2008 (8) TMI 184 - AT - Service Tax

Common input service used in rendering both dutiable and exempted services allegation of utilization of input service credit in excess of 20% - factual inaccuracy which unfortunately appellant did not point out before the lower authorities, is that major portion of the credit availed was from the capital goods credit and not the input service credit 20% restriction is only in respect of the input service credit matter remanded to original authority for de novo decision

Summary

Issues involved:
Violation of Cenvat Credit Rules regarding input service credit exceeding 20%.

Analysis:
The appellate tribunal heard both sides and decided to consider the stay application and appeal together due to the narrow compass of the issue. The impugned order found the appellant in violation of the Cenvat Credit Rules by exceeding 20% of the input service credit while providing both dutiable and exempted services. However, the appellant's advocate pointed out a factual inaccuracy regarding the input service credit availed, which was significantly lower than previously stated. The advocate highlighted that a major portion of the credit availed was from capital goods credit, not the input service credit, emphasizing that the 20% restriction applies only to the latter. Moreover, the advocate referenced decisions from the Commissioners of Calicut and Cochin Commissionerates in favor of the appellant, leading the tribunal to remand the case to the Original Authority for a fresh decision considering the factual details. The appellant will have the opportunity to present their case, and the new decision must be made within four months from the date of the tribunal's order. As a result, the stay application and appeal were allowed by remand to the Original Authority.

This detailed analysis of the judgment showcases the tribunal's thorough consideration of the factual inaccuracies pointed out by the appellant's advocate, leading to a decision in favor of remanding the case for a fresh adjudication. The legal nuances regarding Cenvat Credit Rules and the distinction between input service credit and capital goods credit were pivotal in the tribunal's decision-making process.