2010 (10) TMI 780 - AT - Service Tax

Duty demand Cenvat credit - demand has got enhanced to the extent of Cenvat credit available in their book - original adjudicating authority rejected the claim that the appellant has Cenvat credit available in the order. He also did not accept the claim made by the appellant that amount of Cenvat credit already debited should be appropriated towards amount payable by them - Commissioner (Appeals) has taken a view that the debit of Cenvat credit made by the appellant has to be accepted by the department in view of the fact that the same has not been challenged and according to the law, in the self assessment procedure, the assessee is free to utilize the credit and if the department has any problem, department can take action. Having failed to take any action or in the absence of any evidence for such action, the Commissioner (Appeals) can be said to have held that reversal of Cenvat credit made by the appellant has to be taken as payment towards service tax and other dues confirmed against the appellant Held that - Amount paid by the appellant is to be taken as amount paid towards dues, appeal is allowed with consequential relief

Summary

Issues:
Service Tax demand for photography services, Applicability of Cenvat credit, Rejection of Cenvat credit claim, Debit of Cenvat credit towards dues, Appeal against Service Tax demand.

Analysis:
The appellant, engaged in photography services, faced a Service Tax demand of Rs. 8,07,610 for the period from 16-8-2001 to 31-12-2005, along with interest and penalty under section 78 of Finance Act, 1994. The appellant surrendered the registration certificate on 25-4-2007 after a search and seizure of records. The appellant claimed debiting Cenvat credit of Rs. 3,79,112, but the Department did not consider this while calculating the Service Tax due. The original adjudicating authority observed that the amount paid by the appellant was appropriated, but rejected the claim regarding Cenvat credit without evidence of its admissibility. The Commissioner (Appeals) highlighted the self-assessment nature of Cenvat credit utilization, emphasizing the appellant's freedom to debit the credit for tax payment without requiring approval. The dispute centered on whether the appellant had paid the amount post the Order-in-Original, with conflicting views from authorities on the Cenvat credit issue.

The appellant contended that the Cenvat credit debited by them should be considered towards the dues arising from the adjudication order. The Commissioner (Appeals) implied acceptance of the debit from Cenvat credit account as payment, as it was not challenged and aligned with self-assessment principles. The judgment directed that the amount paid by the appellant, as per the submitted table, should be recognized as payment towards the dues, allowing the appeal with consequential relief. The Revenue was instructed to inform the appellant of the interest amount payable, to be settled within 15 days, followed by payment within 15 days thereafter, ensuring compliance with Service Tax, penalty, and interest payment within 30 days of the order.