Case Law Details
Larsen & Toubro Limited Vs Commissioner of CGST & CX (CESTAT Kolkata)
CESTAT held that in respect of utilisation of Cenvat credit there is no requirement of one to one correlation and cross utilisation of credit is permissible. C.B.E. & C. vide Letter F. No. 381/23/2010/862, dated 30-3-2010, clarified that Cenvat credit on inputs, capital goods and input services which are used for manufacture of goods or for provision of services is available in a common pool and can be used for payment of Excise duty and/or Service Tax. Credit accumulated by the service provider or manufacturer on the input services availed as well as inputs is available for payment of Excise duty or Service Tax. Any contra view taken would defeat the very scheme of credit. It has been held in numbers of cases that as far as the inputs or input services are availed on payment of duty and as long as they are capable of being used in the provision of Service Tax and manufacture of excisable goods, credit cannot be denied and that there is no requirement of one-to-one correlation.
FULL TEXT OF THE CESTAT KOLKATA ORDER
M/s. Larsen & Toubro Limited (hereinafter referred to as the Appellant) had provided taxable services under the category of ‘Consulting Engineering Services” and “Supply of Tangible Goods Services” during the period from October 2011 to March 2012 for a total value of Rs.2,22,75,660/- and discharged Service Tax of Rs.26,68,059/- by utilizing CENVAT Credit on inputs, capital goods and input services, which was available to them as a manufacturer of those goods under the Central Excise Act, 1944. Show Cause Notice dated 14.07.2015 was issued alleging wrong utilization of CENVAT Credit towards payment of Service Tax on output services. A detailed reply dated 14.08.2015 was filed by the Appellant denying the allegations leveled in the Show Cause Notice. However, the Assistant Commissioner of Central Excise, Customs & Service Tax, Rourkela-II Division disallowed the CENVAT Credit of Rs.26,68,059/- under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 and ordered for recovery along with appropriate interest. Penalty of equal amount was also imposed under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. On Appeal, the Ld.Commissioner(Appeals) upheld the Adjudication Order and rejected the Appeal before him on the ground that the CENVAT Credit which has been utilized for payment of Service Tax on output service has been availed as a manufacturer and should have been utilized for payment of duties related to manufacture of excisable goods and not for payment of Service Tax payable on output services provided by the Appellant. Hence the present appeal before the Tribunal.
2. The Ld.Advocate appearing on behalf of the Appellant submits that the Revenue has erred in appreciating the provisions of Rule 2 & 3 of CENVAT Credit Rules, 2004 which provided for inter-sectoral CENVAT Credit on goods and services. The amendment brought in CENVAT Scheme w.e.f. 10.09.2004 categorically permits cross-sectoral utilization of credit which was also stated by the Finance Minister in his speech on 8th July 2004for the Financial Year 2004-05. The Hon’ble Supreme Court in the case of K.P.Verghese [(1981) 131 ITR 594 (SC)] held that such speeches act as guidesfor interpretation of statutes to ascertain the intent of the legislature. He relies on the Tribunal’s decision in the case of Tally Solutions Pvt.Ltd. Vs. Commissioner of Central Excise [2020 SCC OnLine CESTAT 149] and S.S. Engineers v. Commissioner of Central Excise [2015 (38) S.T.R. 614 (Tri.-Mum.)] affirmed by the Hon’ble Bombay High Court in 2016 (42) S.T.R. 3 (Bom.)]. The Ld.Advocate further submits that there is no statutory requirement of one to one co-relation or nexus between activities of payment of Service Tax against the CENVAT Credit availed on input, capital goods and input services.
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