TMI Blog2010 (12) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... on of admissibility or otherwise of the impugned credit allotted by the ISD and availed by the assessee - Decided in the favour of the assessee - ST/1001 OF 2009 - 937 OF 2010 - Dated:- 9-12-2010 - M.V. RAVINDRAN, P. KARTHIKEYAN, JJ. ORDER P. Karthikeyan, Technical Member. - This is an application filed by M/s. Ericsson India Pvt. Ltd., Secundarabad (the assessee for short) seeking waiver of pre-deposit of the following amounts confirmed against them : a. Service tax of Rs. 3,55,05,053 short paid by the assessee during the period 4/2005 to 3/2008 on account of excess Cenvat Credit utilized in violation of provisions of Rule 6(3)(c) of Cenvat Credit Rules, 2004 (CCR for short). b. An amount of Rs. 1,69,30,164 being the Cenvat Credit irregularly availed and utilized towards payment of service tax. c. Applicable interest on the above said items at a b. d. Penalty at the rate of 2 per cent per month starting with the first day after the due date till payment subject to the maximum of the service tax demanded. e. An amount of Rs. 5,25,00,000 being penalty imposed on the assessee under Rule 15(4) of CCR read with section 78 of the Finance Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable. b. In the instant case, the assessee has not maintained separate records at their Corporate Office for the input services commonly used in the taxable output services provided from the branches or in the exempted services provided from the Corporate Office. The Corporate Office at Gurgaon has distributed the entire Cenvat Credit on the input services viz. Telephones, Courier, Rent-a-Cab, Chartered Accountant Services, Manpower Supply and Recruitment services, etc. commonly used in the taxable output services as well as in the exempted services to their branch at Hyderabad. In such a scenario, the assessee is liable to utilize Cenvat Credit only to the extent of an amount not exceeding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of CCR. The assessee had thus utilized excess Cenvat Credit of Rs. 3,55,05,053 which was liable to be recovered. The assessee had wrongly availed Cenvat Credit of Rs. 1,68,43,053 on Insurance Services, Foreign Consultancy Services etc. which are used exclusively in the provision of exempted services and utilized such wrongly availed credit towards payment of service tax. The assessee had wrongly availed Cenvat Credit of Rs. 87,111 on flower arrangement, garden maintenance, outdoor catering charges, real estate service charges etc. distributed by their Corporate Office and utilized such wrongly availed credit towards payment of service tax. Hence the impugned demand and penalties. 3. The ld. Counsel for the appellant made the following submissions : The appellant is providing only taxable services. It has utilized credit of service tax paid on input services as well as credit allotted to it by its Corporate Office located at Gurgaon. Corporate Office is registered as an input service distributor. The Corporate Office maintained two accounts: (i) relating to tax paid on input services which are directly and exclusively used in the provision of taxable output services and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in January, 2006. The interest demanded and the penalty imposed were also challenged relying on various case laws. 3.1 We have heard the ld. Jt. CDR for the revenue. 4. We have examined the case records and carefully considered the rival submissions. We find that the assessee/appellant utilized credit of service tax it paid on input services and credit allotted to it by its Corporate Office as ISD. There is no allegation or finding that the assessee provided taxable and exempted services. The assessee is one of the constitutents of a company engaged in trading of telecommunication equipment. The Corporate Office of the company raises invoices for sale of equipment. The Department has treated it as provision of exempt services relying on definition of exempted services under Rule 2(e) of CCR. The said rule reads as under : Exempted services means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act. 5. We note that in Stay Order No. 1685/2009 in the case of BHEL-GE Turbine Service (P.) Ltd. v. CCE [2010] 27 STT 214 (Bang. - CESTAT) we held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prima facie, not sustainable. 6.2 Rule 7 of CCR which deals with distribution of credit by ISD read as follows in the material period : 7. Manner of distribution of credit by input service distributor. The input service distributor may distribute the CENVAT credit in respect of the service tax paid on the input service to its manufacturing units or units providing output service subject to the following conditions, namely : (a) the credit distributed against a document referred to in rule 9 does not exceed the amount of service tax paid thereon; or (b) credit of service tax attributable to service use in a unit exclusively engaged in manufacture of exempted goods or providing of exempted services shall not be distributed. 7. We find that the Tribunal had, in the case of Godfrey Philips India (P.) Ltd. (supra), held that the eligibility or otherwise of the service tax credit has to be examined at the end of ISD only. Therefore, prima facie, Adjudicating Authority has no jurisdiction to raise the question of admissibility or otherwise of the impugned credit allotted by the ISD and availed by the assessee. In the circumstances, we order total waiver of pre-deposit ..... 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