2018 (8) TMI 780 - AT - Central Excise

Differential duty demand - Urea - N/N. 1/2011 or N/N. 2/2011 - demand on the ground that the appellant had availed the input service tax credit in respect of security agency services and commission agent services - Held that - The appellant stand that they have not availed the service tax paid to commission agent for sale of urea is required to be appreciated by verifying the records maintained by the assessee. For such verification, it is deemed fit to set aside the impugned order and remand the matter to the Original Adjudicating Authority - appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of Notifications No.1/2011 and 2/2011 regarding duty rates for urea manufacturing.
2. Availment of Cenvat credit on input services for urea production.
3. Applicability of Rule 6(5) in relation to common availment of services for dutiable and exempted goods.
4. Determination of service tax credit availed for commission agent services.
5. Requirement for verification of records to ascertain service tax credit availed.

Analysis:

1. The judgment addresses the issue of the appellants being engaged in urea manufacturing, initially exempted but later made dutiable under Notifications No.1/2011 and 2/2011. Notification No.1/2011 offered a concessional rate of 1% subject to no availment of input or input services credit for urea, while Notification No.2/2011 prescribed a 5% rate with Cenvat credit availability on input and input services. The appellants availed the 1% duty rate during March 2011.

2. The Commissioner initiated proceedings against the appellants for availing differential demand of 4% duty for March to July 2011. While the demand for April to July 2011 was dropped due to no Cenvat credit availed, the demand for March 2011 was confirmed as the appellants had availed input service tax credit for security agency and commission agent services. The advocate argued that services were obtained earlier, and Rule 6(5) exception applied for security agency services until its deletion in April 2011.

3. Regarding commission agent services, it was explained that services were only for Ammonia, an intermediate product sold externally, not for urea cleared under Notification No.1/2011. The contention was that service tax credit was not availed for urea sales through commission agents. The Tribunal deemed it necessary to verify the records to ascertain the credit availed, leading to the remand of the matter to the Original Adjudicating Authority for verification.

4. The Tribunal emphasized the need to appreciate the appellant's claim of not availing service tax credit for urea sales through commission agents by verifying the maintained records. The decision to remand the matter for verification was based on the possibility that if no such credit was availed, the appellants would be entitled to the benefits of the Notifications in question, highlighting the importance of factual verification in tax matters.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision to remand the matter for further verification, ensuring a fair assessment of the tax liabilities in question.