2017 (4) TMI 1323 - AT - Central Excise

CENVAT credit - a certain percentage of the stipulated payment would be withheld on account of performance guarantee - Rule 4(7) of the Cenvat Credit Rules, 2004 - Held that - identical issue decided in the case of M/s. Hindustan Zinc Ltd. Versus C.C.E. Jaipur-II 2017 (1) TMI 373 - CESTAT NEW DELHI , where it was held that in case of any amount retained or discounted after the invoices were issued, the credit need not be changed and full credit of service tax paid to the service provider will be eligible for credit - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Interpretation of Rule 4(7) of the Cenvat Credit Rules, 2004 regarding the allowance of Cenvat credit in respect of input service.
- Applicability of circular dated 30.04.2010 issued by the Board on the issue of credit eligibility in cases of retention or discounting of amounts after invoices were issued.

Analysis:
The appeal was filed against an order-in-original passed by the Commissioner (Appeals)-II, Central Excise, Jaipur-II. The appellant, engaged in the manufacture of lead and zinc, awarded contracts for various projects which included withholding a percentage of payment as a performance guarantee. The appellant deducted 5% - 10% from progressive bills raised by contractors and paid the balance, having already paid the full service tax to the contractors and availed Cenvat credit. The department invoked Rule 4(7) of the Cenvat Credit Rules, 2004, regarding the allowance of Cenvat credit in respect of input service based on payment made. The Tribunal noted a previous decision in favor of the assessee in a similar case where a circular dated 30.04.2010 clarified that credit need not be changed in cases of retention or discounting after invoices were issued, allowing full credit for service tax paid. Citing this precedent, the Tribunal allowed the appeal, setting aside the impugned order as without merit.

In conclusion, the Tribunal relied on a previous decision and a circular to determine that the appellant was eligible for full credit of service tax paid, even in cases where amounts were retained or discounted after invoices were issued. The impugned order was set aside, and the appeal was allowed based on the settled position established by the Tribunal's earlier decision and the clarifying circular from the Board.