TMI Blog2011 (2) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... to adjudicating authority to requantify the amount of inadmissible input service credit - appeals disposed of - E/174, 1253/2007 & E/1084, 1113/2008 - - - Dated:- 3-2-2011 - ASHOK JINDAL, MEMBER (J) P R CHANDRASEKHARAN, MEMBER (T) Shri V.S. Nankani, Advocate for the appellant Shri R.K. Mahajan, Jt.CDR for the respondent ORDER Per: Ashok Jindal: The assessee namely Colgate Palmolive India Ltd. (in short CPIL) filed three appeals against confirmation of demand on account of inadmissible input service credit during the period June 2005 to October 2006. Revenue has also filed one appeal against the order of the Commissioner (Appeals) for the period April 2006 to October 2006 for enhancement of penalty. All the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for denial of input service credit on exempted final products. Thereafter demands were confirmed and penalties were imposed. 3. Infrastructure of manufacturing activity of their various products is as under:- Product Location Status Tooth Paste Sewri, Badi (H.P.), Contract Manufacturers (Goa Hyderabad) Except tooth paste manufacture at Badi, which was exempted under area based exemption, Excise duty paid on tooth paste manufactured at Sewri and by contract manufacturer based on MRP. Shaving Cream Aurangabad Duty paid Tooth powder Aurangabad Hyderabad Duty exempted Tooth Brush, Shower Gel, Liquid Hand Wash, Axion Dish Waste Paste, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit of the service tax paid on all the common input services mentioned above. 7. He further clarified that while availing the credit, the appellants have not taken the credit of service tax paid on input services in the following cases:- Services which were exclusively related to manufacture, distribution and sale of tooth powder. Services which were used for the manufacture of toothpaste at our Baddi Unit Services which were used in the manufacture of tooth paste at our Aurangabad unit were also excluded except for the services mentioned in Rule 6(5) of the Cenvat Credit Rules. Services which were exclusively related to product purchased on Principal to Principal basis or imported products were excluded e.g. goods transport fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services- (1) The CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or exempted services, except in the circumstances mentioned in sub-rule (2). [Provided that the CENVAT credit on inputs shall not be denied to worker referred to in rule 12AA of the Central Excise Rules, 2002 on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of the rule.] (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services, and manufactures such final produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be paid by the manufacturer or provider of output service by debiting the CENVAT credit or otherwise. Explanation II- If the manufacture or provider of output service fails to pay the said amount, it shall be recovered along with interest in the same manner, as provided in rule 14, for recovery of CENVAT credit wrongly taken. [Explanation III - For the removal of doubts, it is hereby clarified that the credit shall not be allowed on inputs and inputs services used exclusively for the manufacture of exempted goods or exempted services.]" 13. On perusal of the above provisions of law, this rule deals with the case in hand before us wherein it has been clarified when an assessee manufactures both dutiable and exempted goods/provider of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credit has been taken on the goods which are taxable and the assessable value has been arrived as per Section 4A of the Central Excise Act, 1944. 16. In view of the above discussion, requantification of the amount of reversal is required to ascertain the proportionate in admissible input service credit availed by the appellant for exempted final product. For the said purpose, the matter is sent back to the adjudicating authority to requantify the amount of inadmissible input service credit as discussed above. As issue involved in this case is a matter of interpretation of the admissibility of input service credit, no penalties are warranted in these appeals. Hence the penalties are dropped. Therefore, the adjudicating authority shall re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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