2018 (3) TMI 1280 - AT - Central Excise

CENVAT credit - non-compliance of the requirement of sub-rule (7) of Rule 4 of the Cenvat Credit Rules, 2004 - non-payment of entire invoice value claimed by the service provider - Held that - identical issue decided in the case of Hindustan Zinc Ltd. 2018 (3) TMI 1187 - CESTAT, NEW DELHI , where it was held that no reversal of credit under Rule 14 can be ordered in such situation - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Disallowance of Cenvat credit for non-compliance of Rule 4(7) of Cenvat Credit Rules, 2004.

Analysis:
The judgment revolves around the disallowance of Cenvat credit due to non-compliance with the requirements of Rule 4(7) of the Cenvat Credit Rules, 2004. The appellant had retained 5% from the invoice value while making payments to service providers until evidence of deposit towards statutory liabilities like ESI and PF was provided. The Department invoked Rule 4(7) and confirmed the service tax demand against the appellant for not paying the full invoice value claimed by the service provider.

The Tribunal referred to a previous Final Order in the case of Hindustan Zinc Ltd., where a similar issue was addressed. It was noted that in cases where a portion of the consideration was retained towards service rendered by the provider for performance guarantee, the credit disallowance was not justified. The Tribunal cited various decisions, including Hindustan Zinc Ltd. vs. CCE, Jaipur-II, to support its decision.

Based on the settled legal position and precedents, the Tribunal found the impugned order unsustainable and set it aside, allowing the appeal in favor of the appellant. The judgment emphasized that in light of the established legal principles, there were no merits in upholding the disallowance of Cenvat credit. As a result, the impugned order was set aside, and the appeal was allowed in favor of the appellant.

In conclusion, the Tribunal's decision in this case highlights the importance of considering specific circumstances and legal precedents when determining the eligibility of Cenvat credit under Rule 4(7) of the Cenvat Credit Rules, 2004. The judgment underscores the need for a thorough analysis of the facts and applicable legal principles to ensure a fair and just outcome in disputes related to Cenvat credit disallowance.