2016 (8) TMI 1263 - AT - Service Tax

CENVAT credit - GTA services - common inputs used for manufacture of both taxable and tax free output - Held that - taking notice of the fact that the appellant has already reversed credit taken along with interest, which appears to be falling short of 24%, we allow this appeal - We further direct the appellant/assessee to deposit the differential interest for the period they had taken the credit, that is from the date of credit up to the date of reversal by way of deposit, that is 21-4-2006, and file compliance report - appeal allowed.

Summary

Issues Involved:
Cenvat credit on common inputs, demand under Rule 6(3), interest and penalty, appeal against Order-in-Original, amendment to the Finance Act, 2010, reversal of Cenvat credit, differential interest calculation, compliance report submission.

Cenvat Credit and Demand under Rule 6(3):
The appellant had taken Cenvat credit of ?95,750/- on common inputs, specifically GTA service, utilized for manufacturing both taxable and tax-free output. A show cause notice proposed a demand under Rule 6(3) amounting to ?1,61,31,308/- along with interest and penalty. In response, the appellant deposited the credited amount along with interest on 21-4-2006. The Order-in-Original dated 10-10-2007 confirmed the proposed demand, leading to the appellant's appeal before the Tribunal.

Amendment to the Finance Act, 2010 - Reversal of Credit:
The Tribunal noted the amendment to the Finance Act, 2010, which required the assessee in pending disputes under Rule 6 of the Cenvat Credit Rules, 2004, to reverse or pay the proportionate Cenvat credit along with interest at 24% per annum. Acknowledging that the appellant had already reversed the credit with interest, albeit falling short of 24%, the Tribunal allowed the appeal and set aside the impugned order. The Tribunal directed the appellant to deposit the differential interest from the date of credit until the date of reversal (21-4-2006) and submit a compliance report along with a copy of the order to the adjudicating authority within 30 days.

Compliance Report Submission:
The Tribunal pronounced the decision in the open court, emphasizing the appellant's obligation to deposit the differential interest within the stipulated period and file a compliance report with the adjudicating authority. This requirement ensures the appellant's adherence to the Tribunal's directives and facilitates the monitoring of the case's resolution process.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT ALLAHABAD highlights the key issues, legal implications, and the Tribunal's decision regarding the Cenvat credit dispute and the subsequent directions for compliance with the revised interest calculation.