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M/s Genus Power Infrastructure Ltd. Versus CST, Jaipur - I

2016 (10) TMI 578 - CESTAT NEW DELHI

CENVAT credit - trading activity - input services - restriction of the Cenvat credit to the extent of about 80% in the ratio of value of material supplied by the appellant to the value of services provided by the appellant under the supply and services agreements - denial of a part of the Cenvat credit taken on input services - 'Input Service' as defined in Rule 2 (I) of the Cenvat Credit Rules - whether the credit on such input services were properly taken? - Held that: - The commission agent s .....

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ARYANA HIGH COURT] where it was held that overseas commission agents used for procuring orders would be covered under input service. - Utilization of CENVAT credit - Rule 3 (4) of the Cenvat Credit Rules, 2004 - whether the credits taken have been properly used for making payment of excise duty/service tax on output service? - Held that: - Cenvat credits properly taken may be utilized for payment of either excise duty on final products manufactured or service tax on output service rendered. .....

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xcise & Service Tax, Bhaavnagar [2015 (8) TMI 58 - CESTAT AHMEDABAD]. - The credits have been properly availed on input services - restriction of the CENVAT credit to the service portion of the contract withheld - entire quantum of the service tax paid by the commission agent entitled as credit to the appellant - appeal allowed - decided in favor of appellant. - Service Tax Appeal No. 408 of 2010 - Order No. 53525/2016 - Dated:- 14-9-2016 - Mrs. Archana Wadawa, Member (Judicial) and Shri V. .....

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ion services (ECIS) to various power distribution companies (DISCOMS). They have registration under Central Excise and pay Central Excise duty on goods manufactured by them. They have a separate service tax registration under which they discharge service tax on the services rendered by them. For both the manufacture of goods and rendering of service, they are registered for the same premises. They have maintained a common Cenvat account in which credit on inputs, capital goods as well as service .....

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d Cenvat credit of the service tax paid on the commission agent services as well as insurance services. Revenue entertained a view that the availment of Cenvat credit on these two services was improper and in the proceedings before the lower Authority, Cenvat credit to the tune of ₹ 1,32,69,499/- was ordered to be recovered pertaining to service tax availed during the period April 2006 to December 2007. It is also pertinent to note that Revenue sought recovery of the above amount even thou .....

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ervice as defined in Rule 2 (l) of the Cenvat Credit Rules in as much as commission agent services are used by the appellant for manufacture and supply of final products as well as provision of taxable services. The insurance services were also used by the appellant for the purposes of security of the goods and services supplied and are in relation to its business activities and accordingly are squarely covered by the definition of input service. There is no legal basis for the Revenue to restri .....

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re of final products or used for providing output service. Once credit has been taken properly, such credits are available in a common pool and can be used either for payment of excise duty or for payment of service tax. There is no restriction placed to the effect that credit account should be maintained separately for manufacture of excisable goods and for providing services ; (3) They have also placed reliance on the following support the above arguments : (a) the clarification issued by Dire .....

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excise. Such credit amount can be utilized towards payment of Service Tax by an assessee on their output services. (Refer to Rule 3 of CENVAT Credit Rules, 2004)". (b) CBEC clarification vide Circular F. No. 381/23/2010/862 dated 30/03/2010 clarified as under : Subject : Cross utilization of credit on inputs and input services - reg. The Cenvat credit on inputs, capital goods and input services which are used for manufacture of goods or for provision of services is available in a common poo .....

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ported in 2015 (37) S.T.R. 144 (Tri. - Chennai) ; (v) S.S. Engineers vs. CCE, Pune - I reported in 2015 (38) S.T.R. 614 (Tri. - Mumbai) ; (vi) CCE, Pune - I vs. S.S. Engineers reported in 2016 (42) S.T.R. 3 (Bom.) and (vii) Sumita Tex Spin Pvt. Ltd. vs. CCE & ST, Rajkot reported in 2015 (39) S.T.R. 502 (Tri. - Ahmd.) 4. We have heard Shri B.L. Narsimhan, learned Advocate for the appellant as well as Shri Amresh Jain, learned DR for the Revenue. 5. In the impugned order, a part of the Cenvat .....

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provider of taxable service for providing an output service ; or (ii) used by a 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, market research, storage upto t .....

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ellant for procurement of Turnkey orders from DISCOMS. Since part of such orders are for supply of goods manufactured by the appellant and the other part is for supply of services, such services quality as input service. This view is also supported by several decisions. For example in the case of Commissioner vs, Ambika Overseas reported in 2012 (25) S.T.R. 348 (P&H), the Punjab and Haryana High Court has upheld the order of the Tribunal in which it was held that overseas commission agents u .....

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ed by the appellant. The utilization of Cenvat credit availed is governed by Rule 3 (4) of the Cenvat Credit Rules, 2004 which reads as follows .:- "The CENVAT credit may be utilized for payment of - (a) any duty of excise on any final product ; or (b) an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed ; or (c) an amount equal to the CENVAT credit taken on capital goods if such capital goods are removed as such; or (d) an a .....

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ng output service. This specific issue has been clarified time and again by CBEC. In the FAQ clarified by DGST it has been mentioned that Cenvat credit may be utilized for payment of service tax on output services in addition to discharging the Central Excise duty liability on finished products. On the question of gross utilization of credit on inputs and input services, CBEC in Circular No. 381/23/2010/862 dated 30/03/2010, has clarified that the Cenvat credits on inputs/ capital goods and inpu .....

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Credit Rules. These views find support in the case of Pipavav Shipyard Ltd. vs. CCE & ST, Bhavnagar reported in 2016 (41) STR. 151 (Tri,- Ahmd.) in which the Tribunal has held as follows:- "13. The Larger Bench of the Tribunal in the case of Commissioner of Customs & C.Ex., Meerut-I v. Modi Rubber Ltd. 2000 (119) E.L.T. 197 (TH.-LB), held that the declaration filed by the assessee in terms of Rule 57Q of Central Excise Rules, 1944 is sufficient for the purpose of extending credit o .....

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dditional duty of Customs and Service Tax in respect of input service and utilised credit from these sources for the purpose of paying service. Rules permit taking of credit under a common pool and permit the use of the credit from common pool for different purposes and there is no restriction placed to the effect that credit accounts should be maintained for use for manufacture of excisable goods and for use for providing services. In the case of Commissioner of Central Excise, Salem v, Thangav .....

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