The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal( CESTAT ) has held that the manufacturers of excisable goods can take credit of CENVAT paid on input services and there is no bar on utilization of CENVAT credit availed.
M/s. Larsen & Toubro Limited, the appellant had provided taxable services under the category of ‘Consulting Engineering Services” and “Supply of Tangible Goods Services” during the period from October 2011 to March 2012 for a total value of Rs.2,22,75,660/- and discharged Service Tax of Rs.26,68,059/- by utilizing CENVAT Credit on inputs, capital goods and input services, which was available to them as a manufacturer of those goods under the Central Excise Act, 1944.
Show Cause Notice dated 14.07.2015 was issued alleging wrong utilization of CENVAT Credit towards payment of Service Tax on output services and the Assistant Commissioner of Central Excise, Customs & Service Tax disallowed the CENVAT Credit of Rs.26,68,059/- under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 .Further ordered for recovery along with appropriate interest and penalty was imposed under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.
On Appeal, theCommissioner(Appeals) upheld the Adjudication Order and rejected the Appeal before him on the ground that the CENVAT Credit which has been utilized for payment of Service Tax on output service has been availed as a manufacturer and should have been utilized for payment of duties related to manufacture of excisable goods and not for payment of Service Tax payable on output services provided by the Appellant.
A Coram of Shri P K Choudhary, member(judicial) observed that “in terms of Rule 3(1) a manufacturer or producer of final products or a provider of taxable service shall be allowed to take creditof 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. “
The Tribunal observed that the 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 and there is no requirement of one-to-one correlation. The appeal of the assessee was allowed.
Shri Avra Majumdar &Binayau Gupta, both Advocates appeared for the Appellant and Shri S. Mukhopadhyay, Authorized Representative appeared for the Respondent.
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