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UTILIZISATION OF CENVAT CREDIT FOR PAYMENT OF EXCISE DUTY AND SERVICE TAX

Service Tax - By: - Mr. M. GOVINDARAJAN - Dated:- 21-4-2016 - CENVAT Credit Rules, 2004 provides for taking credit and utilization of that credit against the payment of service tax by the provider of output service or for the payment of central excise duty by the manufacturer of the final products. The issue to be discussed in this article is whether the CENVAT credit taken may be utilized for the payment of both central excise duty and service tax by an assessee who is manufacturing final produ .....

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ot only excise duty paid capital goods and inputs but also additional duty of customs paid under Customs Tariff Act in respect of imported inputs and capital goods and also service tax on the input services utilized in or in relation to the manufacture of excisable goods. In other words, a manufacturer of excisable goods is entitled to use the credit from a common pool to which different categories of specified excise duties, customs duty and service tax are allowed to be taken as credit. Simila .....

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the other for credit attributable to capital goods, inputs and services attributable to the service provided by them. The Tribunal observed that common CENVAT Credit Rules have been formed in terms of powers conferred by Section 37 of Central Excise Act, 1944 and Section 94 of the Finance Act, 1994. Rule 3(1) enables a manufacturer or a provider of taxable service' to take credit of specified duties and utilize them to discharge duty liability under Rule 3(4) of the Rules. A credit can be ut .....

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it amounts should be maintained for manufacture of excisable goods and for use for providing services. The Tribunal held that the view taken by the Commissioner (Appeals) cannot be faulted. In Commissioner of Central Excise V. Thangavel & Sons - 2014 (7) TMI 895 - CESTAT CHENNAI it was held that once the assessee has been held eligible for availing of credit, credit can be utilized for payment of excise duty or for payment of service tax credit as stipulated in Rule 3(4) of the Rules as ther .....

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thorities. They availed the input and input service credit in respect of the manufacturing activity and pay the excise duty on the goods manufactured in their factory. They also availed the credit of input and input services in respect of erection and commissioning of the machinery and also pay the service tax on the said activity. During the scrutiny the Revenue found that the assessee availed the credit of service on the services which are required in connection with erection and commissioning .....

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services used in relation to providing output services; The service tax is levied under Finance Act, 1994 while central excise duty is levied under the Central Excise Act, 1944.Both the Acts operate in their respective domains lay down authority for taking or utilization with their respective domain and is nothing in law to permit cross operations of such accounts for utilization of such credit beyond the respective laws; The appellant registered separately for the manufacturing activity and as .....

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it will create confusion. The Tribunal analyzed the provisions of CENVAT Credit Rules, 2004. Rule 3(4) provides that CENVAT credit may be utilized for payment of various liabilities and includes any duty of excise on any final product as also service tax on any output service. The Tribunal found that Rule 3 does not stipulate maintaining separate account as a manufacture and as a service provider. Third proviso to Rule 3(4) provides that no credit of additional duty leviable under Section 3(5) .....

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give the details of CENVAT credit taken and utilized. In ER-1 in Table at Sl. No. 8 in column (9), details about service tax are specifically listed. On careful analysis of the said formats, the intention appears to be to permit cross utilization of the excise duty and service tax. The Revenue filed appeal against the order of the Tribunal before the High Court in Commissioner of Central Excise, Pune - I V. S.S. Engineers - 2016 (4) TMI 108 - BOMBAY HIGH COURT. The High Court found that the Trib .....

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