At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai
By, THE HONORABLE JUSTICE: RAJU
For Respondents: A.B. Kulgod, AC (AR)
1. The appellants are manufacturer and are also engaged in providing installation and commissioning services. During audit, it was noticed that the appellant had failed to pay Service Tax on services of installation & commissioning. On renting of immovable property, the appellants paid the said amount of Service Tax using CENVAT Credit available to them as manufacturers. A notice was issued to the appellant alleging that it was incorrect to utilize the CENVAT Credit earned on manufacturing activity for payment of Service Tax liability but show-cause notice does not cite any rule. The demand was confirmed by the lower authorities. Aggrieved by the said order, the appellants are before Tribunal.
2. None appeared for the appellants.
3. Learned AR relied on the impugned order.
4. The Order-in-Original relied on Rule 3(1) and Rule 3(4) of the CENVAT Credit Rules, 2004 and held that the manufacturer cannot use credit availed to discharge Service Tax liability as Service Tax provider in absence of any nexus. I find that there is no such requirement for a person to keep separate CENVAT Credit accounts for manufacturing and service activities. Rule 3(1) of the Cenvat Credit Rules provides that a person can avail credit in respect of the manufacturing activity as well as in respect of the activities of providing services. This is a common pool and no different pool for manufacturing and service related activities. Rule 3(4) of the Cenvat Credit Rules prescribes that such credit can be used for payment of excise duty or for Service Tax on any output services. I find that there is no such condition that the CENVAT Credit earned under Rule 3(1) of the Cenvat Credit Rules can be used for X purposes and not for Y purposes.
4.1 The second issue raised is that the appellants are registered separately as manufacturer and service provider. As a result, there are two distinct different activities. Credit earned by one entity cannot be used by another entity. It is observed that both Central Excise registration and Service Tax registration are taken
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by same legal entity, therefore, despite two different registrations, a single CENVAT Credit account can be maintained. 5. In view of the above, the demand cannot be sustained. The appeal is consequently allowed.