Availment of CENVAT credit of Service Tax Eligible for Input Services even if Small quantity is Used in manufacture of Exempted Goods u/r 6(5) of CCR: CESTAT [Read Order]

The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit can be availed even if the part of the service was used about the manufacture of exempted goods under rule 6(5) of the CENVAT Credit Rules(CCR), 2004 and there was no stipulation that the services should be availed exclusively in the manufacture of dutiable goods. 

DCW Ltd, the respondent-assessee was engaged in operation and maintenance service and for the transport of coal by goods transport agency for generation of electricity and steam in the coal-fired 50 MW ‘captive power plant’ installed for consumption in the factor. 

The revenue appealed against the order passed by the Commissioner of Central Excise (Appeals) for denying the retention of CENVAT credit which was availed by the assessee. 

P K Acharya, the counsel for the department contended that the adjudicating authority had not granted the benefit of CENVAT credit on the ground that such a portion of CENVAT credit was exclusively used for production of exempted activity of electricity production. 

S Gupta and Mehul Jivani, the counsels for the assessee contended that in the case of Union Of India Versus Heg Ltd, the court held that CENVAT credit was eligible for Capital goods used in power plants even when the major portion of electricity generated was sold and the CENVAT credit should be allowed for services falling under Rule 6(5) of CENVAT Credit Rules. 

The Bench observed that section 6(5) of CCR outlined the various categories of input services on which the assessee can avail the entire amount of credit even if some quantity of the same is used in the manufacture of exempted goods. 

The two-member bench comprising Ajay Sharma (Judicial) and C J Mathew (Technical) held that the assessee was eligible to avail of CENVAT credit while dismissing the appeal filed by the revenue. 

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates