2017 (6) TMI 1108 - AT - Service Tax

100% EOU - CENVAT credit - utilization - whether the Cenvat credit earned in their 100% EOU which had got common Service Tax number alongwith their other business of providing service of installation, etc in the unbonded premises, whether Service Tax have been rightly discharged from the Cenvat credit so taken? - Held that - the issue herein is squarely covered as pointed out by the counsel for the appellant, by order of a single member of this Tribunal (Myself) in Elcomponics Sales Private ltd v/s Commissioner of Service Tax, Noida 2016 (10) TMI 874 - CESTAT ALLAHABAD wherein under similar facts and circumstances, it was held that there is no such restriction for utilisation of the Cenvat credit by a manufacturer, being 100% EOU under the Cenvat Credit Rules - appeal allowed. Courier Service/GTA Service - demand of service tax - Held that - although it was the case of the appellants that they have discharged proper service tax, at the time of the transaction during the relevant period 2008-09 and 2009-10 but could not produce the relevant documents at the time of adjudication during the year 2013 and accordingly the said demand was confirmed in absence of complete and corroborative documents available with the appellant - demand set aside. Penalties - Held that - there is no contumacious conduct or suppression on the part of the appellant and as such we set aside all the penalties imposed vide the impugned orders. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether Cenvat credit earned by the appellant in their 100% EOU can be transferred to their servicing division in unbonded premises for discharging Service Tax liability.
2. Demand of Service Tax on Courier Service/GTA Service.

Analysis:
1. The appellant, engaged in various services and manufacturing activities, transferred Cenvat credit from their 100% EOU to their servicing division in unbonded premises for discharging Service Tax liability. The Audit Team noted this transfer and raised concerns about the admissibility of such credit transfer as per Cenvat Credit Rules, 2004. The Tribunal referred to a previous ruling in Elcomponics Sales Private Ltd case, where it was held that there is no restriction on utilizing Cenvat credit by a 100% EOU. The Tribunal allowed the appeal, citing the earlier ruling and stating that the transfer was revenue-neutral. The appellant was directed to receive consequential benefits as per law.

2. The second issue involved a demand for Service Tax amounting to &8377; 58,600 along with interest. The appellant claimed to have discharged the proper Service Tax during the relevant period but failed to produce relevant documents during adjudication in 2013. Consequently, the demand was confirmed due to lack of complete documents. The appellant, not contesting the amount, agreed to deposit the sum with applicable interest. The Tribunal disposed of this ground of appeal, directing the appellant to deposit the amount. Considering no contumacious conduct or suppression, all penalties imposed were set aside, and the appeal was allowed in part. The appellant was entitled to consequential benefits as per law.