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M/s Shree Cement Ltd. Versus Commissioner of Central Excise, Jaipur

2015 (10) TMI 2198 - CESTAT NEW DELHI

Denial of CENVAT Credit - input services availed prior to commencement of manufacturing activity - cargo handling service - distribution of credit - Penalty u/s 11AC - Invocation of extended period of limitation - Held that:- Rule 7 of Cenvat Credit Rules, 2004 deals with the manner of distribution of cenvat credit by ISD - there are two restrictions under the said Rule that the cenvat credit cannot be distributed more than the service tax paid and credit should be used by a manufacturing unit o .....

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envat credit. Infact, without procuring inputs, or some inputs service, assessee cannot start manufacturing activity. Therefore, it cannot be said that an assessee who is a manufacturer of excisable goods is to be denied the cenvat credit of duty paid on inputs or input service availed prior to start of manufacturing activity.

When the adjudicating authority held that it is an issue of interpretation of Rule, therefore it cannot be alleged that appellant has taken cenvat credit by wa .....

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nvoking extended period of limitation which is absent in this case. Therefore, extended period of limitation, is also not invokable in the facts of this case. In these circumstances, I hold that the appellant is having the case on merits as well as on limitation. Therefore, I set aside the impugned order - Decided in favour of assessee. - Excise Appeal No. 52035 of 2014-Ex (SM) - ORDER NO. FO/ 52131 /2015-Ex(SM) - Dated:- 29-6-2015 - Ashok Jindal, Member (J), J. For the Appellant : Shri Bipin Ga .....

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ax on cargo handling service which has been distributed to them by their head office prior to start of production. 2. Heard the parties. 3. Learned Counsel for the appellant submits that in this case there is no restriction under Rule 3 of Cenvat Credit Rules, 2004 for availing Cenvat credit prior to start of manufacture and for their utilization. The conditions have been laid down under Rule 7 of Cenvat Credit Rules, 2004 for the ISD distribution of the cenvat credit and Rule 3 provide that an .....

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xtended period of limitation only on 19.6.2012 and the adjudicating authority refrained from imposition of penalty on the ground that this issue relates to interpretation of Rules, therefore penalty was dropped. But the learned Commissioner (Appeals) took the contrary view. The appellant challenged the impugned order and submitted that extended period of limitation is not invokable in the facts of this case. 5. On the other hand, learned AR opposed the contention of the learned Counsel and submi .....

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the knowledge of the department only during the course of audit and therefore, extended period is rightly invoked. She also submits that decision relied upon by the learned Counsel are not relevant to the facts of this case. 6. On careful consideration of the submissions made by both the sides, I find that Rule 7 of Cenvat Credit Rules, 2004 deals with the manner of distribution of cenvat credit by ISD which is reproduced as under: "RULE [7. Manner of distribution of credit by input service .....

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g of exempted services shall not be distributed" 7. As per Rule 7 ibid, there are two restrictions under the said Rule that the cenvat credit cannot be distributed more than the service tax paid and credit should be used by a manufacturing unit of excisable goods. Further, Rule 3 of the Cenvat Credit Rules provides that manufacturer of the final products shall be allowed to take Cenvat Credit. Sub rule 4 of Rule 3 of Cenvat Credit Rules, also state that cenvat credit can be utilized for pay .....

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aid on inputs or input service availed prior to start of manufacturing activity. In these circumstances, I do not find any merits in the arguments advanced by the learned AR. Infact both the Rules, provide that the manner and how the assessee is entitled to take cenvat credit, therefore, I find that appellant has correctly taken the cenvat credit. 9. On limitation also, the adjudicating authority has held that it is an issue of interpretation of Rules and certain decisions are in favour of the a .....

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