TMI Blog2015 (8) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... different rules of CENVAT Credit Rules, they have to be read in a harmonious manner. Cross utilisation of credit of input and input service - input service credit was denied mainly on the basis that the input service credit availed on the input services was shown in ER-1 return instead of ST-3 returns. - Held that:- The restriction on utilisation of CENVAT Credit stipulated relates only for specific type of duties i.e. education cess on excisable goods or payment of education cess on output service. There is no restriction for utilisation of common input credit availed on the inputs and also on input service for payment of excise duty or service tax. Hence, we do not find any reason to deny the input service credit on the ground that it was shown in the ER-1 return. - creidt allowed. Use of capital goods in immovable property - Held that:- the Appellant is unable to render the repair/refit service without the crane in Dry Dock and which can be treated as capital goods. The case law relied upon by the learned Authorised Representative is in context of excisability of goods, and the Tribunal already considered in earlier decision. - credit allowed. Denial of cenvat credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with earth. By the impugned order, the Adjudicating Authority disallowed the CENVAT Credit of ₹ 7,69,25,644.00 alongwith interest and imposed penalty of equal amount of CENVAT Credit. 3. The learned Advocate on behalf of the Appellant submits that the Show Cause Notice proceeded on a erroneous basis that the Appellant was exclusively engaged in the manufacture of exempted final product, ship. It is submitted that the Appellant utilized the credit of input service for outward service viz. ship repairing. That the Appellant a 100% EOU exported the ship under bond. Rule 6(1) would not apply as per provision of Rule 6(6)(d) of the said Rules, 2004. He referred to the decision of Hon ble High Court and Board s Circular. It is further submitted that they have paid the Service Tax on outward service of ₹ 26.07 Crores and utilized the input service credit therein. He drew the attention of the Bench to the LOP issued by the Development Commissioner for manufacturing of ship building and repair of ship. The entire proceedings was initiated on the basis that the Appellant had shown the amount in their ER-1 returns instead of ST-3 returns. He referred the Board circular F.No.S/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of EOU scheme, amongst others. By letter dt.08.01.2008, the Joint Development Commissioner, Kandla Special Economic Zone, authorized the Appellant for manufacturing further items namely, Ship, Vessels, Hulls, Offshore Structures includes FPSO, Rigs, Platforms etc. The jurisdictional Central Excise Customs authority on 06.08.2007, granted permission to manufacture the goods and to render the services of repair within the private bonded Warehouse. The Appellants also executed a bond with Deputy Commissioner of Central Excise. They have obtained Central Excise registration under the Central Excise Rules on 06.09.2007 and also applied for registration as a service provider, which was granted on 08.02.2008. 6. The case of the Appellant is that Dry Dock is the heart of the shipyard used in ship building and repair service. The Hon ble Supreme Court in the case of Scientific Engineering (P) Ltd Vs Commissioner of Income Tax, Andhra Pradesh, (1986) 1 SCC 11 observed that a Dry Dock since it fulfilled the function of a plant must be held to be plant. The every part of this Dry Dock plays an essential part with which, the operation is performed. In the case of Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods for setting up Dry Dock would be allowed for providing output service namely repair/refit service. This is also covered in the inclusive part of the definition of input service . Hence, the finding of the Adjudicating authority, is that the Appellant is exclusively engaged in the manufacture of exempted final product Ships and CENVAT Credit on input, capital goods is inadmissible, cannot be sustainable. 8. The learned Authorised Representative contended that there is no requirement of furnishing the bond by an EOU and it does not cover under Rule 6(6) of the Rules. CBEC by Circular No.928/18/2010-CX, dt.28.06.2010, clarified that a 100% EOU are required to export the goods under bond in terms of customs and excise notifications. CBEC by Circular No.120/01/2010-ST, dt.19.01.2010, in the context of the problems faced by the exporter for availing of refund of excess credit, observed that the major reason causing delay in granting refund as well as rejecting the claim is that as per the wordings of the notification, refund is permitted of duty/tax if only such input/input services which are either used in the manufacture of export goods or used in providing the output service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stating that there is a provision of exporting the goods under bond. In the case of 100% EOUs, the input can be imported free of duty and they can obtain indigenously also free of duty. When duty is paid on the inputs, then the appellants are entitled for the Cenvat credit facility under the Rules Cenvat Credit Rules . There is nothing in the Rules which prohibits 100% EOUs availing Cenvat credit. Rule 5 of the said Rules provides for refund of Cenvat credit availed by the exporter where they do not utilize the goods as inputs for manufacture of 100% export. The case on hand is the precise case wherein the respondent has availed the Cenvat credit facility. They were not in a position to utilize the credit, they applied for refund of the Cenvat credit availed by them. The reason is that all their products were exported and there was no domestic clearance. Therefore, in terms of Rule 5 of the Rules, they are riglitiy entitled for the refund of the duty paid to the department. The learned counsel for the appellant has pointed out that in the case of Sterlite Opitcal Technologies Ltd. v. CCE, Aurangabad - 2006 (201) E.L.T. 428 (Tri.-Mumbai), wherein it is held that letter of underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Noticee has shown the CENVAT Credit availed on input services in their ER-2 return indicating that those services have been used by them in or in relation to manufacture of final products whether directly or indirectly. Had those services been used for providing output services , the Noticee would have shown the CENVAT Credit of Service Tax paid on such input services in their respective ST-3 returns. As already discussed, the criteria to qualify the services used as input service are different in case of Manufacturer and Output Service Provider. Therefore, if the service received were qualified as input service for providing output service viz. Transport of Goods by Road or Ship Management Service, the Noticee should have shown the same as CENVAT Credit in the relevant ST-3 returns filed with the jurisdictional Service Tax authorities. 12. CBEC vide Circular F.No.381/23/2010/862, dt.30.03.2000, clarified that cross utilisation of credit of input and input service. A manufacturer who is also providing a taxable service obtained registration from the Central Excise authority as well as Service Tax authority and required to file ER-1 and ST-3 returns separately. In so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CENVAT Credit Rules, 2004. The restriction on utilisation of CENVAT Credit stipulated relates only for specific type of duties i.e. education cess on excisable goods or payment of education cess on output service. There is no restriction for utilisation of common input credit availed on the inputs and also on input service for payment of excise duty or service tax. Hence, we do not find any reason to deny the input service credit on the ground that it was shown in the ER-1 return. 14. The Adjudicating authority denied CENVAT Credit on capital goods, being inadmissible used in immovable property come into existence. We find that the Tribunal in the case of Commissioner of Central Excise Vs JSW Ispat Steel Ltd - 2013-TIOL-1758-CESTAT-Mum observed that merely because various machineries and equipments, appliances and parts have been assembled at site to set up the Oxygen plant and such plant being an immovable property, it will be preposterous to deny the CENVAT Credit on these individual machineries/equipments/appliances. The Hon ble Andhra Pradesh High Court in the case of Commissioner of Central Excise Visakhapatnam-II Vs Sai Sahmita Storages (P) Ltd - 2011 (270) ELT 33 (A.P.) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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