2018 (3) TMI 743 - AT - Central Excise

CENVAT credit - advertisement services - Held that - the lower authorities have not given due consideration to the information furnished during the hearing in relation to the form ST-3 returns for the relevant financial year - The disclosures made in the ST-3 returns should have been verified to ascertain the factum of reversal and also for comparison with proportion of sales vis-a-vis trading. Without such ascertainment it was inappropriate on the part of the lower authorities to arrive at a conclusion that CENVAT credit was wrongly availed. The matter is remanded back to the original authority to verify the submission of the appellant that CENVAT credit had been reversed and to ascertain correctness of the computation of CENVAT credit that was reversed - appeal allowed by way of remand.

Summary

Issues: Disallowance of CENVAT credit for March 2012 due to commercial benefits derived from advertising for sale of traded goods.

In this case, the dispute revolved around the disallowance of CENVAT credit amounting to ?39,50,999 for March 2012, along with interest and penalty, imposed by the original authority and confirmed in the order-in-appeal by the Commissioner of Central Excise (Appeals), Pune I. The appellant, a company engaged in manufacturing and trading activities, had availed CENVAT credit on advertisement services. The jurisdiction authorities deemed a portion of the credit ineligible due to commercial benefits from advertising for the sale of traded goods. The appellant argued that they had been regularly reversing CENVAT credit in proportion to trading volume and had disclosed the reversed amount in their ST-3 returns for 2011-12. However, both lower authorities failed to consider this submission, leading to an erroneous confirmation of the demand for recovery.

Upon review, it was observed that the lower authorities had not adequately considered the information provided during the hearing regarding the ST-3 returns for the relevant financial year. The failure to verify the disclosures made in the returns, which included the reversal of CENVAT credit, and to compare them with the proportion of sales related to trading activities was highlighted. The Tribunal found this oversight to be crucial, as it led to an inappropriate conclusion by the lower authorities that the CENVAT credit was wrongly availed. Consequently, the impugned order was set aside, and the matter was remanded back to the original authority for verification of the appellant's claim regarding the reversal of CENVAT credit and the accuracy of the computation of the reversed credit. The appeal was disposed of based on these terms.