2020 (3) TMI 1383 - AT - Central Excise

CENVAT Credit - requirement to pay 5%/6%/7% of the value of exempted services - rule 6 of Cenvat Credit Rules, 2004 - HELD THAT - Demand was raised under Rule 6(3A) i.e. 5%/6%/7% of the value of exempted services. It is the submission of learned Chartered Accountant that during the period involved in all the three cases, no Cenvat credit of common input services was availed. If this is correct, then the question of raising any demand under Rule 6(3A) will not arise. However, the fact whether during the period 2013-14 to 2015-16 appellant has not availed Cenvat credit or otherwise, has neither been properly submitted by the appellant nor the Adjudicating Authority or Commissioner (Appeals) has verified. The matter should go back to the Adjudicating Authority to verify whether the appellant has availed Cenvat credit on common input service during the relevant period - Appeal allowed by way of remand.

Summary

Issues Involved:
Common issue of whether the appellant is required to pay 5%/6%/7% of the value of exempted services in terms of rule 6 of Cenvat Credit Rules, 2004.

Analysis:
In the present case, the appellant, represented by a Chartered Accountant, argued that no Cenvat credit on common input services was availed during the period 2013-16. Referring to a previous Tribunal order, it was highlighted that for the earlier period, only a specific credit relevant to that case was availed, which was subsequently set aside. The appellant contended that the demand under Rule 6(3A) should not apply as no credit was taken for common input services. However, it was noted that this fact was not explicitly presented before the lower authorities, although written submissions were made during the hearing emphasizing the non-availment of credit during the relevant period.

The Superintendent (Authorised Representative) opposed this argument, stating that the appellant had not provided any documentation regarding the non-availment of Cenvat credit on common input services. Referring to a similar case involving Welspun Corp. Limited, it was mentioned that an appeal against the Tribunal's decision had been admitted by the Gujarat High Court. The Tribunal, after hearing both sides and reviewing the records, observed that if no Cenvat credit of common input services was indeed availed during the period in question, then the demand under Rule 6(3A) would not be justified. However, since the verification of this fact was lacking, the matter was deemed necessary to be sent back to the Adjudicating Authority for proper examination.

The Tribunal directed the Adjudicating Authority to verify whether the appellant had availed Cenvat credit on common input services during the relevant period. It was emphasized that if no credit was taken, the demand would not be sustainable. The Tribunal also instructed the Adjudicating Authority to consider the previous judgment of the Tribunal while issuing a fresh order. Regarding the case of Welspun Corp. Limited, it was noted that although the appeal was admitted by the High Court, no stay had been granted, thus the Tribunal's order in that case would remain in effect. Consequently, the impugned orders were set aside, and the appeals were allowed for remand to the Adjudicating Authority for further examination.