2010 (1) TMI 348

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....ing engineer, scientific and technical consultancy service. Service tax demand of Rs. 3,52,81,421/- for the period from 1-9-2004 to 29-2-2008 has been confirmed against the appellant on the ground that appellants had availed Cenvat credit in respect of services which are used in respect of services provided in J&K state and SEZ which were exempted during the relevant time and while paying the Service tax they were required to utilize only 20% of the credit available for payment of Service tax on the input service in accordance with the provisions of Rule 6(3)(c) of Cenvat Credit Rules, 2004. Penalty equal to the Service tax demanded interest on the Service tax demanded have been imposed. 2. Learned advocate on behalf of the appellants su....

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....unt would have got wiped out during the year 2008-2009 when these restrictions were taken out of the statute book. Therefore, the situation would be totally Revenue-neutral. Further, he also submits that it is their contention that services provided to SEZs are not at all exempted and cannot be treated as an exempted service. He also submits that in respect of J & K, it was not the appellants who provide the service but only subcontractors. 3. Learned DR on the other hand submits that as observed by Commissioner in his order appellants were required to maintain separate account even if they had not taken the credit of input services which are common. Further, he also submits that calculation has to be service wise and the method adopted ....

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....on and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take Cenvat credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which Service tax is payable." 5. The very beginning of the rule shows that only where a provider of output service avails Cenvat credit in respect of input services and uses the same and he is engaged in providing exempted as well as taxable services then only he is required to maintain separate accounts for receipt, consumption and utilisation of inpu....