2016 (8) TMI 307 - AT - Service Tax

Cenvat credit common input services - credit on capital goods used exclusively for providing exempted services - Held that - appellant is maintaining separate account as required under Rule 6(2) of the CCR, 2004 and there is no contrary finding save and except as alleged by the Id. Commissioner that in the statement of Senior Manager (finance), he did not state unambiguously. - In view of the clinching documentary evidence, no reliance can be placed on unambiguous statement of the officers. The appellant has fulfilled the condition of Rule 6(2) of CCR. Demand set aside. Interest and penalties set aside. The impugned order is set aside save and except the issue relating to credit pertaining to capital goods used exclusively for providing exempted services which are not contested by the appellant decided partly in favor of appellant.

Summary

Issues Involved:
1. Demand of cenvat credit under Rule 6 (3) read with Rule 6(3A)
2. Penalty imposed under Rule 15(1) of Cenvat Credit Rules, 2004

Analysis:

Issue 1: Demand of cenvat credit under Rule 6 (3) read with Rule 6(3A)
The appellant, M/s Magnum Ventures Ltd., appealed against the demand of cenvat credit totaling &8377; 1,11,72,351/- under Rule 6 (3) read with Rule 6(3A). The appellant was found to have availed cenvat credit on input services used for both taxable and exempted services without maintaining separate accounts as required by Rule 6(2) of Cenvat Credit Rules, 2004. The appellant failed to provide necessary documents and information, leading to the issuance of a show cause notice. The Tribunal found discrepancies in the documents related to cenvat credit availed, but the appellant argued that the services provided were not exempted services as per the Finance Act, 2011. The Tribunal held that the appellant maintained separate accounts as required under Rule 6(2) and set aside the demand of &8377; 91,11,674/-, along with the demand of &8377; 21,45,284/- due to untenable objections raised by the Commissioner. The penalties imposed on the company and its officers were also set aside, except for the uncontested penalty of &8377; 15,393/-.

Issue 2: Penalty Imposed under Rule 15(1) of Cenvat Credit Rules, 2004
The co-appellants, Senior Manager (Finance) and Manager (Excise), were appealing against penalties of &8377; 5 lakhs each imposed under Rule 15(1) of Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994. The penalties were related to non-compliance with maintaining separate accounts for cenvat credit utilization for taxable and non-taxable services. However, the Tribunal set aside the penalties along with the demands of cenvat credit, except for the penalty of &8377; 15,393/- relating to credit pertaining to capital goods used exclusively for providing exempted services.

In conclusion, the Tribunal partially allowed the appeals, setting aside most of the demands and penalties, except for a minor penalty relating to capital goods credit. The judgment emphasized the importance of maintaining separate accounts for cenvat credit utilization and provided detailed reasoning for the decisions made based on the evidence and legal provisions cited during the proceedings.