Krishi Kalyan Cess (KKC) on the price of 0.5% is being imposed on all taxable companies with impact from 01.06.2016 on all taxable companies supplied or agreed to be supplied by the service supplier. The income collected from this Cess will probably be utilised by the federal government for bettering agricultural sector and for taking initiatives to advertise agricultural actions. Nevertheless, the difficult provisions enshrined for this Cess are likely to defeat the ‘Kalyankari intention’ of the federal government. It’s supplied that solely a supplier of output service shall be allowed to take cenvat credit score of the Krishi Kalyan Cess on taxable companies leviable beneath part 161 of the Finance Act, 2016. This has the consequence of elevating doubt as regards availment of cenvat credit score of KKC levied on enter companies obtained by a producer cum service supplier. Not solely this, it’s being supplied that the cenvat credit score of any obligation shall not be utilised for cost of KKC leviable beneath part 161 of the Finance Act, 2016. Within the opinion of authors, literal interpretation of the availability results in conclusion that solely a service supplier can avail the cenvat credit score of KKC imposed on enter companies availed by it and the credit score so availed could be utilised for cost of KKC and no different obligation. Because of this a producer, who’s a service supplier as effectively, can not avail the cenvat credit score of KKC in any respect on the enter companies obtained by it within the capability of producer of products and consequently, can not utilise the identical for cost of service tax on output companies supplied by it. This interpretation depart from the precept laid by variety of judicial pronouncements which have concluded that legitimately earned cenvat credit score is on the market as a ‘widespread pool’ and there’s no one to at least one co-relation required for utilisation of cenvat credit score earned within the capability of producer in direction of cost of service tax within the capability of service supplier. This ratio has been laid down within the following selections rendered by varied Tribunals:- ♦ COMMISSIONER OF C. EX., SALEM VERSUS V. THANGAVEL & SONS (P) LTD. [2015 (37) S.T.R. 144 (TRI. – CHENNAI)] ♦ C.C.E., COIMBATORE VERSUS LAKSHMI TECHNOLOGY & ENGINEERING INDUS. LTD. [2011 (23) S.T.R. 265 (TRI. – CHENNAI)] ♦ S.S. ENGINEERS VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [2015 (38) S.T.R. 614 (TRI. – MUMBAI)]
♦ FORBES MARSHALL PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [2010 (258) E.L.T. 571 (TRI. – MUMBAI)] ♦ JYOTI STRUCTURES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASIK [2012 (285) E.L.T. 356 (TRI. – MUMBAI)] Nevertheless, it is usually price noting that within the above instances, the availment of cenvat credit score was not conditional that solely service supplier can avail the cenvat credit score of a specific obligation as is being achieved within the case of KKC. It’s pertinent to say {that a} new sub-rule (1a) has been inserted in Rule Three after sub-rule (1) which particularly mentions that ‘A supplier of output service shall be allowed to take cenvat credit score of KKC on taxable companies leviable beneath part 161 of the Finance Act, 2016’. Quite the opposite, Rule 3(1) states that ‘A producer or producer of ultimate merchandise or a supplier of output service shall be allowed to take credit score (hereinafter known as the Cenvat Credit score)…’ which signifies that the cenvat credit score availed of the duties talked about in Rule 3(1) whether or not availed within the capability of producer or within the capability of service supplier is on the market as ‘Cenvat Credit score’. Within the opinion of authors, the above cited judicial pronouncements won’t have relevance in case of availment of cenvat credit score of KKC on enter companies availed by a producer cum service supplier to be used in or in relation to fabricate of ultimate items. Moreover, when the producer cum service supplier can not avail the cenvat credit score of KKC on the enter companies utilized in manufacture of ultimate items, the query of utilisation of KKC doesn’t come up in any respect. The above interpretation poses a terrific problem on the assessees who’re engaged in manufacture and provision of companies each. Say for instance, a producer of equipment who can be engaged in offering companies of set up, commissioning and restore companies. In such state of affairs, the mentioned assessee will probably be receiving enter companies each for manufacture of equipment and likewise for offering the companies of set up, commissioning and restore companies. In such a case, it might be extraordinarily troublesome for the mentioned assessee to keep up separate information for enter companies utilized in manufacture of equipment in order that no cenvat credit score of KKC is being availed on the identical whereas keep separate information for enter companies utilized in provision of companies equivalent to set up, commissioning and restore companies and avail the cenvat credit score of KKC. Furthermore, what about widespread enter companies availed by the mentioned manufacturer-cum-service supplier. The assessee avails a lot of widespread enter companies within the manufacture/provision of service equivalent to phone companies, Chartered Accountant companies, authorized companies, safety companies and many others. The writer want to spotlight that in case of assessee who’s engaged in manufacturing dutiable items and provision of taxable companies, whereby it’s not potential to establish the cenvat credit score of KKC pertaining to provision of taxable companies, whether or not the assessee would require to adjust to the provisions of Rule 6 of the Cenvat Credit score Guidelines, 2004 even when no exempted companies have been supplied or no exempted items have been eliminated. It’s pertinent to notice that there was no modification in Rule 6 to offer that the provisions shall apply in case of manufacturer-cum-service supplier with respect to credit score of KKY availed on widespread enter companies utilized in manufacture of dutiable items and provision of taxable companies. The prudent assessees in such a state of affairs will certainly discover it handy to forgoe the cenvat credit score of KKC as an alternative of adopting an advanced and tedious process of sustaining separate information.
