2023 (9) TMI 299 - AT - Service Tax

Utilization of CENVAT Credit from the common pool of Cenvat credit - input and inputs service related to manufacturing of goods for payment of service tax on output service when the assessee is involved in both manufacturing as well as service providing - HELD THAT - This issue is no more res-integra as the same haz been decided in various decisions which have been considered in the judgment in the case of COMMISSIONER OF CENTRAL EXCISE, NASHIK VERSUS GRAPHITE INDIA LTD. 2017 (2) TMI 155 - CESTAT MUMBAI , where it was held that the respondent has rightly paid the service tax from a common pool of Cenvat credit. Thus, the issue is no more res-integra as it has been decided that utilisation of credit for payment of service tax is permissible. Therefore, the demand in the present case cannot be sustained - impugned order set aside - appeal allowed.

Summary

Issues involved:
The issue involved is whether the appellant is eligible to utilize Cenvat credit of input and inputs service related to manufacturing of goods for payment of service tax on output service when the assessee is involved in both manufacturing as well as service providing.

Comprehensive details of the judgment:

Issue 1:
The appellant, engaged in manufacturing and providing output service of renting immovable property, utilized Cenvat credit for service tax payment. The department disallowed the credit, demanding service tax and imposing penalties. The appellant contended that there is no bar for utilizing credit related to manufacturing for service tax payment. The Tribunal referred to precedents and ruled that maintaining a consolidated Cenvat account for both activities is permissible, as per Rule 3 of Cenvat Credit Rules, 2004. The Board's circular also supported this practice. Thus, the appellant rightfully paid service tax from the common pool of Cenvat credit. The appeal was allowed, setting aside the demand.

Final Decision:
The Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the demand for service tax payment. The judgment highlighted the permissibility of utilizing Cenvat credit from a common pool for payment of service tax, emphasizing the absence of any explicit requirement for separate accounts for manufacturing and service activities. The decision was based on legal provisions, precedents, and a Board circular supporting the practice of maintaining a consolidated Cenvat account for both manufacturing and service activities.