2018 (9) TMI 1922 - AT - Service Tax

CENVAT Credit - service tax amount indicated in the invoices issued by the sub-contractor - sub-rule (7) of Rule 4 of Cenvat Credit Rule, 2004 - CBEC Circular No. 122/3/2010-ST dated 30.04.2010 - denial on the ground that under the provisions of sub-rule (7) of Rule 4 of Cenvat Credit Rule, 2004, the assessee was only entitled to avail Cenvat Credit of the amount paid to the service provider i.e. the sub-contractor - HELD THAT - An identical matter came up before the Tribunal for consideration in the case of Hindustan Zinc Limited 2018 (7) TMI 522 - CESTAT NEW DELHI . Upon-examination of the statutory provisions read with the circular dated 30.04.2010 issued by the CBEC, the Tribunal has held that in case a part amount of value of service is retained from the bills of the service provider, the Cenvat Credit cannot be denied for the full amount of service tax claimed in the invoices. There are no merits in the impugned order passed by the Learned Commissioner (Appeals) - appeal allowed - decided in favor of appellant.

Summary

Issues:
Cenvat Credit entitlement when part of service value retained by appellant.

Analysis:
The appellant, a manufacturer of electrical control panels providing taxable services, assigned part of the service to a subcontractor during the disputed period. The appellant retained a portion of the billed amount as a security deposit but availed the entire Cenvat Credit of service tax from the subcontractor's invoices. The department disputed this, citing Rule 4 of Cenvat Credit Rule, 2004, stating the appellant could only avail credit of the amount paid to the service provider. The matter was adjudicated against the appellant, leading to confirmed Cenvat demand, interest, and penalties. The Commissioner (Appeals) upheld the decision, prompting the appellant to appeal to the tribunal.

The appellant's advocate argued that Circular No. 122/3/2010-ST and a previous tribunal decision supported their position. The Revenue's representative reiterated the findings in the impugned order. Upon hearing both sides and examining the records, the tribunal referred to a previous case involving Hindustan Zinc Limited. The tribunal in that case held that if a portion of the service value is retained but the service tax paid remains unchanged, Cenvat Credit cannot be denied for the full service tax amount claimed in the invoices. As the appellant had paid the full service tax amount reflected in the invoices despite retaining part of the service value, the tribunal found no merit in the Commissioner (Appeals)'s decision. Consequently, the tribunal allowed the appeal in favor of the appellant, setting aside the impugned order.