2018 (1) TMI 870 - AT - Central Excise

CENVAT credit - input sold as such - GTA service in respect of Raw Petroleum Coke (RPC) - whether Service Tax credit paid on GTA on the said input is to be reversed as the Input had been sold as such instead of using it in the manufacture of final product? - Held that - The Hon ble Punjab & Haryana High Court in the case of Commissioner of Central Excise, Chandigarh-I Vs. Punjab Steels 2010 (7) TMI 252 - PUNJAB AND HARYANA HIGH COURT , rejected the appeal filed by the Revenue on the identical situation, where it was held that there is no provision for reversal of credit of service tax on return of goods - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Reversal of Service Tax credit on GTA service for input sold as such.
2. Rejection of refund claim due to delay in application.
3. Appeal against the Order-in-Appeal by the Commissioner (Appeals).

Analysis:

1. The main issue in this case was whether the Service Tax credit paid on GTA service for an input sold as such should be reversed. The Adjudicating authority initially dropped the proceedings initiated by a Show Cause Notice. However, a refund claim was later rejected by the Assistant Commissioner due to a delay in filing. The Commissioner (Appeals) then allowed the appeal of the Revenue and rejected the appellant's appeal, leading to the filing of two appeals by the appellant.

2. The appellant argued that Rule 3(5) of the Cenvat Credit Rules, 2004 does not mention reversing credits on input services, citing a Central Excise Tariff Conference Instruction. The appellant also referred to a judgment by the Hon'ble Punjab & Haryana High Court in a similar case, Commissioner of Central Excise, Chandigarh-I Vs. Punjab Steels, where it was held that Rule 3(5) only pertains to credits on inputs or capital goods, not input services. The court emphasized that tax laws should be interpreted based on plain and unambiguous language, and any ambiguity should be resolved in favor of the taxpayer. Consequently, the Order of the Commissioner (Appeals) was deemed unsustainable, and the appeals filed by the appellant were allowed.

3. The judgment highlighted the importance of clear language in tax statutes and the need to adhere to defined terms and provisions. It also underscored the significance of legal principles in interpreting tax laws to ensure fairness and consistency in tax administration. The decision provided clarity on the issue of reversing credits on input services and set a precedent based on established legal principles and previous judicial interpretations.