited the Ministry of Finance Circular No. 137/203/07-CX-4 dated 1-10-2007 and a Tribunal decision in the case of M/s. Idea Cellular Ltd. v. CCE, Rohtak to support this argument. The representative requested a total waiver of the pre-deposit based on these grounds. The Joint CDR for the department acknowledged that the adjudicating Commissioner did not address the Board's Circular in the order. However, the Commissioner distinguished between taking Cenvat credit and utilizing credit, applying a 20% restriction on duty paid capital goods and specified services. Despite this, the department did not oppose the waiver of pre-deposit considering the Board's Circular and the Tribunal decision cited by the appellant. After considering arguments from both sides and reviewing the Board's Circular and the Tribunal decision, the Tribunal found that the appellants had a prima facie case in their favor. Consequently, the Tribunal waived the requirement of pre-deposit during the appeal's pendency.
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