GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (8) TMI 58 - CESTAT AHMEDABAD

2015 (8) TMI 58 - CESTAT AHMEDABAD - 2016 (41) S.T.R. 151 (Tri. - Ahmd.) - Denial of CENVAT Credit - Appellants fabricated a Dry Dock for manufacturing ship and repair service - Credit on input services, input and capital goods used for fabrication of the Dry Dock, amongst others - Held that:- CENVAT Credit availed on input service, input and capital goods for setting up Dry Dock would be allowed for providing output service namely repair/refit service. This is also covered in the inclusive part .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tablishing the nexus between taking of the credit and for refund of credit. Even if different phrases are used under 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 stipul .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lant 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 on the basis of document issued by the ISD (Input Service Distributor). - Held that:- As per CENVAT Credit Rules, the Appellants are eligible to avail the credit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t: Shri K. Sivakumar, Authorised Representative Per: P. K. Das The relevant facts of the case, in brief, are that the Appellant, a 100% Export Oriented Unit (EOU) was granted permission for manufacturing ship building and the services of ship repairs/refit within the private bonded warehouse as per Letter of Permission (LOP) issued by the Development Commissioner, Kandla. The Appellants fabricated a Dry Dock for manufacturing ship and repair service. The Appellant is registered with Central Exci .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

proposing to deny the CENVAT Credit on input service, input and capital goods for the period October 2010 to February 2011. It has been alleged that the final product ship is classifiable under Central Excise Tariff Heading 8901 chargeable to Nil rate of duty and therefore, there are not eligible to avail the CENVAT Credit for manufacturing of the exempted final product in contravention of Rule 6(1) of CENVAT Credit Rules, 2004. It has further been alleged that the Appellant availed the CENVAT .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rovider goes into a common pool and can be used for both purpose. Further, demand of CENVAT Credit on capital goods on the ground that the machinery assembled at the site, is covered in favour of the Appellant by the decision of the Tribunal in the case of Commissioner of Central Excise Vs JSW Ispat Steel Ltd - 2013-TIOL-1758-CESTAT-Mum. He further submits that denial of CENVAT Credit on the input availed on the basis of ISD invoice issued by Head Office, whose name was not mentioned in the LOP .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r submits that the Appellants themselves declared and availed CENVAT Credit in their ER-1 return for manufacturing exempted final product Ship. Rule 6(1) of the Rules, 2004 provides no credit is to be allowed for exclusive exempted final product. It is further submitted that the Appellant is EOU and there is no requirement of furnishing Bond. So, Rule 6(6)(d) of the said Rules would not apply. It is submitted that the address of Head Office was not mentioned in the LOP and therefore, the CENVAT .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

4.2006, permitted the applicant for establishment of a new undertaking, under 100% EOU scheme for manufacturing of Ship Building, Ship Repairs/Refit. It was permitted on the condition that the Appellant shall export the entire production excluding reject and sales in the Domestic Tariff Area as per 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 Commission .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s any service, - (i) used by a provider of taxable service for providing an output service, or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rvice for providing an output service, any service used by a manufacturer in or in relation to manufacture of final product and inclusive part of the definition, services used in relation to setting up, modernisation, renovation or repair of a factory, premises of a provider of output service or an office relating to such factory or premises etc. The expression any service read with for providing an output service would cover wide encompass of the definition of input service. The Honble Supreme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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.28.06.201 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he manufacture of export goods or used in providing the output services exported. As against this, the phrases used in the CENVAT Credit Rules, permitted credit on service used whether directly or indirectly, in or in relation to the manufacture of final product or for providing output service . The field formation tend to take the view that for eligibility of refund, the nexus between input or input services and the final product/services has to be closer and more direct than that is required f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

redit Rules, they have to be read in a harmonious manner. 9. The learned Advocate relied upon the decision of Hon ble Karnataka High Court in the case of Commissioner of Customs, Banglore Vs ANZ International - 2009 (233) ELT 40 (Kar.) where the appeal of the Revenue was dismissed. It has been held that a 100% EOU is entitled to take CENVAT credit on the duty of the inputs procured indigenously and when they are not in a position to utilise the same, they are entitled for the benefit of refund u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e to find out as to whether the aforesaid substantial question of law would arise or not for our consideration in this Appeal. The CESTAT, having regard to the undisputed fact that the respondent is 100% Export Oriented Unit (for short ECU ) in respect of which, benefit of CENVAT Credit Rules, 2004 is available for the inputs which will be used for manufactured goods of 100% export. Therefore, the Tribunal has applied Rule 6(6) and recorded the reasons stating that there is a provision of export .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cture 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sition to utilize the same, they are entitled for the benefit of the refund under Rule 5 of the Rules. Therefore, the orders impugned in the Appeal before the CESTAT held to be bad in law and the same were set aside. Therefore, we do not find that no substantial question of law does arise in this Appeal for our consideration to answer the same in favour of the Revenue. Accordingly, the appeal is devoid of merits and therefore it must fail and is dismissed. 10. In the case of Commissioner of Cent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er Rule 6(1) of CENVAT Credit Rules, 2004 used in the manufacture of such exempted goods even if such goods are exported. In that case, the Respondent was engaged in the manufacture of finished leather and it had exported the manufactured leather. The Hon ble High Court held that an assessee manufacturing the goods chargeable to Nil rate of duty is eligible to avail CENVAT Credit paid on the inputs under the exception clause contained in Rule 6(6) of the said Rules, used in the manufacture of su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

below:- 12.2.5 In the instant case, the 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 serv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

put 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 some cases, these returns are filed in different jurisdictions the CENVAT credit on input, capital goods and input services which are used in manufacturing of goods or providing output service is available in a common pool and can be used for payment of excise duty or servic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

laration filed by the Assessee in terms of Rule 57Q of Central Excise Rules, 1944 is sufficient for the purpose of extending credit on lubricants under Rule 57A of the said Rules. In the case of Commissioner of Central Excise, Coimbatore Vs Lakshmi Technology & Engineering Indus. Ltd. - 2011 (23) STR 265 (Tri-Chennai), the Tribunal held that the manufacturer entitled to use the credit from a common pool to which different categories of specified excise duties, customs duty and service tax al .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

anufacture of excisable goods and for use for providing services. In the case of Commissioner of Central Excise, Salem Vs Thangavel & Sons (P) Ltd. - 2014 (7) 895-CESTAT Chennai, the Tribunal held that the Respondents are not only the manufacturers of excisable goods, but also the provider of output service and both the activities are carried out in the same premises. Respondents are eligible for availment of input credit, they can utilise the CENVAT credit available with them either for pay .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version