TMI Blog2023 (3) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(5) of the Service Tax Credit Rules, 2002, which is pari materia with Rule6(3)(c) of the Cenvat Credit Rules, 2004, has held that the utilization is not restricted to monthly or quarterly basis and that it can be utilized at any time - in the present matter the demand of service tax on this ground does not sustain. As several years have passed, the appellant would have been entitled to utilize the credit subsequent to the period in question and therefore the demand on this ground is not sustainable. Reversal of CENVAT Credit - Appellant has provided taxable services to their clients in the State of Jammu Kashmir, without maintaining separate account of receipts, consumption use of Cenvat Credit - HELD THAT:- The provisions of Rule 6 of Cenvat Credit Rules comes into application when the manufacturer/service provider avails credit on inputs/input services used for manufacture of final products or providing output service which are chargeable to duty/tax as well as exempted goods/exempted services. The proviso to sub-clause (2) of Rule 1 of Cenvat Credit Rules states that nothing contained in these rules relating to availment and utilization of credit of service tax sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise the said definition becomes redundant - in view of the overriding effect of Section 51 of the SEZ Act, the service supplies made by DTA units to SEZ units will amount to export for the purpose of all export benefits. The benefit shall include benefits available in respect of exports provided by exception to Rule 6 of Cenvat Credit Rules. Time limitation - no suppression of facts - HELD THAT:- There is no findings during investigation that the appellant was intentionally availing and utilizing Cenvat credit with mala fide intention. Based upon interpretation of the provisions of the Finance Act, 1994 and Cenvat Credit Rules, 2004 they bonafidely believed that they are entitled for the Cenvat credit and they correctly utilized the cenvat credit. In order to invoke the extended period, there should be suppression or willful misstatement with intention to evade payments of tax. The issue involved is of interpretation wherein the department is of the view that the appellant is not eligible for credit and they were liable to maintain separate accounts in order to avail credit when input services were common or non-entitlement when the services were exclusively used in exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cenvat Credit on the entire input services received by them. Thus as per condition of clause (c) of Rule 6(3) of Cenvat Credit Rules 2004 w.e.f. 10.09.2004 appellant were required to utilize credit only to the extent of an amount not exceeding 20% of the amount of Service tax payable on taxable output services. Prior to this date, the service provider were entitled to the extent of 35% of the Service tax payable on taxable output service as per sub-rule (5) of Rule 3 of erstwhile Service tax Credit Rules, 2002. It was noticed that appellant had utilized cenvat credit of more than admissible amount i.e. 20% /35% of the amount of Service tax payable on taxable output services. Accordingly, show cause notice was issued to the Appellant for short payment of Service tax. The said show cause notice was adjudicated vide OIO dated 30.03.2009 wherein entire demand was confirmed. Being aggrieved with the order appellant had preferred an appeal before CESTAT. Vide Order dated 06.01.2010 CESTAT remanded the matter back to the adjudicating authority for fresh decision. Thereafter the matter was again decided vide OIO dated 26.06.2012 and Appellant filed appeal before the Tribunal. Thus, vide fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA LTD. -2017(297)ELT 166 (CHHATTISGARH) COMMISSIONER VS. INDIA CEMENT LTD. -2020(34)G.S.T.L. 425(TELANGANA) SUJANA METAL PRODUCTS LTD. VS. CCE 2011(273)ELT 112(TRI. BANG.) RELIANCE PORTS AND TERMINALS LTD. VS. CCE -2015(40)STR 200(TRI. AHMD.) 3.2 Further he submits that Appellant has not provided services in the state of Jammu Kashmir. Such service were provided by sub-contractor Excel Marketing Corporation. There is clear error committed by Commissioner in not considering that services to clients in State of Jammu and Kashmir were actually rendered by sub-contractor. The seized documents from appellant in connection with another enquiry including bills, vouchers, receipts, etc. concerning sub-contractors submitted with specimen documents which have been taken on record. Commissioner had no Justification to ignore appellant s submission that sub-contractors had actually provided services to clients in State of Jammu and Kashmir without service tax. The Appellant have not taken credit of inputs or input services for output services in the State of Jammu and Kashmir. The Commissioner has brushed aside the same on the ground that appellant had not submitted copies o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vat credit attributable to the exempted services, the situation was as if no cenvat credit was taken by the assessee of exempted services. Therefore, the demand that revenue could have made in the present case was payment/ reversal of amount of cenvat credit of input service attributable to exempt services. There is no contravention of provisions of Rule 6 and impugned order has erred in confirming the total demand of Rs 2,69,93,599/-. He placed reliance on the following decisions:- HELLO MINERALS WATER PVT. LTD. VS. UIO 2004 (174)ELT 422 (ALL) HI-LINE PENS PVT. LTD. VS. COMMISSIONER 2003(158)ELT 168 (TRI. DEL) BHARAT EARTH MOVERS LTD. VS COLLECTOR -2001(136)ELT 225 (TRI. BANG.) CCE, AHMEDABAD II VS. MAIZE PRODUCT- 2009(234)ELT 431 (GUJ.) MERCEDES BENZ INDIA LTD. 2015(40)STR 381 3.5 He also argued that demand of Rs. 2,69,93,599/- has been wholly time barred because there was no suppression of facts and assessment of tax had also been made correctly by the appellant for the entire period. The dispute raised by Revenue was that tax assessed was required to be paid in cash and not through credit. There was no suppression of facts on assessment of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Vijayanand Roadlines Ltd. v. CCE, Belgaum reported in 2007 (7) S.T.R. 219 (Tri.-Bang.), with reference to Rule 3(5) of the Service Tax Credit Rules, 2002, which is pari materia with Rule6(3)(c) of the Cenvat Credit Rules, 2004, has held that the utilization is not restricted to monthly or quarterly basis and that it can be utilized at any time. We agree with this submission. In the case of Vijayanand Roadlines Ltd. (supra) the Appellant during June 2003 to December 2003 period, as against service tax credit utilization quota of 35% of the total service tax payable, had paid entire service tax through PLA and they utilized the unutilized quota of payment through duty credit for January 2003 - December 2003 period, during January 2004 - March 2004 period and the Tribunal held that there is no time frame fixed in Rule 3(5) of the Service Tax Credit Rules, 2002 for utilization of the credit to the extent of 35% of the tax liability. 5.2 Therefore, in the present matter the demand of service tax on this ground does not sustain. As several years have passed, the appellant would have been entitled to utilize the credit subsequent to the period in question and therefore the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable and no service tax demand is sustainable in this matter. We also find the support in this context from the decisions of Tribunal passed on the identical issue in the matter of Ramboll Imisoft Pvt. Ltd. Vs. Commissioner of Customs Central Excise, Hyderabad-II- 2017 (47) S.T.R. 61 (Tri. - Hyd.) wherein the tribunal held as under: 5. It is the case of Department that as the appellant availed credit on common input services for providing services to the State of Jammu Kashmir and rest of the country, the appellant ought to have maintained separate accounts as the services provided in Jammu Kashmir is exempted and services provided to rest of the country is taxable services. On failure to maintain separate accounts, the appellant is liable to reverse the proportionate credit attributable to the input services utilized for providing services in the State of Jammu Kashmir. 6. The period of dispute is 4/2008 to 9/2010. During the relevant period the definition of output service under Rule 2(p) of Cenvat Credit Rules, 2014 is any taxable service, excluding the taxable service referred to in sub-clause (zzp) of Clause (105) of Section 65 of Finance Act, prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants are not eligible for the Cenvat credit and accordingly are liable to pay the service tax in excess of 20% through PLA. There is no dispute as to the fact that the appellant had provided services to SEZ units. However on perusal of the retrospective amendment as has been brought in by Finance Act, 2012 by Section 144, we find that the Central Government has categorically stated that if any services are rendered to a unit situated in SEZ, the said services cannot be termed as exempted services. We may reproduce the said retrospective amendment. Amendment of Rule6 of Cenvat Credit Rules, 2004. 144. (1) In the Cenvat Credit Rules, 2004, made by the Central Government in exercise of the powers conferred by Section 37 of the Central Excise Act, 1944 (1 of 1944), sub-rule (6A) of Rule 6 as inserted by Clause (ix) of Rule 5 of the Cenvat Credit (Amendment) Rules, 2011, published in the Official Gazette vide notification of the Government of India in the Ministry of Finance (Department of Revenue) number G.S.R. 134(E), dated 1st March, 2011 shall stand amended and shall be deemed to have been amended retrospectively, in the manner specified in Column (2) of the Eighth S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.Therefore, we hold that the demand of service tax confirmed by the impugned order is not sustainable in law. 5.6 Further, we also find that the Hon ble High Court of Bombay, in the case of Repro India Ltd., reported in 2009 (235) E.L.T. 614 (Bom.) held that the provisions of Rule6(3)(b) of the Cenvat Credit Rules are not attracted in the case of exports as Rule6(6)(v) provides an exception in the case of clearances for export. As per Section 2(m) of Special Economic Zones Act, 2005, supplying goods, or providing services, from a unit in DTA to a SEZ unit or SEZ developer is deemed as export and vide Section 50 of the said Act, the provisions of SEZ Act shall prevail over the provisions of other enactments. Thus supplies made to SEZ or SEZ developer amounts to export . Viewed from this perspective also, the appellant is rightly entitled to Cenvat credit on the inputs and input services used in or in relation to rendering of output services to a unit in SEZ or to a SEZ developer. It is to be noticed that when the supply of service to SEZ is treated as export, it is necessarily in the context of supply by the DTA units and to extend all the benefits available in respect of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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