TMI Blog2020 (7) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 6-7-2020 - HON'BLE MR. ANIL CHOUDHARY, JUDICIAL MEMBER AND HON'BLE MR. P. ANJANI KUMAR, TECHNICAL MEMBER Appearance: Ms. Meetika Baghel, Advocate For the Appellant Mr. P. Gopakumar, Jt. Commr. (AR) For the Respondent Per : ANIL CHOUDHARY Dell India Pvt. Ltd. (DIPL) presently known as Dell International Services India Ltd. is a SEZ unit at Sriperumbudur for manufacturing various computer systems. They have got centralized registration under Service Tax under the category Management, Maintenance and Repair Service, Erection, Commissioning and Installation Service, Business Auxiliary Service and Information Technology Software Service. 2. Appellant availed service tax credit on several input services during the period 2008-09 and filed a rebate claim in respect of export of taxable service under BAS, stating that they could not utilize the credit availed for payment of service tax, due to the export of services. In response to query appellant further clarified that the input services have been consumed in marketing in pre-sale and support services activities, among others. The summary of input credit availed/utilized was filed along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount paid in credit as reflected in the ST3 returns 170614239 170611239 Total tax paid both cash and credit 254771738 257078319 Total credit availed during 08-09 143897308 257705172 Total credit utilized during 08-09 170710292 170611238 Credit Reversed under Rule 6(3) of Cenvat Credit Rules, 2004 - 114759939 Closing Balance as on 31.03.2009 3793891 2844816 4. The appellant also reversed an amount of ₹ 11,47,59,939/- (Rupees Eleven Crores Forty Seven Lakhs Fifty Nine Thousand Nine Hundred and Thirty Nine only) under Rule 6(3) which was not reflected in the original return but only in the revised returns, filed belatedly. The details of the input services on which credit had been availed were enclosed with the rebate claim filed by the appellant for the financial year 2008-09, on the export of services made to Dell Asia P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 2(l) of CCR. The payment dates, for service tax credit availed are not mentioned against the invoices, in violation to Rule 4(7) of CCR. (b) Maintenance and Repair Services, Commissioning and Installation Services cannot be considered as input service, inasmuch as the appellants are themselves registered for providing this service as output service. The input service and output service are the same, with apparently no value addition, as the jobs are being outsourced by the appellant. (c) Appellants have availed credit on invoices addressed to their SEZ, which are exempted from paying service tax. Hence, credit availed on such invoices appeared erroneous. (d) Credit is availed on invoices of consultants where service tax have been charged for drafting of A-2 certificate, reassessment charges, etc which are not related input services. (e) Appellant vide their letter dated 13/07/2009 in respect of rebate claim, stated that as per the service agreement dated 24/09/2001 entered with Dell Asia Pacific Sdn (DAP), the location of service recipient is Penang, Malaysia. The marketing support/technical support services provided by appellant to DAP are in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pees Eleven Crore Thirty Eight Lakhs Ten Thousand Eight Hundred and Sixty Two only) (reversed under Rule 6(3A) and reflected in ST-3 Returns). Further appropriation was ordered for ₹ 9,49,076/- (Rupees Nine Lakhs Forty Nine Thousand and Seventy Six only) and also an amount of ₹ 14,98,469/- (Rupees Fourteen Lakhs Ninety Eight Thousand Four Hundred and Sixty Nine only) as deposited vide GAR 7 dated 04/07/2009 and reflected in the ST-3 returns. 9. It was further ordered that in the event service tax credit of ₹ 14,14,46,763/- (ST+EC+SHEC) (i.e. ₹ 25,77,05,170/- minus (₹ 11,38,10,862/- plus ₹ 24,47,545/-) reversed/paid under the provisions of Rule 6 (3A) which is held as irregular/inadmissible is utilized for payment of service tax, an amount to the extent of such utilization that would not be otherwise available on the last day of the month for payment of service tax, shall be paid by M/s. DIPL in cash, in view of the proviso to Rule 3(4) of the Cenvat Credit Rules, 2004; 9.1 Appropriation of an amount of ₹ 71,28,730/-, ₹ 14,04,394/- and ₹ 71,74,996/-, totally amounting to ₹ 1,57,08,120/- paid in cash by M/s. DIPL vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the Cenvat Credit Rules. 10.1 Further the learned Commissioner have not considered the input credit register submitted with reply to the show-cause notice and have determined the amount of ₹ 6,22,33,589/- (Rupees Six Crore Twenty Two Lakhs Thirty Three Thousand Five Hundred and Eighty Nine only) from the details annexed to the rebate claim, which is incorrect. 10.2 So far cenvat credit on ITSS is concerned, appellant imports such service and also procures from the domestic area. Such procurement of software is wholly towards provision of taxable service under the head ITSS. Further appellants have maintained proper/separate record for purchase and sale of software and ITSS, and such credit is wholly availed against taxable ITSS service, as an output service. The said disallowance of availment and utilization of credit for ITSS is erroneous and fit to be set aside. 10.3 Further urged that learned Commissioner have erred in taking proportionate credit of common input service, specified in Rule 6(5) of Cenvat Credit Rules. The only condition specified in Rule 6(5) is that the specific service should not be exclusively used in or in relation to manufacture o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being Appeal No. ST/20741/2014-DB, wherein this Tribunal has held as follows: 2. The learned counsel submits that Cenvat credit has been denied and demanded on the basis of calculations made by the Revenue. While making the calculations, the effort is to arrive at the amount to be reversed attributable to the trading activity of the noticee in respect of which cenvat credit is not admissible. While doing so, the services which have been used exclusively in providing dutiable services alone also have been taken into account for the purpose of calculation of the amount to be reversed. This is incorrect. If services were identifiable to have been used only for providing dutiable services exclusively, there is no need to reverse any portion of the credit on the basis of proportion of trading activity to the total turnover, or even for exempted services. The order of Tribunal has been accepted by the Department. 10.8 Reliance has also placed on the ruling in Superpacks Vs. CCE, ST and Cus., Bangalore (Final Order Nos. 22383-22388/2017) wherein this Tribunal has interpreted the provisions of Rule 6(5) of Cenvat Credit Rules as follows: 7.2. As regards the cenvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit and shall be attributed towards exempted goods and exempted services by multiplying the common credit with the ratio of value of exempted goods manufactured or exempted services provided to the total turnover of exempted and nonexempted goods and exempted and non-exempted services in the previous financial year 10.10 It is categorically held by the learned Commissioner that on a cogent reading of sub-rule (ii) and (iii) above, it is clear that input credit attributable to ITSS (which is a taxable output service) is not to be included in the formula of determining credit attributable towards exempted goods and exempted services. Learned Commissioner also observed that in view of the Budget Circular vide D.O.F No. 334/08/2016-TRU, stating that Rule 6 has been re-drafted with the intention of simplifying and rationalizing the Rule, without altering the already established principles of reversal of such credit, this only means that amendment to Rule 6 is clarificatory in nature and is retrospective in effect. 11. Learned AR for the Revenue has relied on the impugned order. 12. After considering the rival contentions, we find that the allegations in the present case for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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