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2024 (6) TMI 1010 - AT - Service TaxIssues Involved: 1. Demand of Rs. 11,12,41,507/- based on Rule 6(3A) of the Cenvat Credit Rules, 2004. 2. Demand of Rs. 5,27,86,789/- for Cenvat Credit taken for services used in laying pipelines. Summary: Issue 1: Demand of Rs. 11,12,41,507/- based on Rule 6(3A) of the Cenvat Credit Rules, 2004 The Appellants were issued a Show Cause Notice for taking Cenvat Credit for services utilized for the transportation of CBM gas through pipelines, alleging that this amounted to taking credit for both exempted goods and taxable services. The Adjudicating Authority dropped the demand of Rs. 11,12,41,507/-, holding that Rule 6 of the Cenvat Credit Rules, 2004 had been misinterpreted. The Revenue appealed, arguing that Rule 6(3) applies even when exempted goods are manufactured and supplied along with taxable services. The Tribunal upheld the Adjudicating Authority's decision, noting that the Appellant was only compressing CBM for transportation, not manufacturing CNG. The Tribunal also considered a verification report from the Assistant Commissioner, which concluded that the Appellant's activities did not amount to manufacturing CNG. Consequently, the Tribunal rejected the Revenue's appeal. Issue 2: Demand of Rs. 5,27,86,789/- for Cenvat Credit taken for services used in laying pipelines The Adjudicating Authority disallowed the Cenvat Credit of Rs. 5,27,86,789/- taken for services used in laying pipelines. The Appellant argued that the credit was taken only for services utilized in the transportation of gas and not for the extraction of CBM. The Appellant cited several case laws, including *Rastriya Ispat Nigam Ltd. vs. CCE, Cus & S.T., Visakhapatnam* and *Mundra Ports & Special Economic Zone Ltd. v. CCE & Cus.*, to support their claim that Cenvat Credit is admissible for services used in laying pipelines. The Tribunal agreed with the Appellant, setting aside the demand on merits. Additionally, the Tribunal found that the demand for the extended period was time-barred, as the Appellant was registered with the Service Tax Department and had been reflecting the Cenvat Credit in their ST-3 Returns. Consequently, the Tribunal allowed the Appellant's appeal and set aside the confirmed demand of Rs. 5,27,86,789/-. Conclusion: The Tribunal rejected the Revenue's appeal concerning the demand of Rs. 11,12,41,507/- and allowed the Assessee's appeal regarding the demand of Rs. 5,27,86,789/-, with consequential relief as per law.
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