TaxTMI 
TaxTMI 
2010 (5) TMI 271
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....f overburden in open cast coal mines to M/s. Singareni Collieries Company Ltd., Kothagudem (SCCL). These activities were brought: under the tax net with effect from 16-6-2005 under the entry vide clause 97 (a) of Section 65 of the Finance Act, 1994. The authorities noticed that the appellants had availed Cenvat credit on capital goods namely, excavators during the half years ending 30-9-2005 and 31-3-2006. It was observed that these excavators had been purchased prior to 16-6-2005 when the activities undertaken by the appellants were not exigible to service tax. As per Rule 2(e) of the Cenvat Credit Rules, 2004 (CCR), 'exempted services' means taxable services which are exempt from the whole of the service tax le viable thereon, and....
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....their premises and had not put them in use in providing exempted services. Therefore they had correctly availed the capital goods credit demanded from them vide the impugned order. The Cenvat Credit Scheme was intended to provide relief to the service providers as well as manufactures from the cascading effect in discharging liabilities of service tax and excise duty. As the Cenvat credit was taken on the strength of genuine and proper duty paying documents, denial of the credit was not correct in law. They relied on the decision of the Tribunal in case of M/s. ACE Timez v. CCE, Bangalore [2004 (170) E.L.T. 371 (Tri.-Bang.)] in support. The appellants therein had not availed credit in the financial year in which the capital goods were recei....
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.... duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year." From the above statutory provisions, we find that a person engaged in providing exempted services is not entitled to Cenvat credit of duty paid on capital goods. We also find that in Spenta International Ltd. (supra) case cited by learned Jt. CDR, a Larger Bench of the Tribunal had considered the following reference "Whether Cenvat credit eligibility is to be determined with reference to the dutiability of the final product on the date of receipt of the goods or the date of utilization/eligibility of 50% credit?" The reference was answered by holding that Cenvat credit eligibility....
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....n the factory that too after issue of sh9w cause notice. In Kaleesu wan Refinery Pvt. Ltd. (supra) case, the Tribunal similarly held that Rule 6(4) of CCR barred availment of credit on capital goods if at the time of receipt they are used exclusively in the manufacture of exempted products. We find that the decision in the ACE Timez (supra) case cited by the appellants was passed in a case of a different factual matrix. The appellants therein had been availing exemption in terms of Notification No. 8/2001. The provisions of Section 6 (4) of CCR do not apply to an assessee who availed exemption based on the value of clearances. Therefore, ACE Timez decision does not advance the case of the appellants. Moreover, vide Circular F. No. 137/12....