2018 (10) TMI 627 - AT - Central Excise

CENVAT Credit of Krishi Kalyan Cess - utilization of such credit for payment of Krishi Kalyan Cess paid on renting of immovable property service - Held that - The appellant is not only the manufacturer of excisable goods but also provider of services namely renting of removable property therefore the appellant is working in the capacity of manufacturer as well as service provider - As per Rule 3 (1) (a) of CCR provider of output services is allowed to take the Cenvat Credit the service Tax of the Krishi Kalyan Cess. As per facts the appellant are providing output services that is Renting of immovable as property as the service provider and according to Rule 3(1)(a) the Cenvat Credit of Krishi Kalyan Cess is admissible to the appellant as per Clause(d) of Rule 3(7). The said credit of Krishi Kalyan Cess is allowed to be utilized only for payment of Krishi Kalyan Cess on taxable service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availing Cenvat Credit on Krishi Kalyan Cess paid on inputs service
- Utilization of Cenvat Credit for payment of Krishi Kalyan Cess on output service
- Entitlement of manufacturer for Cenvat Credit on Krishi Kalyan Cess paid on inputs service

Analysis:
The appellant, engaged in manufacturing Copper excisable goods, availed Cenvat Credit for inputs and inputs service, including Krishi Kalyan Cess. The department contended that the manufacturer was not entitled to Cenvat Credit on Krishi Kalyan Cess paid on inputs service. The appellant argued that they used the credit only for paying Krishi Kalyan Cess on output service, Renting of immovable property. They referred to Cenvat Credit Rules and GST migration details to support their claim.

The Deputy Commissioner representing the Revenue supported the department's stance. However, the tribunal analyzed the situation, noting that the appellant operated as both a manufacturer and a service provider. Referring to Rule 3(1)(a) of the Cenvat Credit Rules, the tribunal highlighted that a provider of output services could claim Cenvat Credit on Krishi Kalyan Cess. The tribunal emphasized that the appellant, providing output services like Renting of immovable property, was eligible for such credit under Rule 3(7)(d). The tribunal clarified that the credit could only be used for Krishi Kalyan Cess on taxable services, not for Excise Duty or Service Tax.

After considering both parties' arguments and reviewing the records, the tribunal concluded that the appellant was entitled to Cenvat Credit on Krishi Kalyan Cess. The tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The judgment was dictated and pronounced in open court, resolving the issue in favor of the appellant.