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TMI Blog2024 (6) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... lized the said credit availed on the specified services only for payment of duty on other dutiable products such as Phospho Gypsum, Sulphuric Acid and Phosphoric Acid, which are removed by the Appellant on payment of Central excise duty at normal rate. The restriction mentioned in Rule 6(5) of the CENVAT Credit Rules, 2004 is not applicable to the Appellant. Accordingly, the availment of CENVAT CREDIT of input services as provided under Rule 6(5) of the CENVAT Credit Rules, 2004 would not be a bar to avail the benefit of concessional rate of duty as provided under Notification No. 1/2011-CE. The Appellant is eligible for the concessional rate of duty @1% available in terms of the Notification No. 1/2011-CE. Accordingly, the demand of duty confirmed in the impugned order is set aside. Since, the duty demanded is not sustainable, the question of demanding interest and imposing penalty does not arise. The impugned order is set aside - appeal allowed. - SHRI ASHOK JINDAL, MEMBER (JUDICIAL) AND SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL) Shri Jnanesh Mohanty and Smt. Shreya Mundhra, Advocates for the Appellant Shri Prasenjit Das, Authorized Representative for the Respondent ORDER The prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t services which are exclusively used for manufacture of DAP NPK, which are removed from the factory on payment of duty at concessional rate of 1% in terms of the Notification No. 1/2011-CE. However, the Appellant has availed the credit of input services specified under Rule 6(5) of the CCR, 2004. In respect of the duty payable on manufacture of DAP NPK, the Appellant has paid the amount of duty in cash and not from the CENVAT Credit account maintained by them. Thus, the appellant's contention is that the input service credit has been utilized only towards payment of Central excise duty on the products, such as Phospho Gypsum, Sulphuric Acid and Phosphoric Acid and not on DAP or NPK. 3. On the basis of scrutiny of accounts of the Appellant by the audit during August 2012, a Show Cause Notice dated 16.06.2014 was issued to the appellant demanding differential Central Excise Duty of Rs.2,34,13,966/-. In the Notice, it has been alleged that the Appellant is not entitled to the benefit of 1% concessional rate under Notification No. 1/2011-CE since they had availed CENVAT Credit in respect of some common input services. Accordingly, the Notice alleged that the Appellant was liable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. V.M.Salgaonkar Bros Pvt. Ltd. [2008 (10) S.T.R. 609 (Tri.-Mum.)] 4.3. In view of the above, the Appellant submits that the finding in the impugned Order is legally not tenable and therefore, prayed for setting aside the demands confirmed in the order. 5. The Ld. Authorized Representative appearing for the Revenue reiterated the findings in the impugned order. 6. Heard both sides and perused the appeal documents. 7. We observe that the issue involved in this appeal is whether the Appellant is liable to pay excise duty on manufacture and clearance of Fertilisers, namely, Di-Ammonium Phosphates (DAP), Nitrogen Phosphorus and Potassium (NPK) on account of the alleged contravention of Notification No. 1/2011-CE dated 01.03.2011, when the Appellant has not utilized the CENVAT Credit on common input services under Rule 6(5) of the CENVAT Credit Rules, 2004 at the time of clearances of such fertilisers. 7.1. Notification No. 1/2011-CE, allows concessional rate of duty @1% to DAP NPK manufactured by the appellant subject to the condition that no CENVAT Credit on the inputs and input services is availed. The Appellant has contended that they have not availed any CENVAT Credit in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing contained in sub-rules (1), (2) and (3), creddit of the whole of Service Tax paid on taxable service as specified in sub-clauses (g), (p), (q), (r), (v), (w), (za), (zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) of clause (105) of Section 65 of the Finance Act shall be allowed unless such service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services. As per the said Rule, there is no bar to avail Cenvat credit on the services covered under Rule 6(5) by a unit who is engaged in the activity of manufacturing on both dutiable as well as exempted goods and engaged in dutiable as well as exempted services. Therefore, we hold that in this case the assessee is entitled to take the Cenvat credit of services referred in Rule 6(5) of Cenvat Credit Rules, 2004 for whole of the credit attributable to dutiable as well as final exempted products and for taxable or exempted services but the assessee is not entitled to take Cenvat credit attributable to the activity of trading as during the relevant time, the trading activity was neither excisable nor an exempted service at all. Therefore, the quantification of inadmiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit on such quantity of input service which is used in the manufacture of exempted goods, this being the plain stipulation contained in Rule 6(1). This is subject to Rule 6(5) which has an overriding provision which allows the availment of Cenvat credit in respect of certain specified taxable services unless they are used exclusively in or in relation to the manufacture of exempted goods. But the point to note is that merely because the Appellant manufactures exempted goods, that would be no justification to disallow to it the benefit of availing of Cenvat credit on that quantity of input service which is utilised in or in relation to the manufacture of dutiable final products. As we have noted earlier, the definition of the expression input service is cast in broad terms. The expression input service means any service used by the manufacture, whether directly or indirectly or in or in relation to the manufacture of final products. It is impossible to accept the hypothesis that would assert, that input services that are utilized by the Appellant in or in relation to the process of manufacture that takes place at Mumbai Offshore is not a service that is used by the manufacturer in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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