TaxTMI 
TaxTMI 
2019 (11) TMI 1462
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.... is the liability of credit availed on procurement of 'cube testing machines', 'excavators', 'generators' and 'EOT cranes' which, at some time or other, had been deployed in the erstwhile state of Jammu & Kashmir or for rendering services in Gabon and Mauritius. A second issue pertains to non-discharge of obligation as provider of 'erection, commissioning and installation service' held to be taxable under section 65(105)(zzd) of Finance Act, 1994 and the third arises from the finding of the original authority that appellant had availed depreciation under Income Tax Act, 1961 to disentitle them, under rule 4(4) of CENVAT Credit Rules, 2004, from availment of credit of duties paid on capital goods. 2. The appellant renders 'commercial and industrial construction service', as defined in section 65(25b) of Finance Act, 1994, to which end capital equipment is necessary and it has been held that, as per rule 6(4) of CENVAT Rules, 2004, the embargo on credit of duty paid on capital goods used exclusively for rendering exempt services required reversal of credit attributable to equipment that were used outside the territory over which Finance Act, 1994 empowered levy and collection of t....
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....cto Construction Ltd. He placed particular emphasis on the finding of the adjudicating authority that the fate of the revised return did not appear to be on record. 5. There is no dispute that the capital goods were brought into the premises of the appellant and were, therefore, entitled to claim the credit of duty liability discharged by the supplier. That the goods were utilised in the erstwhile state of Jammu & Kashmir and in Gabon is also not in dispute. That the activity rendered in Gabon and that provided in Jammu & Kashmir were not subject to tax under Finance Act 1994 and Central Excise Act, 1944 is also undisputed. 6. At this stage, the scope of rule 6 of CENVAT Credit Rules, 2004, relied upon in the impugned order, bears examination. The scheme of CENVAT credit envisages an option to adjust the levies borne on excisable goods and taxable services while discharging liability thereon and thereby permits accumulation of credit attributable to inputs and input services required for such manufacture or rendering of services. The converse, much favoured by tax authorities, of inadmissibility except when exclusively used for such manufacture or rendering of service is not ....
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....sation for restricting of credit. 9. The decision of the Tribunal in re Brindavan Beverages Pvt Ltd holding that '7. In terms of the provisions of sub-Rule (4) of Rule 6 of the Cenvat Credit Rules, 2004 Cenvat credit shall not be admissible on capital goods which are used exclusively in the manufacture of exempted goods or in providing exempted services, other than the final products which are exempt from the whole of the duty of excise leviable thereon under any notification, where the exemption is granted based on the value or quantity or clearances made in a financial year. From a perusal of this sub-Rule, it is clear that capital goods Cenvat credit would be admissible when the capital goods are used either only for dutiable final product or for dutiable as well as exempted final product. The capital goods Cenvat credit is also admissible when a manufacturer is availing full duty exemption based on the value or quantity of the goods cleared in a financial year, in which case, while initially the manufacturer will be availing full duty exemption (for some months or for several financial years at a stretch) but subsequently at some point of time when he crosses the th....
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....re of exempted goods on trial basis and subsequently were used for manufacture of dutiable goods when regular production was started, the Cenvat credit in respect of capital goods cannot be denied and the Tribunal's judgment in case of M/s. Surya Roshni Ltd. (supra) would not be applicable.' is confirmation of our independent evaluation of legislative intent. 10. In the facts of the dispute before us, there is no finding that the impugned 'capital goods' were intended in the exclusive usage for activities that are beyond the scope of taxation under Finance Act, 1994. Furthermore, we are unable to ascertain from the findings whether deployment of the 'capital goods' in Gabon and Mauritius was not for performance of activities that would have been taxed but for being export of services. The impugned order has also placed reliance on rule 3(5) of CENVAT Credit Rules, 2004 to justify the recovery of credit; we are unable a find reference to this provision in the show cause notice. It is settled law that the noticee cannot be denied an opportunity to rebut the grounds on which proceedings are initiated against them. These aspects need examination before the claim of the appellant ....