TMI Blog2016 (1) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... f service tax stands utilized in a unit which is manufacturing exempted as also dutiable goods, the said Rule will have no application. The expression "exclusively" is not associated with the word "service tax" as suggested by the learned advocate. The credit of service tax in respect of services used in the said Rudrapur unit is not available to the appellant's ISD. The order of the lower authorities to that extent, disallowing proportionate credit is upheld. Levy of penalty for wrong utilization of credit - Rule 15(3) of the CENVAT Credit Rules - Held that:- The period involved in the present appeals is April 2006 to April 2010. - The said Rule provided maximum penalty of ₹ 2000/- While confirming the demand of credit, pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, it was pointed out that the Management Consultancy Services attributable exclusively to the Rudrapur Unit is not entitled for CENVAT credit and the same also cannot be distributed to their other Plants. The appellant immediately reversed the credit of ₹ 14,21,082/- involved in Appeal No. 26513/2013. As regards the second Appeal No. 26152/2013, it is seen that the issue relates to the proportionate reversal of the CENVAT credit relatable to the Rudrapur Unit inasmuch as the credit was availed on the common input services. 3. The lower authorities by referring to the provisions of Rule-7 of the CENVAT Credit Rules 2004, entertained a view that the ISD cannot avail the credit in respect of services either used exclusively in Rudra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utable to service [used by one or more units] exclusively engaged in manufacture of exempted goods or providing of exempted services shall not be distributed; 5. In terms of Rule, 7(b) credit of service tax is not available where the services are used in a unit which is exclusively engaged in the manufacture of exempted goods. The contention of the learned advocate appearing for the appellant is that wherever services were exclusively used in Rudrapur unit, they have reversed the credit by accepting the Revenue's stand. However, where the credit has been taken on common services, a part of which has also been used in a unit engaged in the manufacture of exempted goods, ISD is entitled to take the credit of whole of service tax and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly engaged in the manufacture of exempted goods and inasmuch as the Rudrapur unit is admittedly engaged in the manufacture of only exempted goods, I am of the view that the credit of service tax in respect of services used in the said Rudrapur unit is not available to the appellant's ISD. The order of the lower authorities to that extent, disallowing proportionate credit is upheld. 7. As regards the penalty, learned Chartered Accountant Shri Ramasubramanian has drawn my attention to the provisions of Rule 15 of CENVAT Credit Rules under which penalty stands imposed. The period involved in the present appeals is April 2006 to April 2010. The penalties stand imposed in terms of Rule 15(3) of the CENVAT Credit Rules. By drawing my atten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the Finance Act, or of the rules made thereunder with intention to evade payment of service tax, then the provider of output service shall also be liable to pay penalty in terms ofthe provisions of section 78 of the Finance Act. (5) Any order under sub-rule (1), sub-rule (2), sub-rule (3), or sub-rule (4) shall be issued by the Central Excise Officer following the principles of natural justice. He submits that the said rules were amended with effect from 27.2.2010 and amended provisions read as under:- Confiscation and penalty. - (1) If any person, takes or utilises CENVAT credit in respect of input or capital goods or input services, wrongly or in contravention of any of the provisions of these rules, then, all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a comparison of both the Rules would show that Rule 15(1) (2) apply only in respect of inputs and capital goods and it was Rule 15(3) which was invokable in the case of wrong availment of CENVAT Credit of service tax. The said Rule provided maximum penalty of ₹ 2000/-. However, after the amendment, provisions of Rule 15(3) included the wrong availment of service tax in respect of input services. However, the assessee was to be imposed penalty only when the credit was availed wrongly by way of fraud collision or in willful misstatement of suppression of facts. He submits that in the 1 st case, the provisions of earlier Rule 15(3) which would apply, which provide for penalty for ₹ 2,000/- only and in the other case it is the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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