2009 (6) TMI 57 - AT - Service Tax

Cenvat Credit Input Service removal of goods as such reversal of Cenvat credit under rule 3(5) - The appellant removed certain inputs in respect of which Cenvat credit had been taken, as such and in accordance with the provisions of Rule 3 (5) of Cenvat Credit Rules, 2004, reversed only the Cenvat credit of the Excise Duty. The Department pointed out that they should have also reversed the credit of service tax on GTA service used for transportation of those inputs whom Cenvat credit had also been taken. Held that - there is no provision to reverse the credit of service tax availed in respect of such goods or capital goods demand on account of non reversal of Cenvat credit in input service rejected.

Summary

The Appellate Tribunal CESTAT, New Delhi, in the case of Shri Rakesh Kumar, Member (Technical), heard an appeal from a steel ingot manufacturer regarding the reversal of Cenvat credit under Rule 3 (5) of the Cenvat Credit Rules, 2004. The appellant removed certain inputs for which Cenvat credit had been taken, reversing only the excise duty credit and not the service tax credit on GTA services used for transportation. The Department demanded the reversal of the service tax credit as well, resulting in a demand of Rs. 2,75,684 along with interest and penalty. The appellant argued that Rule 3 (5) only requires the reversal of credit for inputs or capital goods, not input services, citing a previous Tribunal judgment. The Department contended that the scope of Cenvat credit includes service tax credit and the demand was justified. The Tribunal ruled in favor of the appellant, stating that Rule 3 (5) does not require the reversal of service tax credit on inputs or capital goods, as per the precedent set by the Chitrakoot Steel & Power Pvt. Ltd. vs. CCE, Chennai case. The impugned order was set aside, and the appeal was allowed. The judgment was pronounced in open court by Rakesh Kumar, Member (Technical).