2016 (11) TMI 1159 - AT - Service Tax

Cenvat credit - process of heat treatment - job work - as the appellants are clearing their final product on payment of service tax as also without payment of service tax, they are entitled to use only 20% of the credit so availed - whether the only objection of the Revenue is the appellants should not have taken the Cenvat credit on its own and should have filed refund claim, justified? - Held that - From the letter dtd. 30.06.09, I find that a proper intimation was given to the Asstt. Commissioner and the said letter also discloses the discussion between the appellant and the Asstt. Commissioner. It is also written in the said letter that Asstt. Commissioner was kind enough to permit the appellants to take the credit. Revenue is not disputing that the said letter was filed by the appellants. If that be so, the permission of the Asstt. Commissioner is deemed to have been granted during the personal discussion between the appellant and the Asstt. Commissioner. I find no reasons to direct the appellants to deposit any part of demand or the penalty imposed - I have already held the Asstt. Commissioner having granted the permission during discussion amounts to grant of permission by the Revenue for claiming the refund. In any case, taking of credit back on deposit of tax amount in cash is only a book adjustment and Revenue is not disputing that such re-credit was available to the appellants otherwise on merits - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant was liable to pay service tax for heat treatment services.
2. Whether the appellant was entitled to avail Cenvat credit for inputs and input services.
3. Whether the appellant properly credited an amount in their Cenvat credit account.
4. Whether the appellant should have filed a refund claim instead of taking Cenvat credit on their own.
5. Whether the imposition of penalty on the appellant was justified.

Analysis:
1. The appellant provided heat treatment services for their principals, with some customers paying duty on the final product. The Revenue objected to the varying payment of service tax by the appellant. The appellant admitted to this and paid duty in cash, becoming entitled to credit utilized for past service tax payments.

2. The Revenue contended that the appellant could only use 20% of the credit due to the mixed payment of service tax. The appellant credited ?5,81,850 in their Cenvat account after paying duty in cash, as per a letter to the Revenue.

3. Subsequently, a show cause notice was issued to the appellant, alleging that the self-credit adjustment was impermissible. The impugned order confirmed the demand and imposed a penalty. The appellant argued that they had proper permission from the Assistant Commissioner to take the credit.

4. The Tribunal found that the appellant had intimated the Revenue about the credit in a letter, and the Assistant Commissioner's permission was deemed to have been granted during discussions. The Tribunal rejected the Revenue's argument that a refund claim should have been filed instead of the appellant taking credit on their own.

5. The Tribunal disagreed with the Revenue's reference to another judgment, stating that the Assistant Commissioner's permission sufficed for the credit. The Tribunal held that the re-credit was a book adjustment and allowed the appeal, setting aside the impugned order and any consequential relief was granted.

This detailed analysis of the judgment addresses the issues raised in the case comprehensively, highlighting the key legal arguments and the Tribunal's reasoning in reaching its decision.