2007 (6) TMI 137 - Commissioner - Service Tax

Once the services are covered u/r 6(5) CCR, then separate accounts of dutiable and exempted services are not required to be maintained The word allowed covers both taking and utilization so Revenue s contention of denial of utilization of credit is baseless

Summary

Issues:
- Appeal against Order-in-Originals confirming demand, interest, and penalty under the Finance Act, 1994 and Cenvat Credit Rules, 2004.
- Applicability of Rule 6(3) and Rule 6(5) of the Cenvat Credit Rules, 2004.
- Interpretation of provisions regarding credit utilization and restrictions.
- Arguments based on case laws and judgments.
- Hearing and submissions made by the appellants.
- Decision on setting aside the Order-in-Originals in all three cases.

Analysis:
1. The appeals were filed by two companies against the Order-in-Originals confirming demands, interest, and penalties under the Finance Act, 1994, and Cenvat Credit Rules, 2004. The companies were found to have contravened Rule 6(3)(c) by utilizing common input services for both taxable and non-taxable services, exceeding the permissible limit of credit utilization.

2. The show cause notices issued to the appellants raised concerns about the wrongful utilization of Cenvat credit, recovery of interest, and imposition of penalties under the relevant sections of the Finance Act. The appeals sought relief by requesting a stay on the Orders-in-Originals and waiver of demands and penalties pending appeal disposal.

3. The appellants argued that the restrictions under Rule 6(3)(c) applied only to credit on input services not specified in Rule 6(5). They relied on various judgments to support their contentions during the personal hearing held on the matter.

4. The Commissioner examined the arguments presented by the appellants and the department. It was noted that the credit taken by the appellants was on services covered under Rule 6(5) of the Cenvat Credit Rules, 2004. The Commissioner analyzed the provisions and concluded that Rule 6(3) was not applicable to the services mentioned under Rule 6(5), as indicated by the term "notwithstanding."

5. Additionally, the Commissioner addressed the department's argument regarding credit utilization, emphasizing that the rule allowed for both taking and utilization of the credit. The rationale behind the rule was discussed, drawing parallels with Cenvat credit rules for goods to clarify the issue.

6. Consequently, the Commissioner allowed the appeals of the appellants and set aside the Orders-in-Originals in all three cases. The decision was based on a clear interpretation of the law and the provisions outlined in the judgment, providing relief to the appellants based on the legal analysis conducted during the proceedings.