2013 (11) TMI 1456 - AT - Service Tax

Demand of service tax - Availment of CENVAT Credit - Beneft of Notification No. 30/2004-CE & 29/2004-CE both dt. 09/07/2004 - Business auxiliary services - Cross utilisation of credit on inputs and input services by the same manufacturer - Whether the appellant is doing both the activities of manufacturing dutiable goods and providing dutiable services - Held that - after reversal of credit of inputs lying in the appellants factory premises on 01.07.2007 there was still unutilised credit in appellant s cenvat credit account. Which can be on account of cenvat credit accumulated and lying with the appellant with respect to capital goods received by the appellant Once appellant is undertaking the activity of manufacturing of excisable goods and clearing a part of it on payment of duty and also paying service tax on the service rendered by the appellant the cenvat credit lying in the cenvat credit account can be utilised for payment of both the Central Excise duty and the service tax liability as Rule 3(1) & 4 of the Cenvat Credit Rules clearly prescribes that cenvat credit taken by the appellant can be used for payment of tax for any service - Decided in favour of assessee.

Summary

Issues:
- Demand of service tax paid by appellant using accumulated cenvat credit
- Benefit of Notifications No. 30/2004-CE & 29/2004-CE
- Rejection of claim by first Appellate Authority
- Appellant's argument of availing benefits of both notifications
- Interpretation of circular regarding cross-utilization of credit
- Appellant switching from dutiable scheme to full exemption scheme
- Utilization of cenvat credit for discharging service tax liability
- Appellant maintaining separate records for clearance of goods
- Applicability of Cenvat Credit Rules, 2004
- Cross utilization of credit of excise duty and service tax

Analysis:
The appeal involved a dispute over the demand of service tax paid by the appellant using accumulated cenvat credit under Notifications No. 30/2004-CE & 29/2004-CE. The first Appellate Authority rejected the claim, stating that the accumulated credit lapsed due to availing full exemption under Notification No. 30/2004-CE. The appellant argued that they were simultaneously benefiting from both notifications and relied on relevant case laws. The revenue contended that the credit lapsed on switching to full exemption. The Tribunal analyzed the appellant's intimation to the Revenue, noting the switch to full exemption and reversal of credit for inputs. The Tribunal found that the appellant maintained separate records for clearance of goods and services, indicating simultaneous activities. The Tribunal referenced the Cenvat Credit Rules, highlighting the permissibility of using cenvat credit for both excise duty and service tax liabilities.

The Tribunal observed that the Cenvat Credit Rules did not mandate separate accounts for manufacturers providing services. Citing case law, it emphasized the common pool concept for utilizing credit for different purposes. The Tribunal noted the format of returns permitted cross-utilization of excise duty and service tax credits. Ultimately, the Tribunal held that the appellant, engaged in both manufacturing and service provision, could use cenvat credit for both Central Excise duty and service tax liabilities. Accordingly, the appeal was allowed, emphasizing the permissibility of utilizing credit for various tax liabilities as prescribed by the Cenvat Credit Rules.