TaxTMI 
TaxTMI 
2026 (1) TMI 649
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.... appeal is whether availment of CENVAT credit of service tax paid on licence for providing courier service is tenable. 3. The brief facts are the Appellant is manufacturing PVC pipes and holding Central tax registration. During course of audit, it is observed that Appellant had availed service tax credit on the service not connected with the manufacturing activity undertaken by them and on further verification it was found that the Appellant entered into an agreement with M/s. KSRTC for transporting of parcels/goods, operation of courier services through the buses belonging to M/s. KSRTC and paid an amount of Rs.1,51,11,739/- as license fee including service tax of Rs. 25,80,768/- to the agency and availed the same as CENVAT credit which....
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....e credit availed is wrongly utilized as well. If the credit availed is not utilized, the provision of Rule 14 is not at all applicable. In the instant case, the order-in-original itself at Para 12 gives a categorical finding that the credit availed was not utilized. That being the case, the question of demand for reversal of credit is not legal and proper. 6. Learned Chartered Accountant (CA) further submits that assuming but not admitting that the credit was ineligible, it is an undisputed fact that credit was reversed before utilization of the credit. It is settled law that reversal of the credit tantamount to non-taking of the CENVAT Credit. In this regard reliance is placed on Commissioner of C. Ex., Mumbai-1 Vs. Bombay Dyeing & Mfg.....
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....ayment of excise duty is proper as per Rule 3(4) of CENVAT Credit Rules, 2004. The Learned Chartered Accountant (CA) further submits that the issue was considered by the Hon'ble High Court of Gujarat in the matter of Commissioner of C. Ex. & S.T., Bhavnagar Vs. Pipavav Shipyard Ltd.- 2023 (4) Centax 246 (Guj.) where it is held that:- "45. The case of the appellant is that the Cenvat credit sought to be availed was reflected in the respondent's Monthly Return (ER-2) filed before the Central Excise Officer but not in the respondent's ST-3 Return to be filed before the jurisdictional Service Tax authorities. It is therefore contended that such credit should not be allowed to the respondent as an output service provider, since ....
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....d for ST-3 Return to be filed before the jurisdictional Service Tax authorities. 48. As is held by the CESTAT, the input service credit cannot be denied on the ground that it is shown in the ER-1 return instead of the ST-3 returns since the cross-utilization of credit of input and input service is permissible and Cenvat Credit on input, capital goods and input services used in the manufacturing goods or providing output service is available in common pool and Cenvat Credit taken during the period shown in ER-1 or ST-3 return would be the same and there is no restriction on utilization of the common input credit". 9. Learned Chartered Accountant (CA) also relied on the decision of the Tribunal in the matter of CCE., Coimbatore Vs....
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....attributable to the service provided by them. Common CENVAT Credit Rules have been framed in terms of powers conferred by Section 37 of the Central Excise Act, 1944 and Section 94 of the Finance Act, 1994. Rule 3(1) enables a 'manufacturer' or a 'provider of taxable service' to take credit of specified duties and utilize them to discharge duty liability under Rule 3(4) of the CENVAT Credit Rules. A credit can be utilized for payment of any duty of excise on any final product or for payment of service tax on any output service. The respondent is undisputedly registered as a service provider for providing the services of renting of immovable property. The credit taken by them as manufacturer service provider has been used both....
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.... reversed before utilization and immediately on being pointed out by Revenue. The said fact is accepted in Para 12 of adjudication order. When the credit was reversed without utilization, the issue of notice itself was invalid in terms of Rule 14 of CENVAT Credit Rules, 2004, as there should be utilization of credit to issue of Notice. Further they were entitled for benefit of Section 11A (2), whereby no notice could have been issued and penalty under Rule 15 of the CENVAT Credit Rules, 2004 is not leviable. Further Penalty under Rule 15(1) is imposed without any proceedings for confiscation of goods. That being a case, such proceedings are incorrect. Further submits that there was no intention to avail the ineligible CENVAT Credit and acco....