2016 (8) TMI 13 - AT - Service Tax

Cenvat Credit - eligible input services - input services were used for creating immovable property - Held that - benefit of canvat credit allowed - credit taken on debit notes are also allowed as valid duty paying documents. - Credit taken twice is required to be reversed. - Decided partly in favor of assessee.

Summary

Issues:
1. Admissibility of CENVAT credit on capital goods/inputs.
2. Invocability of the extended period for recovery.
3. Admissibility of CENVAT credit on input services.
4. Admissibility of CENVAT credit taken on debit notes.
5. Recovery of CENVAT credit taken twice.

Analysis:

Admissibility of CENVAT Credit on Capital Goods/Inputs:
The Order-in-Original denied CENVAT credit on capital goods/inputs amounting to Rs. 4,37,26,268/- as per a Larger Bench decision. The appellant's advocate acknowledged this decision but argued against the invocability of the extended period. The Tribunal agreed that only the credit pertaining to the normal period is recoverable.

Invocability of Extended Period:
Both parties admitted the inadmissibility of CENVAT credit on capital goods/inputs as per the Larger Bench decision. The Tribunal clarified that the extended period is not invocable in this case, limiting the recoverable credit to the normal period only.

Admissibility of CENVAT Credit on Input Services:
Regarding the input service credit of Rs. 1,13,90,730/-, the appellant's advocate cited relevant judgments to support the admissibility of such credit. The Tribunal analyzed the definitions of 'input' and 'input service' under the CENVAT Credit Rules, highlighting the distinction. Relying on precedents, the Tribunal held the impugned CENVAT credit on input services as admissible.

Admissibility of CENVAT Credit Taken on Debit Notes:
The advocate argued that the CENVAT credit of Rs. 2,92,604/- taken on debit notes should be allowed as the essential particulars were provided. The Tribunal agreed, stating that substantive benefit should not be denied in such cases, thus holding this credit as admissible.

Recovery of CENVAT Credit Taken Twice:
The demand for recovery of Rs. 2,07,393/- due to allegedly taking CENVAT credit twice was contested by the advocate. However, upon reviewing the documents, the Tribunal found clear evidence of the credit being claimed twice based on the same document. Consequently, this amount was deemed inadmissible and recoverable.

Conclusion:
The Tribunal ordered that CENVAT credit related to capital goods/inputs is not admissible, and the extended period is not invocable. It held the CENVAT credit on input services and taken on debit notes as admissible. However, the demand for credit taken twice was deemed inadmissible and recoverable. The case was remitted for further adjudication to determine the inadmissible credit and re-assess the penalty after providing the appellant with an opportunity to be heard.