2017 (8) TMI 902 - AT - Service Tax

N/N. 6/2005-ST dt. 1.3.2005 - R & D Service - demand confirmed on the ground the appellant have not complied with the condition of non availing the Cenvat Credit in order to avail the exemption - Held that - the exemption is not available if the assessee availed the cenvat credit during the period for which exemption under the notification is availed of - As per the facts revealed from the ST.3 Return and the extract submitted by the appellant. It is clear that the appellant have not availed the cenvat credit in respect of input service or capital goods during the period 2010-2011 - also Revenue could not establish with tangible evidence that the appellant have availed the cenvat credit - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant complied with the conditions of non-availing Cenvat Credit to claim exemption under Notification No. 6/2005-ST.

Analysis:
The judgment pertains to the demand of service tax on R&D services provided by the appellant, which was contested on the grounds of non-compliance with the condition of not availing Cenvat Credit to claim exemption under Notification No. 6/2005-ST. The appellant argued that the case was built on the incorrect assumption that they had availed Cenvat Credit, presenting evidence that no credit was availed during the relevant period. The appellant's representative highlighted that even if there was a carried forward Cenvat balance from the previous year, the benefit of exemption should not be denied as the condition for non-availment of credit is specific to the period for which the exemption is claimed. The Revenue, represented by the Assistant Commissioner, reiterated the findings of the impugned order.

Upon careful consideration, the Tribunal focused on the conditions prescribed in the notification regarding the non-availment of Cenvat Credit. The relevant clauses (iii) and (iv) of para 2 of the notification were examined to determine the appellant's entitlement to the exemption. It was observed that the exemption would not apply if the appellant had availed Cenvat Credit during the period for which the exemption was claimed. However, based on the evidence presented, including the ST-3 Return and submissions by the appellant, it was established that no Cenvat Credit was availed in respect of input services or capital goods during the period in question (2010-2011). The Revenue failed to provide concrete evidence of Cenvat Credit availed by the appellant. Consequently, the Tribunal concluded that the appellant had indeed complied with the conditions of Notification No. 6/2005-ST, rendering the demand unsustainable. As a result, the impugned order was set aside, and the appeal was allowed.

The judgment was pronounced in court on 07/07/2017 by Shri Ramesh Nair, Member (Judicial), and Shri Raju, Member (Technical).