2016 (6) TMI 78 - AT - Service Tax

Eligibility of Cenvat credit - wrongly taken and utilized - House Keeping Services, Pest Control Service etc. - proper documents not furnished - Appellant contended that the service provider has erroneously raised an invoice on their Mumbai Branch - Held that - this appears to be a mistake committed by the Service Provider for which the Appellant should not be punished. Credit is eligible as long as the duty payment particulars are genuine by applying the Tribunal Ruling in the case of Tool Tronics Vs CCE, Mumbai-II 2004 (5) TMI 526 - CESTAT, MUMBAI . Therefore, the Credit is held to be eligible. Cenvat credit availed on the basis of invoices issued by the Service Receiver - Appellant contended that this amount was not availed as cenvat credit but by mistake, there was an excess payment which was adjusted under Rule 6(4A) of the Service Tax Rules and payment made for internet subscription - Held that -there is no scope before the Tribunal to examine the veracity of the documents and therefore the matter is remanded back to the Adjudicating Authority in so far as the issue pertaining to the alleged excess payment of service tax. As all the above issues being purely interpretative in nature with no malafides, penalty is set aside. - Appeal disposed of

Summary

Issues Involved:
- Availment of cenvat credit on improper documents
- Availment of cenvat credit on input services not used for output services
- Availment of cenvat credit against provisions of Rule 9 of CCR 2003
- Recovery of wrong credit and penalty imposition

Analysis:

Issue 1: Availment of cenvat credit on improper documents
The appellant, engaged in providing services like Graphics and Animation, was alleged to have availed cenvat credit on improper documents, resulting in short payment of service tax. The original authority confirmed a demand under Section 73 (2) of the Finance Act and imposed a penalty. On appeal, the Commissioner upheld the order but remitted the case back for verification of relevant invoices. The Tribunal held that the appellant did not furnish proper documents to claim eligibility of cenvat credit, and the matter was remanded to the original authority for further examination.

Issue 2: Availment of cenvat credit on input services not used for output services
The appellant had availed cenvat credit on input services like House Keeping and Pest Control, which were not used for providing output services, contravening Rule 2(l) of CCR 2004. The original authority granted relief on this issue, and the Commissioner upheld the decision. The Tribunal found that the credit availed on these services was eligible, citing a relevant Tribunal ruling. The issue was resolved in favor of the appellant.

Issue 3: Availment of cenvat credit against provisions of Rule 9 of CCR 2003
Concerning availing cenvat credit against provisions of Rule 9 of CCR 2003, the appellant had availed credit on invoices where the input service provider only applied for service tax registration. The Tribunal noted that there was an excess payment that was adjusted under Rule 6 (4A) of the Service Tax Rules. The matter was remanded back to the Adjudicating Authority for verification, emphasizing the need for adherence to natural justice principles during the re-examination.

Issue 4: Recovery of wrong credit and penalty imposition
A show cause notice was issued proposing recovery of wrong credit along with interest and penalty imposition under Section 76 and Rule 15 (3) of CCR 2004. The original authority confirmed a demand, imposed a penalty, and the Commissioner upheld the decision with a remand for verification of specific invoices. The Tribunal allowed the appeal in part, setting aside the penalty due to the interpretative nature of the issues and remanding the matter back to the Adjudicating Authority for further examination.

In conclusion, the Tribunal's judgment addressed various issues related to the appellant's cenvat credit availment, highlighting the importance of proper documentation, eligibility criteria, and adherence to statutory provisions. The decision provided clarity on the eligibility of certain credits, remanded specific matters for verification, and emphasized the application of natural justice principles during re-examination.