2009 (5) TMI 831 - AT - Central Excise

CENVAT credit - C&F Agents service - Held that - credit of service tax paid under C&F Agents service was incorrectly denied on the ground that the Board Circular came to be issued subsequent to the material period. The documents called debit notes had apparently contained all the particulars required to be provided in an invoice were adequate to avail CENVAT credit.

Summary

Issues:
1. Inadmissible CENVAT credit availed by the appellant.
2. Applicability of CBEC Circular on service tax incurred under C&F agent service.
3. Denial of service tax credit on the ground of availing against debit notes.

Analysis:

1. Inadmissible CENVAT credit availed by the appellant:
The Commissioner (Appeals) upheld the demand for an amount of Rs. 99,439 as inadmissible CENVAT credit availed by the appellants during a specific period. The demand was based on two counts: first, the inadmissible credit of service tax paid under C&F agent service related to the export of finished goods, and second, the CENVAT credit of service tax availed based on documents not prescribed under the Central Excise Rules.

2. Applicability of CBEC Circular on service tax incurred under C&F agent service:
The appellant moved an application for waiver of pre-deposit, arguing that the denial of credit under C&F agent service for export of finished goods was incorrect. The appellant cited the CBEC Circular No. 91/8/2007-S.T., dated 23-8-2007, clarifying the admissibility of such service tax credit incurred up to the place of removal of finished goods. The appellant also relied on previous Tribunal decisions supporting the consideration of services availed until the Port area as input services. The Tribunal found that the credit was incorrectly denied based on the timing of the Circular and accepted the appellant's argument supported by the certificate issued by a third party.

3. Denial of service tax credit on the ground of availing against debit notes:
Regarding the denial of service tax credit on the basis of availing against debit notes, the appellant argued that the debit notes were essentially bills raised by the service provider. The appellant submitted a certificate from a third party confirming that the debit notes were equivalent to bills/invoices. The Tribunal, after considering the submissions and case law presented, found that the denial of service tax credit on this ground was not sustainable. It concluded that the documents in the form of debit notes contained the necessary particulars required for availing CENVAT credit, thereby ordering a waiver of pre-deposit and stay of recovery of the adjudged dues pending the appeal decision.

In summary, the Tribunal ruled in favor of the appellant, granting a waiver of pre-deposit and stay of recovery based on the prima facie case made against the impugned demand and penalty. The judgment highlighted the importance of adherence to Circulars, the validity of documents for availing credit, and the need for a thorough examination of the facts and submissions before making a decision in such matters.