Custom, Excise & Service Tax Tribunal
M/S Indo Rama Synthetics (I) Ltd vs Commissioner Of Central Excise, Nagpur on 13 August, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Application No. E/S/93877/13 in Appeal No. E/85998/13 (Arising out of Order-in-Original No. 68/2012/C dated 30.11.2012 passed by the Commissioner of Central Excise & Customs, Nagpur). For approval and signature: Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Indo Rama Synthetics (I) Ltd. Appellant Vs. Commissioner of Central Excise, Nagpur Respondent Appearance: Shri Gajendra Jain, Advocate Shri Bharat Raichandani, Advocate for Appellant Shri Ahibaran, Addl. Commissioner (AR) for Respondent CORAM: SHRI P.R. CHANDRASEKHARAN, MEMBER (TECHNICAL) SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 13.08.2013 Date of Decision: 13.08.2013 ORDER NO. Per: P.R. Chandrasekharan
The appeal and stay application are arising against Order-in-Original No. 68/2012/C dated 30.11.2012 passed by the Commissioner of Central Excise & Customs, Nagpur.
2. The appellant, M/s Indo Rama Synthetics (I) Ltd., Nagpur availed CENVAT Credit of Service Tax paid on Management, Maintenance or Repair Services as defined under Section 65(105)(zzg) of the Finance Act, 1994 in their factory. The electricity generated was utilized partly in the manufacture of excisable goods as well as exempted goods and partly being supplied to electricity grid of the Maharashtra State Electricity Board (MSEB in short). The department issued a show-cause notice dated 28.11.2011 demanding recovery of proportionate CENVAT Credit of the Service Tax paid on Management, Maintenance or Repair Services on the ground that the appellant is not eligible for CENVAT Credit in respect of electricity supplied to MSEB. Accordingly, a demand of Rs.51,27,157/- for the period 2007-08 to 2010-11 (upto October, 2010) along with interest thereon was proposed along with imposition of penalties. The case was adjudicated vide the impugned order and demand was confirmed along with interest and also by imposing penalties.
3. The learned Counsel for the appellant submits that there is no dispute that Service Tax has been paid on the Management, Maintenance or Repair Services under Section 65(105)(zzg). As per Rule 6(5) of the Cenvat Credit Rules, 2004, it has been provided that notwithstanding anything contained in sub-rules (1), (2) and (3), credit of the whole of service tax paid on taxable service as specified in sub-clause (g), (p), (q), (r), (v), (w), (za), (zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) of clause (105) of section 65 of the Finance Act shall be allowed unless such service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services. Therefore, in respect of services falling under sub-clause (zzg) of Section 65(105), credit of the whole Service Tax paid would be available even if the service is used partly in relation to manufacture of exempted goods or exempted service. In the present case, the electricity has been consumed in the manufacture of dutiable goods as well as exempted goods and there is no dispute in this respect. Therefore, as per the provisions of sub-rule (5) of Rule 6 of the Cenvat Credit Rules, 2004, the appellant is eligible for credit. Accordingly, he prays for grant of stay and allowing the appeal. The learned Counsel for the appellant also relies on the following decisions: -
(i) CCE, Nagpur Vs. Indorama Textiles Ltd. 2010 (260) ELT 382 (Bom) affirmed by the Hon'ble Supreme Court as reported in 2010 (260) ELT A83 (SC).
(ii) Union of India Vs. HEG Ltd. 2012 (275) ELT 316 (Chattis.)
4. The learned Commissioner (AR) appearing for the Revenue reiterates the findings of the adjudicating authority.
5. We have carefully considered the submissions made by both the sides. As the issue lies in a narrow compass, we are of the view that the appeal itself can be disposed of at this stage. Therefore, after dispensing with the requirement of pre-deposit of the dues adjudged against the appellant and with the consent of both sides, we take up the appeal for consideration and disposal.
5.1 The appellant has availed credit of Service Tax paid on the services falling under Section 65(105)(zzg). From sub-rule (5) of Rule 6 (extracted supra) in respect of the said services, the credit can be availed even if the part of the service is used in relation to manufacture of exempted goods. There is no stipulation that the services should be availed exclusively in the manufacture of dutiable goods. Therefore, there is merit in the appellants contention in this regard. In the case of HEG Ltd. (supra), a similar issue arose in respect of capital goods which were used in manufacture of dutiable as well as exempted goods and the Hon'ble High Court held that capital goods used partly in the manufacture of dutiable goods and partly in the manufacture of exempted goods, capital goods credit cannot be denied. The same logic would apply in respect of interpretation of sub-rule (5) of Rule 6 also. Thus, the appellant is rightly entitled to take credit on Management, Maintenance or Repair Services as provided under sub-rule (5) of Rule 6 of Cenvat Credit Rules, 2004.
6. In view of the above, we set aside the impugned order and allow the appeal. The stay petition is also disposed of.
(Dictated and pronounced in Court)
(Anil Choudhary) (P.R. Chandrasekharan)
Member (Judicial) Member (Technical)
Sinha
1