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2018 (10) TMI 695 - AT - Central ExciseCENVAT Credit - time limitation for raising invoices - reverse charge mechanism - Whether the invoice raised by the service recipients under reverse charge mechanism, against which, the assessee had availed CENVAT Credit on input service, was within the time limit stipulated under the CENVAT Credit Rules, 2004 or not? Held that - The reasoning given by the first appellate authority namely, that the invoices have been raised beyond the time provided under Rule 4A of the Service Tax Rules is without any justification. As pointed out by the adjudicating authority, the issue relates to the availment of CENVAT Credit beyond the time limit specified in CENVAT Credit Rules and this has been clarified by the Board vide Notification No. 21/2014. Further, there is no dispute that the CENVAT Credit has been availed here in this case in February, 2015 which is within six months period and thereby, satisfying with the CBEC Notification No. 21/2014. Appeal restored.
Issues:
- Dispute regarding availing CENVAT Credit on input service within the time limit stipulated under the CENVAT Credit Rules, 2004. Comprehensive Analysis: Issue 1: Availment of CENVAT Credit within the stipulated time limit The case involved a dispute regarding the availing of CENVAT Credit on input service by the appellant within the time limit specified under the CENVAT Credit Rules, 2004. The Show Cause Notice alleged that the appellant had availed ineligible service tax credit by taking it after six months from the date of provision of service, which was contrary to the Notification No. 21/2014-CE (NT) dated 11.07.2014. The appellant contended that the commission paid to its directors was for continuous service and not based on individual transactions, and the input tax credit was distributed based on invoices raised within the stipulated period. The adjudicating authority accepted the appellant's plea, stating that the appellant had not contravened any provisions of the CENVAT Credit Rules. However, the first appellate authority allowed the appeal by holding that the service tax should have been paid on the date of completion of service provision and not on the dates it was actually paid, as per Rule 3A of the Service Tax Rules, 1994. The appellate authority set aside the Order-in-Original and confirmed the demand, interest, and penalty proposed in the Show Cause Notice. The appellant challenged this decision feeling aggrieved by the Commissioner (Appeals) order. Issue 2: Judicial Review of the Commissioner (Appeals) Order During the hearing, the appellant's advocate and the Revenue representative presented their arguments. The Member (Judicial) of the Appellate Tribunal considered the rival contentions, perused the documents, and reviewed the facts of the case. The Member observed that the CENVAT Credit availed by the appellant had been distributed on a pro rata basis by the Input Service Distributor and availed by the appellant as input service tax credit within the stipulated time under Rule 4A. The adjudicating authority had relied on Notification No. 21/2014-CE (NT) but failed to refer to it in the Order-in-Original. The Member found that the reasoning of the first appellate authority regarding the invoices being raised beyond the prescribed time under Rule 4A of the Service Tax Rules lacked justification. The Member clarified that the issue was about availing CENVAT Credit within the time limit specified in the CENVAT Credit Rules, as per the Board's Notification No. 21/2014. Since the CENVAT Credit was availed within the stipulated six-month period, the Member held that the Commissioner (Appeals) order was unsustainable and set it aside, restoring the Order of the adjudicating authority. In conclusion, the Appellate Tribunal held in favor of the appellant, ruling that the CENVAT Credit availed was within the prescribed time limit as per the CENVAT Credit Rules, 2004, and set aside the Commissioner (Appeals) order, restoring the Order of the adjudicating authority.
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