2018 (7) TMI 1787 - AT - Service Tax

Interpretation of Statute - Rule 6(3A)(a)(ii) of Cenvat Credit Rules 2004 - relevant date - With effect from 01/04/2011 trading was clarified to be exempted service - case of Revenue is that the option was availed by the respondent on 20/07/2011 stating that option was to be availed from 01/04/2011 and that the Adjudicating Authority has accepted the said plea - Held that - The substantial provision was to reverse attributable Cenvat credit involved in the exempted service. The Original Authority has given a finding on the basis of verification conducted by the Jurisdictional Range Superintendent for the Financial Year 2011-12 that the respondent correctly reversed the Cenvat credit attributable to the exempted service - there is no merit in Revenue s appeal - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of Rule 6(3A)(a)(ii) of Cenvat Credit Rules, 2004 regarding the exercise of option for payment of Cenvat credit attributable to exempted services within a specified timeframe.

Analysis:
The appeal in question arose from an Order-in-Original issued by the Customs, Central Excise & Service Tax, Ghaziabad, concerning the respondent's availing of the option for payment of Cenvat credit attributable to exempted services, particularly trading. The Revenue contended that the respondent failed to submit the required intimation within the stipulated 15-day timeframe, leading to a demand for payment. However, the Original Authority, in its decision, found that the respondent had correctly reversed the Cenvat credit attributable to exempted services for the relevant period, thereby dropping the demand for payment. The Revenue challenged this decision on the grounds of incorrect interpretation of Rule 6(3A)(a)(ii) of the Cenvat Credit Rules, 2004.

Upon hearing arguments from both parties, the Tribunal delved into the interpretation of the relevant rule. The Revenue argued that the option to exercise the payment of Cenvat credit should only be prospective and not retrospective, emphasizing the importance of the timeline for exercising this option. Conversely, the respondent contended that the rule did not explicitly mandate the exercise of the option within a specific timeframe, focusing on the essence of reversing the Cenvat credit attributable to exempted services.

After considering the contentions presented, the Tribunal examined the crux of the issue, which was the correct reversal of Cenvat credit related to exempted services. The Tribunal noted that the Original Authority's decision was based on verification by the Jurisdictional Range Superintendent, confirming the proper reversal of Cenvat credit for the relevant period. Consequently, the Tribunal found no merit in the Revenue's appeal and rejected it, upholding the Original Authority's decision in favor of the respondent.

In conclusion, the Tribunal's analysis centered on the correct application and interpretation of Rule 6(3A)(a)(ii) of the Cenvat Credit Rules, 2004, emphasizing the necessity of reversing Cenvat credit attributable to exempted services and the verification process conducted by the Range Superintendent to ascertain compliance. The decision ultimately favored the respondent, affirming the Original Authority's ruling and dismissing the Revenue's appeal.