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2015 (2) TMI 436 - AT - Service TaxNon maintenance of separate accounts - CENVAT Credit - Held that - As regards the period prior to 1.4.2008 there was a cap of 20% of the credit taken with respect to utilization in case the credit pertains to both taxable as well as exempted services. There was no requirement that the utilization should be within the limit of 20% every month as held by this Tribunal in the case of Vijayanand Roadlines Ltd vs CCE, Belgaum - reported in 2006 (12) TMI 56 - CESTAT,BANGALORE and Idea Cellular Ltd vs CCE, Rohtak reported in 2009 (2) TMI 91 - CESTAT NEW DELHI . Thus for the period prior to April 2008, if the appellant had taken credit and the appellant had not utilized that credit in excess of the 20% of the credit taken there will not be any liability to reverse only excess credit taken. For the period 2008-09 to 2010-11, the appellant s contention is that they have maintained separate accounts and the ineligible credit taken by them would be only ₹ 5.81 lakhs. This is a question of fact and needs to be verified by the department. - Matter remanded back conditionally - Application disposed of.
Issues:
1. Service tax demand confirmation for the period from 2006 to 2011. 2. Maintenance of separate accounts for input services utilized in taxable and exempted services. 3. Imposition of penalty under Section 78 of the Finance Act, 1994. Issue 1: Service Tax Demand Confirmation The appeal challenged the Order-in-Original confirming a service tax demand of Rs. 1,17,42,949 for the period from 2006 to 2011. The appellant was held liable due to not maintaining records separately for input services used in taxable and exempted services. Additionally, a penalty was imposed under Section 78 of the Finance Act, 1994. The appellant contested the decision, citing discrepancies in the utilization of credit compared to the permissible limit. Issue 2: Maintenance of Separate Accounts The appellant argued that for the period prior to April 2008, the utilization of credit exceeding 20% occurred only in specific months, remaining within the limit overall. Citing precedents, the appellant claimed that as long as the total credit utilized falls within the 20% limit during the period of availment, it suffices. For the subsequent period of 2008-09 to 2010-11, the appellant maintained separate accounts and reversed the excess credit pointed out during audits. The appellant contended that the amount of ineligible credit was significantly lower than the demand, which required verification by the department. Issue 3: Imposition of Penalty The Revenue argued that the appellant failed to provide evidence of maintaining separate accounts for credit utilization on input services for taxable and exempted services. The Revenue supported the adjudicating authority's decision to confirm the demand at 8% of the value of exempted services. The Tribunal, after considering both sides' submissions, decided to remand the matter back to the adjudicating authority for fresh consideration. The appellant was directed to pre-deposit a specific amount and provide evidence supporting their claim of maintaining separate accounts for credit utilization. In conclusion, the appeal was allowed by way of remand, and the stay petition was disposed of accordingly.
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