2018 (6) TMI 193 - AT - Service Tax

Utilisation of CENVAT credit - Reversal of CENVAT credit - provision of exempted as well as taxable services - non-maintenance of separate records - Rule 6(3)(c) of the CCR - non-utilization of CENVAT credit in excess of 20% - time limitation - Held that - The demand of tax liability is only in respect of the two months September, 2004 and December, 2004 wherein CENVAT credit in excess have been utilized - there is no time period mentioned in Rule 6(3) (c) of the CENVAT Credit Rule for collecting the CENVAT credit. In respect of same assessee, similar issue raised in the case of IDEA CELLULAR LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, ROHTAK 2009 (2) TMI 91 - CESTAT NEW DELHI , where it was held that if during certain months, the credit utilization for payment of service tax was less than the 20% ceiling specified in Rule 6(3) (c) of CENVAT Credit Rules, 2002, the unutilized credit of those months has to be adjusted against utilization in excess of the 20% ceiling, in other months. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Demand of service tax liability exceeding due credit utilization during specific months.

Analysis:
The appeal was against Order-in-Original No. 24/2008 - ST dated 27.11.2008. The issue revolved around the demand of service tax liability utilized in excess of due credit by the appellant during April, 2004 to December, 2004. The appellant, a service provider offering exempted and taxable services, did not maintain separate accounts for these services. The Revenue alleged that the appellant exceeded the 20% limit of CENVAT credit utilization from September, 2004 to December, 2004. The Adjudicating Authority upheld these allegations.

The Chartered Accountant representing the appellant argued that Rule 6(3)(c) of the CENVAT Credit Rules does not specify a time period for collecting the 20% amount to be utilized. Referring to previous tribunal decisions, the appellant's representative contended that a similar issue was decided in their favor. The Departmental Representative supported the lower authorities' findings.

Upon review, the Tribunal found that the tax liability demand was only for September, 2004 and December, 2004, where excess CENVAT credit was utilized. Rule 6(3)(c) was examined, which mandates utilizing credit up to 20% of the service tax payable on taxable output service. The Tribunal agreed with the Chartered Accountant that Rule 6(3)(c) does not specify a time frame for credit utilization. Previous decisions in favor of similar appellants were cited, emphasizing the absence of a fixed time frame for credit utilization.

Considering the consistent decisions in favor of similar appellants by two Division Benches, the Tribunal concluded that the impugned order was unsustainable. Therefore, the Tribunal set aside the impugned order and allowed the appeal with any consequential reliefs. The judgment highlighted the absence of a fixed time frame for credit utilization under Rule 6(3)(c) and the relevance of previous decisions in similar cases.