2014 (11) TMI 657 - AT - Service Tax

CENVAT Credit - Imposition of interest on unutilized credit - Rule 14 - whether a mere taken of CENVAT credit facilities without actually using it, would carry interest as well as penalty - Held that - Following decision of Strategic Engineering (P) Ltd. 2014 (11) TMI 89 - MADRAS HIGH COURT - mere taking itself would not compel the assessee to pay interest as well as penalty - the only aspect that requires verification is whether the appellant had credit of more than the amount taken on capital goods during the relevant period or not. Since this requires factual verification and the details are not available, we consider that this issue also has to be remanded for consideration. - Decided in favour of assessee.

Summary

Issues involved:
1. Condonation of delay in filing the appeal.
2. Admissibility of Cenvat credit on service tax paid by distributors of SIM cards.
3. Demand for interest on short paid service tax on international roaming service.
4. Demand for interest on 50% of credit taken in 2006-07.

Condonation of delay in filing the appeal:
The appellant sought condonation of a 16-day delay in filing the appeal, explaining that the Order-in-Original was misplaced by company officials. The Tribunal was satisfied with the reasons provided and accordingly condoned the delay.

Admissibility of Cenvat credit on service tax paid by distributors of SIM cards:
A demand of Rs. 5,20,09,346 arose from service tax credit paid by SIM card distributors on commission received from April 2006 to March 2011. Referring to a previous Tribunal decision, it was held that credit is admissible, and the matter needed to be remanded for verification of documents.

Demand for interest on short paid service tax on international roaming service:
There was a demand for interest on short paid service tax for the period from April 2006 to September 2006 on international roaming service. The Tribunal considered a previous decision where it was held that no service tax was payable on such service, directing the original adjudicating authority to consider this decision and pass an order accordingly.

Demand for interest on 50% of credit taken in 2006-07:
A demand arose for interest on 50% of credit taken in 2006-07 due to taking 100% credit on capital goods. The appellant argued that interest should not be payable if the credit was not utilized, citing relevant court decisions. The Tribunal noted the need for factual verification and remanded the issue for consideration.

Overall Decision:
The impugned order was set aside, and the matter was remanded to the original adjudicating authority for a fresh consideration of all issues after observing the principles of natural justice. The Tribunal emphasized the need for factual verification in certain aspects and directed the authority to pass an appropriate order in accordance with the law.

*(Operative portion of the order has been pronounced in open court)*