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TMI Blog2011 (11) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... id on input services used in or in relation to their output services in accordance with the provisions of Cenvat Credit Rules, 2004. On scrutiny of the ST-3 returns filed by them for the period from October 2004 to March 2005 and April 2005 to September 2005, the department raised the following objections - (a) the appellant have taken Cenvat credit on the basis of the services received and invoices issued prior to 10-9-2004, the date on which the Cenvat Credit Rules, 2004 had been notified, (b) they have taken capital goods Cenvat credit on the inputs whose description is not mentioned in the ST-3 returns and also the capital goods which were received and installed outside the registered pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvoices bear the date and the department's allegation that some of the input service invoices do not contain date is factually incorrect, that the bulk of the Cenvat credit demand in the impugned order has been confirmed in respect of the credit availed on the basis of the invoices issued prior to 10-9-2004, that the only basis for the Commissioner's decision is that in terms of Rule 3(1) of Cenvat Credit Rules, 2004, the Cenvat credit of service tax paid on input services received could be taken only in respect of those input services received by a manufacturer of final product or provider of output services which were received on or after 10-9-2004 and the provisions of Rule 11(1) are not applicable, as during the period to 10-9-2004, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same existed during the period prior to 10-9-2004 or by a provider of output service under Service Tax Credit Rules, 2002 as the same existed during the period prior to 10-9-2004, and remaining unutilised on that day shall be allowed, that in view of this, the impugned order confirming the Cenvat credit demand alongwith interest in respect of the Cenvat credit availed on the basis of the invoices issued during the period prior to 10-9-2004 and imposing penalty on the appellant is not sustainable. 2.2 Shri Amresh Jain, the learned Senior Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner in it and emphasised that in view of clear provisions of Rule 3(1) of Cenvat Credit Rules, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category as that of output service, while the input services, in question, fall in different category and, hence, there was not question of the appellant having earned any service tax credit during the period prior to 10-9-2004. 6.1 Rule 3(1) of Cenvat Credit Rules, 2004 provides for Cenvat credit of Central Excise duty, education cess and other specified duties paid on inputs and capital goods and service tax and education cess paid on input services received by a manufacturer of final product or provider of output services on or after 10-9-2004. However, this sub-rule has to be readwith the transitional provisions of sub-rule (1) of Rule 11 which are reproduced below :- ''any amount of credit earned by a manufacturer under Cenvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit Rules, 2002, the Cenvat credit was available only in respect of those input services which were of the same category as that of output service is factually incorrect as these rules had been amended w.e.f. 14-5-2003 by Notification No. 5/2003-S.T. so as to permit Cenvat credit even in respect of those input services which were not falling in the same category as that of output service. In this regard, Rule 3(1) of Service Tax Credit Rules, 2002 as amended by Notification No. 5/2003-S.T., dated 14-5-2003 is reproduced below :- "Service Tax credit 3. [(1) An output service provider shall be allowed to take credit (hereinafter referred to as service tax credit) of the service tax paid on input service in the following manner, namely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner in the impugned order has not considered the amendment to Service Tax Credit Rules, 2002 by Notification No. 5/2003-S.T., dated 14-5-2003 and has proceeded on the assumption that during the period prior to 10-9-2004 service tax credit was available only in respect of those input services which fall in the same category of taxable service as that of output service, the impugned order is not sustainable. The matter, however, has to be remanded for ascertaining as to whether the input service invoices of period prior to 10-9-2004, when the input service and output service was not of same category, had been issued on or after 14-5-2003. 8. The impugned order is, therefore, set aside and the matter is remanded to the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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