2017 (2) TMI 155 - AT - Service Tax

Reversal of CENVAT credit - service tax paid by utilising the cenvat credit availed from a common pool - whether an assessee is a manufacturer as well as service provider can maintain a consolidated cenvat account in respect of input and input services used for both the activities and pay the excise duty and service tax from such consolidated account? - Held that - the credit of either excise duty paid on input or service tax paid on the input services have been termed as cenvat credit and the said cenvat credit is allowed to be utilised either for payment of excise duty or for payment of service tax. In the said provisions, there is no explicit condition that for manufacture and services separate account has to be maintained. Therefore in the absence of any such restriction or prohibition, the assessee is free to maintain a consolidated cenvat account and discharge the excise duty as well as the service tax liability from such common pool. The Board in the letter F.No. 381/23/2010/862 dated 30.03.2010 states that the utilisation of cenvat credit from common pool for payment of excise duty and/or service tax is permissible. The respondent has rightly paid the service tax from a common pool of cenvat credit - appeal dismissed - decided against Revenue-appellant.

Summary

Issues involved:
1. Whether an assessee engaged in both manufacturing and providing services can maintain a consolidated cenvat account for payment of excise duty and service tax from a common pool.

Analysis:
The case involved a respondent engaged in manufacturing activities and providing various services, availing cenvat credit for inputs and input services used in both manufacturing and services. The dispute arose when the revenue claimed that separate cenvat accounts should be maintained for manufacturing and services, arguing against cross-utilization of cenvat credit. The Commissioner (Appeals) had allowed the appeal, setting aside the demand imposed by the adjudicating authority.

The revenue contended that separate cenvat accounts were necessary due to distinct inputs and services for manufacturing and services. However, the respondent cited various judgments and a Board circular supporting cross-utilization of cenvat credit between manufacturing and services. The issue centered on whether an assessee could maintain a consolidated cenvat account for both activities.

The Tribunal examined Rule 3 of Cenvat Credit Rules, 2004, which allowed cenvat credit for excise duty and service tax, without mandating separate accounts for manufacturing and services. The absence of explicit restrictions supported the respondent's right to maintain a consolidated cenvat account. The judgments cited by the respondent and the Board circular further reinforced this position.

The Board's circular emphasized the permissibility of utilizing cenvat credit from a common pool for excise duty and service tax payments. In light of the legal provisions and precedents, the Tribunal upheld the impugned order, affirming the respondent's right to pay service tax from a common cenvat credit pool. The revenue's appeal was dismissed, and the impugned order was deemed correct and legal.