one firm provide services under category 'Supply of Tangible Goods' using exempted capital goods.
Such capital goods are manufactured using various inputs. Cenvat credit on such input is utilized for output service tax payment.
Now the question is
can one take cenvat credit on inputs used for manufacturing exempted capital goods which are in turn used as intermediate goods for providing taxable service (supply of tangible goods).?
If yes/no how/why.
The Hon Supreme Court, in the case of CCE Vs Solrais Chemtech Limited (2007) 214 ELT 481 (SC) has held that even though intermidiate product is non-excisable, being used for manufacture of taxable GOODS, modvat credit on inputs used for such intermediate product is allowed.
CAN WE CONSIDER TAXABLE GOODS AND TAXABLE SERVICE ON THE SAME FOOTING FOR CENVAT PURPOSES.??
SINCE CENVAT CREDIT FOR GOODS AS WELL AS SERVICE WHAT WILL BE THE CORRECT POSITION.?