In a case, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT)Kolkata bench held that Larsen & Toubro Limited, the appellant can utilize common Cenvat Credit account for payment of Service Tax on output services provided by them. It was observed that there is no bar on the utilization of CENVAT credit availed on input services for payment of tax on excisable goods so manufactured and cleared.
The appellant challenged the impugned order wherein utilization of Cenvat Credit was disallowed to the appellant for payment of service tax on the output service provided by them. The appellant is a manufacturer of excisable goods and also providing consulting engineering service and supply of tangible goods services. During the impugned period 2007-08 to 2011-12, the appellant utilized Cenvat Credit lying in their Cenvat Credit account for payment of service tax for the output service provided by them.
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The Revenue viewed hat as the Cenvat Credit on input service is lesser than the Cenvat Credit utilized by the appellant for payment of output service. Therefore, the appellant is not entitled to utilize Cenvat Credit account for payment of service tax on output taxable services. The proceedings were initiated against the appellant and demands were raised.
Counsel for the appellant submitted that in their own case for the subsequent period this Tribunal has decided the issue and allowed utilization of Cenvat Credit for payment of Service Tax on output service provided by them reported in (2023) 2 Centax 305 (Tri-Cal).
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It was evident that a manufacturer of excisable goods can take credit of CENVAT paid on input services and there is no such requirement for one to one co-relation and there is no bar on the utilization of CENVAT credit availed on input services for payment of tax on excisable goods so manufactured and cleared.
С.В.Е. & C. vide Letter F. No. 381/23/2010/862, dated 30-3-2010, clarified that Cenvat credit on inputs, capital goods and Input services which are used for manufacture of goods or for provision of services is available in a common pool and can be used for payment of Excise duty and/or Service Tax. Credit accumulated by the service provider or manufacturer on the input services availed as well as inputs is available for payment of Excise duty or Service Tax. Any contra view taken would defeat the very scheme of credit.
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It has been held in numbers of cases that as far as the inputs or input services are availed on payment of duty and as long as they are capable of being used in the provision of Service Tax and manufacture of excisable goods, credit can not be denied and that there is no requirement of one-to-one correlation.
In the case of CCE v. S.S. Engineers 2016 it was observed that “Cenvat credit of input services-utilization thereof cross utilization no infirmity in Tribunal findings that the said credit can be utilized for payment of excise duty on goods manufactured by assessee and that such cross-utilization is neither barred nor prohibited accounting problems in such cases has been taken care of in CBEC circular dated 30-3-2010 aforesaid interpretation of Cenvat Credit Rules by Tribunal being probable and possible, is not perverse No substantive question of law, having been raised, Revenue’s appeal dismissed Rule 3 and 7 of Cenvat Credit Rules/2004.”
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The two-member bench of Shri Ashok Jindal, Member (Judicial) and Shri Rajeev Tandon, Member (Technical) held that the appellant can utilize common Cenvat Credit account for payment of Service Tax on output services provided by them. The bench set aside the whole of the demand raised against the appellant.
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