LAWS(CE)-2011-2-98

INSTRUMENTATION LTD. Vs. COMMISSIONER OF C. EX., JAIPUR

Decided On February 21, 2011
INSTRUMENTATION LTD. Appellant
V/S
Commissioner Of C. Ex., Jaipur Respondents

JUDGEMENT

(1.) BY the impugned order, cenvat credit of Rs. 1,32,33,287/ - along with interest and equivalent amount of penalty, were demanded from the applicants.

(2.) The facts of the case are that the applicants are manufacturer as well as service provider. During the course of business activities, the applicants are procuring both input and input services. While procuring, input or input services, the applicants are paying duty/service tax. The applicants take credit in their cenvat account of duty/service tax paid. It is admitted fact that the applicants are maintaining a common account of cenvat credit for their manufacturing activity as well as providing services. The applicants are filing their returns regularly. In their service tax return, the applicant claimed credit in their cenvat credit account both for duty/tax paid on inputs and input services. During the course of audit, it was observed that the applicants were not maintaining separate account of cenvat credit for their manufacturing activity as well as for providing services. Hence according to the department, they are not entitled to claim whole credit lying in their cenvat credit account for payment of duty on output services. A show cause notice was issued for disallowing the credit availed by them and demands were confirmed along with interest and penalty. Aggrieved by the said order, the applicants are before us.

(3.) THE learned Advocate for the applicants submits that the applicants are having a common cenvat credit account for inputs and input services for their activities of proving services/manufacturing. He further submitted that in Cenvat Credit Rules, nowhere it is specified that the assessee has to maintain separate cenvat credit accounts for manufacturing activity and output services. As the applicants are having a common account, they utilised the credit against payment of tax on output services and admittedly they have not utilized the same credit for paying duty on manufactured products. Hence the impugned order is not sustainable in the eyes of law and prayed for grant of waiver of pre -deposit of entire demand during the pendency of the appeal.