2018 (2) TMI 804 - AT - Central Excise

CENVAT credit - supplementary invoices - Rule 9(i)(bb) of the CCR - ST paid on reverse charge basis - Held that - Rule 9(i)(bb) is applicable to supplementary invoice, bill or challan issued by provider of output service and Rule 9(i)(e) is applicable, inter alia, to a person liable to pay service tax under Rule 2(1)(d) of Service Tax Rules, 1994 - It is apparent that the appellant is not service provider and therefore Rule 9(i)(bb) would not be applicable to them. The appellant is paying service tax on reverse charge basis in terms of Rule 2(1)(d) of Service Tax Rules, 1994 and therefore credit can be availed in terms of Rule 9(i)(e) of CCR - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of Cenvat credit, demand of interest, imposition of penalty

In the judgment delivered by the Appellate Tribunal CESTAT, Mumbai, the appellant, M/s. Polygenta Technologies Ltd., appealed against the disallowance of Cenvat credit, demand of interest, and imposition of penalty. The appellant had availed input service credit due to service tax liability under reverse charge after an investigation by DGCEI revealed non-payment of service tax on certain services received from foreign firms. The appellant paid the service tax amount and claimed credit. The Revenue sought to deny the credit under Rule 9(i)(bb) of the Cenvat Credit Rules, which debars credit on supplementary invoices issued due to fraud, suppression, misdeclaration, etc. The appellant argued that their case falls under Rule 9(i)(e) as the service tax was paid under Section 66A of the Finance Act, 1994 on a reverse charge basis without any supplementary invoice being issued. The Tribunal noted that the appellant paid service tax on a reverse charge basis and availed credit based on the challan for the tax paid, not a supplementary invoice. Rule 9(i)(bb) applies to output service providers, while Rule 9(i)(e) applies to those liable to pay service tax under specific clauses of the Service Tax Rules. Since the appellant is not a service provider and pays tax under a different rule, Rule 9(i)(bb) does not apply, and the credit cannot be denied. Thus, the appeal was allowed, emphasizing the correct rule application and the appellant's compliance with the tax payment regulations.