2019 (4) TMI 1414 - AT - Central Excise

Utilization of CENVAT Credit - case of Revenue is that cenvat credit availed by them has been utilized by them towards payment of Central Excise Duty on Pre-stressed Sleepers which has no nexus with the manufacturing activity - HELD THAT - The cross utilization of credit on input and input services and capital goods is permitted by law - the assessee has rightly taken the cenvat credit and utilized a part of the same as there is no bar in cross utilization. Appeal dismissed - decided against Revenue.

Issues:
- Interpretation of the definition of 'input service' under Rule 2(l) (ii) of Cenvat Credit Rules, 2004.
- Utilization of cenvat credit for payment of central excise duty on manufactured products.
- Cross utilization of credit on input services and capital goods.
- Validity of the impugned order and rejection of the Department's appeal.

Interpretation of 'input service':
The case involved a dispute regarding the eligibility of cenvat credit amounting to Rupees 45,99,035/- on input services availed by the appellant. The Revenue contended that the credit was utilized for central excise duty on Pre-Stressed Sleepers, which lacked nexus to the final product. The adjudicating authority held that the appellant was not engaged in the manufacture of exempted goods/services, contrary to the Revenue's claim. The Commissioner (Appeals) upheld the Order-in-Original, rejecting the Revenue's appeal. The appellant argued that they were engaged in both manufacturing excisable goods and providing exempted Works Contract services to the railway, maintaining a single cenvat register. The appellant's defense was supported by legal precedents allowing cross utilization of credit on input services and capital goods.

Utilization of cenvat credit:
The Commissioner (Appeals) found that the appellant had not irregularly availed cenvat credit, as supported by the Tribunal's decision permitting cross utilization of credit on input and input services, in line with Rule 3 of Cenvat Credit Rules, 2004. The Commissioner cited precedents where cross utilization of credit for payment of excise duty on manufactured goods was deemed permissible. The appellant's utilization of cenvat credit for Renting of Immovable Property, where their office was located, was deemed lawful. The impugned order was sustained, dismissing the Revenue's appeal due to the lack of any infirmity.

Cross utilization of credit:
The Commissioner (Appeals) referenced legal decisions, including CCE, Pune Vs. SS Engineers, where cross utilization of cenvat credit for payment of excise duty on manufactured goods was deemed acceptable. The Tribunal's interpretation of Cenvat Credit Rules allowed for maintaining a consolidated cenvat account for both manufacturing and service activities, enabling payment of excise duty and service tax from a common pool. The absence of explicit restrictions on maintaining separate accounts for manufacturing and services indicated the permissibility of cross utilization.

Validity of the impugned order:
After hearing both parties and reviewing the records, the Tribunal found no infirmity in the impugned order. The Commissioner (Appeals) had appropriately considered all contentions raised by the Department and concluded that the demand raised by the Revenue was unsustainable in law. The Tribunal upheld the impugned order, dismissing the Revenue's appeal and affirming the decision that the appellant had not irregularly availed cenvat credit. The appeal was rejected, and the impugned order was sustained.

Conclusion:
The judgment addressed the issues of interpreting 'input service,' cenvat credit utilization, cross utilization of credit, and the validity of the impugned order. It highlighted the legal precedents supporting the appellant's position on cross utilization of credit and the lawful utilization of cenvat credit for Renting of Immovable Property. The Tribunal upheld the impugned order, dismissing the Revenue's appeal based on the lack of any infirmity in the decision.

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