2017 (11) TMI 1251 - AT - Service Tax

CENVAT credit - taxable as well as exempt services - non-maintenance of separate records - Rules 6 (3) (c) of CCR, 2004 - the Cenvat Credit was restricted to 20% of the output taxable services provided by them, the respondent has availed credit in excess - Held that - the case of the Revenue is not sustainable as Revenue has calculated month wise whereas Cenvat Credit is available to them up to the limit of 20% of the input services as per return wise as held by this Tribunal in the case of Vodafone Essar Digilink Ltd. Vs. CCE, Jaipur 2011 (6) TMI 586 - CESTAT, NEW DELHI - as per the return wise, the respondent has correctly availed the Cenvat Credit up to 20% of the input services credit - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against dropping proceedings for exceeding Cenvat Credit limit.

Analysis:
The appeal was filed by the Revenue against an order where the Ld. Commissioner (Appeals) had dropped proceedings against the respondent for allegedly utilizing Cenvat Credit in excess of the permissible limit. The respondent, a provider of telecommunication services, was accused of not maintaining separate accounts for taxable and exempted services, resulting in a restriction on Cenvat Credit to 20% of the output taxable services. The Revenue contended that the respondent had availed Cenvat Credit in excess during specific periods, thus challenging the dropping of the demand amounting to INR 22,08,688. On the contrary, the respondent argued that the Ld. Commissioner had correctly examined the records and decided to drop the proceedings.

Upon hearing both parties and examining the records, the Member (Judicial) observed that the Revenue's case was not sustainable. The Tribunal referred to a previous case law where it was established that Cenvat Credit should be limited to 20% of input services return-wise. The Tribunal noted that the respondent had correctly availed the Cenvat Credit up to the permissible limit of 20% of input services credit as per the return-wise calculation. Consequently, the Member (Judicial) found no infirmity in the impugned order and upheld it, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal's decision was based on the interpretation of the Cenvat Credit Rules and the specific calculation method for determining the permissible limit of Cenvat Credit. The judgment emphasized the importance of adhering to the prescribed rules and procedures while availing such credits to avoid disputes and potential liabilities.