TMI Blog2016 (3) TMI 1042X X X X Extracts X X X X X X X X Extracts X X X X ..... icity out of it for commercial consideration - Held that:- The Cenvat rules are common for both the inputs and for input services. Thus what the Hon'ble Supreme Court in Maruti Suzuki Ltd. [2009 (8) TMI 14 - SUPREME COURT ] has held in case of inputs will apply to the input services as well. In the instant case they have infact not availed entire credit but only the credit which is admissible to them in terms of Rule 6(2) of the Cenvat Credit Rules, 2004. In view of above we find that there is merit in the appeal filed by the appellants on this count. - Decided in favour of assessee Non admissible service tax - demand under Rule 6(3)(i) of the Cenvat Credit Rules - the electricity generated from the plant does not attract Central Excise duty - Held that:- The rule 6(3) can be invoked only if it is found that the appellant has failed to follow the previous provisions of the said rule 6 of the Cenvat Credit Rules 2004. In this case the appellants have taken credit only to the extent of credit that is eligible to them as the demands of reversal credit themselves have been set aside. In such circumstances the rule 6(3)(i) of the Cenvat Credit Rules 2004 cannot be invoked. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd issue and three Orders-in-Original were passed, against which three appeals have been filed. The third issue raised is in respect of the period April, 11 to February, 14 wherein the demand under Rule 6(3)(i) of the Cenvat Credit Rules, 2004 was made alleging that the appellant had not followed the procedure and conditions laid down under Rule 6(3A) of the Cenvat Credit Rules, 2004. It was alleged that the appellant had failed to maintain separate account for input and input services used in the generation of electricity for captive use and for sale, and therefore they were required to pay the amount equal to 5% upto 31.3.2012 and 6% from 1.4.2012 onwards, on the value of electricity sold to MSEB, which was exempted from payment of Central Excise duty. 3. Learned Counsel for the appellant explained in detail how they were taking credit. He explained that no credit was taken when the services were received till the amount of electricity consumed captively and sold out side was determined at the end of the month. When the electricity consumed captively and sold at the end of the month was determined, the credit of input services was taken in that proportion. He argued that Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that credit was sought to be disallowed in respect of certain items listed in Annexure-B of the show-cause notice. In respect of some items, the appellant had accepted and reversed the credit. In respect of other items namely, Sr No. 21, 42, 43, 61, 63, 65, 67 and 53 of the said annexure, it was observed by the Commissioner that these items cannot be called as capital goods but can be treated as inputs. He argued that in respect of these items, they are entitled to CENVAT Credit as inputs and same should be allowed. He argued that in similar circumstances, credit has been allowed by the Tribunal in case of Bhilai Steel Plant - 2010 (261) ELT 612 (Tri-Del) and Modi Rubber Ltd. - 2000 (119) ELT 197 (Tri-LB). He argued that items at Sr. No. 32, 58 and 64 of the said annexxure are also capital goods. He argued that Sr. No. 32 is G.I. Plates scrap; Sr. No. 58 is SHRINKKOMP-30 and Sr. No. 64 is FRP Motor Cover. No reason is given for denying the credit on these items in the impugned order. 3.3 Learned Counsel for the appellant in respect of third issue argued that the question of applicability of Rule 6 of Cenvat Credit Rules will arise only when the appellant takes ineligible credit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power plant was sold to MPEB through its grid, however, it cannot be said that capital goods were exclusively used in manufacture of exempted goods (electricity) sold to MPEB as a portion of electricity generated in the power plant is also utilized in manufacture of final products sponge iron of the respondent factory, which is leviable to the excise duty and is not exempted goods. 13. On the basis of aforesaid analysis, we are of the opinion that the Tribunal was justified to hold that respondent was entitled for modvat credit against the capital goods used in the captive power plant of the respondent and Rule 6(4) of the Rules was no bar for denying Cenvat Credit. In view of the above we consider that there is no bar on availment of Capital Goods Cenvat Credit in the Instant case. 5.1.1 It is noticed that in respect of other items namely, Sr No. 21, 42, 43, 61, 63, 65, 67 and 53 of the said annexure, it was observed by the Commissioner in the impugned order that these items cannot be called as capital goods but can be treated as inputs. So long as credit is allowable either as Capital goods or as inputs, the demand cannot be sustained. Tribunal in case of Bhilai St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o examine the issue. Hon'ble Supreme Court has observed as follows: - 20. To sum up, we hold that the definition of input brings within its fold, inputs used for generation of electricity or steam, provided such electricity or steam is used within the factory of production for manufacture of final products or for any other purpose. The important point to be noted is that, in the present case, excess electricity has been cleared by the assessee at the agreed rate from time to time in favour of its joint ventures, vendors etc. for a price and has also cleared such electricity in favour of the grid for distribution. To that extent, in our view, assessee was not entitled to CENVAT credit. In short, assessee is entitled to credit on the eligible inputs utilized in the generation of electricity to the extent to which they are using the produced electricity within their factory (for captive consumption). They are not entitled to CENVAT credit to the extent of the excess electricity cleared at the contractual rates in favour of joint ventures, vendors etc., which is sold at a price. The Cenvat rules are common for both the inputs and for input services. Thus what the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of input services relating to the traded goods. Therefore, question of maintenance of separate accounts does not arise at all. Consequently provision of sub-rule (3) of the said Rule 6 mandating payment of an amount equal to 10%/5% of the value of the exempted goods and exempted service would also not apply. Even assuming but not admitting that the appellant has availed input service credit on both dutiable/exempted goods and taxable/exempted service, Rule 3A which came into force w.e.f. 1-4-2008 provides for reversal of credit on the input service attributable to exempted goods/services on a proportionate basis based on the turnover. In the present case, the appellant has precisely done that ab initio and has not taken any credit in respect of input services attributable to the traded goods. Calculation done by the appellant has not been disputed by the Revenue and the Revenue has not shown that the credit taken by the appellant in respect of input services in relation to manufactured goods was in excess of what was eligible to be taken. Therefore, in the absence of any evidence led by Revenue proving that the appellant has taken ineligible credit, the question of appellant violat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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