2013 (12) TMI 615 - AT - Service Tax

CENVAT Credit - Revenue contends that appellants are clearing their final product on payment of service tax as also without payment of service tax, they are entitled to use only 20% of the credit as availed - Assessee accepting the same made self-book adjustment - Imposition of penalty - Held that - From the letter dated 30-6-2009, we find that a proper intimation was given to the Asstt. Commissioner and the said letter also discloses the discussion between the appellant and the Asstt. Commissioner. It is also written in the said letter that Asstt. Commissioner was kind enough to permit the appellant to take the credit. Revenue is not disputing that the said letter was filed by the appellants. If that be so, the permission of the Asstt. Commissioner is deemed to have been granted during the personal discussion between the appellant and the Asstt. Commissioner. We find no reasons to direct the appellants to deposit any part of demand or the penalty imposed - Stay granted.

Summary

Issues:
1. Applicability of service tax on heat treatment process.
2. Utilization of Cenvat credit for payment of service tax.
3. Dispute regarding self-book adjustment and refund claim.

Analysis:
1. The appellant was engaged in the heat treatment process for their principals, with some customers paying duty on the final product, exempting the appellant from paying service tax. The appellant availed Cenvat credit for inputs and services used for paying service tax when applicable.

2. The Revenue contended that since the appellant cleared final products with and without service tax payment, they could only use 20% of the availed credit. The appellant acknowledged this and paid duty in cash, resulting in a credit of Rs. 5,81,850 in their account, which was utilized for past service tax payments.

3. Subsequently, a show cause notice challenged the self-book adjustment, stating that a refund claim should have been filed instead. However, the Tribunal found that the appellant had intimated the Assistant Commissioner about the credit adjustment in a letter, where permission was informally granted during discussions. The Tribunal ruled that the permission granted during discussions sufficed, dismissing the Revenue's objection and allowing the stay petition unconditionally.

4. The Revenue referred to a judgment upholding the requirement of a refund claim for suo motu credit. However, the Tribunal rejected this argument, emphasizing that the informal permission granted during discussions by the Assistant Commissioner constituted approval for the credit adjustment. The Tribunal deemed the re-credit as a book adjustment, noting that the Revenue did not dispute the availability of such re-credit to the appellant on merit.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the stay petition and dismissing the Revenue's objections regarding the self-book adjustment and refund claim requirement for the credit adjustment made by the appellant.