Appeal granted, service tax demand set aside. Cenvat credit pool usage allowed without separate accounts.

The Tribunal allowed the appeal, setting aside the demand for service tax payment. It ruled that utilizing Cenvat credit from a common pool for service tax payment is permissible, highlighting the absence of a requirement for separate accounts for manufacturing and service activities. The decision was based on legal provisions, precedents, and a Board circular supporting the practice of maintaining a consolidated Cenvat account for both manufacturing and service activities.

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Issues involved:
The issue involved is whether the appellant is eligible to utilize Cenvat credit of input and inputs service related to manufacturing of goods for payment of service tax on output service when the assessee is involved in both manufacturing as well as service providing.

Comprehensive details of the judgment:

Issue 1:
The appellant, engaged in manufacturing and providing output service of renting immovable property, utilized Cenvat credit for service tax payment. The department disallowed the credit, demanding service tax and imposing penalties. The appellant contended that there is no bar for utilizing credit related to manufacturing for service tax payment. The Tribunal referred to precedents and ruled that maintaining a consolidated Cenvat account for both activities is permissible, as per Rule 3 of Cenvat Credit Rules, 2004. The Board's circular also supported this practice. Thus, the appellant rightfully paid service tax from the common pool of Cenvat credit. The appeal was allowed, setting aside the demand.

Final Decision:
The Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the demand for service tax payment. The judgment highlighted the permissibility of utilizing Cenvat credit from a common pool for payment of service tax, emphasizing the absence of any explicit requirement for separate accounts for manufacturing and service activities. The decision was based on legal provisions, precedents, and a Board circular supporting the practice of maintaining a consolidated Cenvat account for both manufacturing and service activities.

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