2015 (2) TMI 1379 - AT - Service Tax

CENVAT Credit - amount to be reversed attributable to the trading activity of the appellant in respect of which cenvat credit is not admissible - HELD THAT - If services are identifiable to have been used only for providing dutiable services exclusively there is no need to reverse any portion of the credit on the basis of proportion of trading activity to the total turnover or even for exempted services. Since the calculation did not take this aspect into account then matter has to go back for fresh consideration. The impugned order is set aside and the matter is remanded to the original adjudicating authority for fresh adjudication after giving reasonable opportunity to the appellants to present their case and call additional evidences in support of the case - Appeal allowed by way of remand.

Summary

Issues involved:
1. Denial of cenvat credit based on incorrect calculations.
2. Consideration of services exclusively used for dutiable services in credit reversal.
3. Time-barred demand without allegations of suppression or intention to evade duty.
4. Setting aside the impugned order and remanding the matter for fresh adjudication.

Analysis:

Issue 1: Denial of cenvat credit based on incorrect calculations
The appeal addressed the denial of cenvat credit and the demand based on Revenue's calculations. The Tribunal noted that the calculations aimed to determine the amount to be reversed related to the trading activity where cenvat credit was not admissible. However, services used exclusively for providing dutiable services were also considered for credit reversal, which was deemed incorrect. The Tribunal found the submissions valid, emphasizing that if services were identifiable for providing only dutiable services, no portion of credit needed to be reversed based on trading activity or exempted services. As the calculation did not consider this aspect, the matter was ordered to be reconsidered.

Issue 2: Consideration of services exclusively used for dutiable services in credit reversal
The Tribunal acknowledged the argument that a substantial portion of the demand was time-barred without any allegations of suppression or intention to evade duty. It was highlighted that the show-cause notice lacked such allegations, indicating that the extended period could not have been invoked. The Tribunal directed the Commissioner to reexamine this aspect in detail during a fresh adjudication process, providing the appellants with a reasonable opportunity to present their case and submit additional evidence.

Issue 3: Time-barred demand without allegations of suppression or intention to evade duty
Considering the circumstances, the impugned order was set aside by the Tribunal. The matter was remanded to the original adjudicating authority for a fresh adjudication, ensuring that the appellants had the opportunity to present their case and introduce additional evidence in support of their position. The order was pronounced in open court, concluding the Tribunal's decision on the issues raised in the appeal.