Whether availment of Rule 6(5) credit after April, 2011 proper?

PJ/CASE LAW/2015-16/2867

Case:-ADITYA BIRLA RETAIL LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASIK

Citation:- 2015 (39) S.T.R. 303 (Tri. - Mumbai)

Brief Facts:-The appellants are in appeals against the impugned order wherein the demand of duty of 5%/10% of the value of exempted goods have been confirmed against the appellants along with interest and penalties on the basis that the appellants are engaged in the manufacturing of dutiable as well as exempted products and availing input service credit without payment of duty under Rule 6(3)(i) of Cenvat Credit Rules, 2004.

Appellants Contention:-The contention of the learned consultant for the appellants is that prior to April 2011, Rule 6(5) of Cenvat Credit Rules, 2004 was in force and as per the said Rule there were specified services which were available to take input service credit if the assessee is engaged in manufacturing of both dutiable as well as exempted goods. As in this case the appellants have distributed the credit of the service availed prior to April, 2011 therefore, it was of the view of the lower authorities that from April, 2011 the appellants are not entitled to take Cenvat credit on these goods. If they have taken the credit they are required to reverse 5%/10% value of the exempted final product. The issue is squarely covered by the Circular No. 943/04/2011-CX., dated 29th April 2011. Therefore, it is prayed that the impugned order is required to be set aside.

Respondents Contention:-On the other hand, learned AR opposes the contention of the learned Consultant and submits that from April 2011 Rule 6(5) has been deleted from the statutory books. Moreover, the Circular relied on by the learned Consultant relates to rent-a-cab service which was excluded from input service. In this case the service namely security service has been availed by the appellant.

Reasoning of Judgement:-Considered the submissions made by both the sides. The issue of availment of service prior to April, 2011 is not in dispute. Therefore, it was held that as per Rule 6(5) of Cenvat Credit Rules, 2004, during the relevant time, the appellants are entitled to take Cenvat credit on inputs service namely security service. It is immaterial whether the same is taken later on as held in the Circular No. 943/04/2011-CX., dated 29-4-2011. In these circumstances, it was held that the appellants are entitled to take Cenvat credit and are not required to reverse the amount equivalent to 5%/10% of the value of the exempted goods. With these terms, the impugned order is set aside and the appeals are allowed with consequential relief, if any.

Decision:- Appeals allowed.

Comment:- The crux of the case is that as per C.B.E. & C. Circular No. 943/04/2011-CX., dated 29-4-2011 for Rule 6(5) services availed prior to April, 2011, assessee is entitled for availing 100% cenvat credit and is not required to reverse the amount equivalent to 5%/10% of value of exempted goods.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2867

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