2019 (2) TMI 558 - AT - Central Excise

EOU - Refund of accumulated credit - Rule 5 of the Cenvat Credit Rules, 2004 - wrong availment of CENVAT credit or not - Held that - The issue decided in the case of M/S NAVIN FLUORINE INTERNATIONAL LTD. VERSUS CCE, INDORE 2018 (11) TMI 346 - CESTAT NEW DELHI , where it was held that tax was not being paid during the relevant period and as such it can be concluded that there was suppression or mis-statement on the part of the assessee, thus leading to non-availability of credit to them - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Withdrawal of refund claims by the appellant
2. Dispute regarding the availment of Cenvat credit
3. Denial of credit for service tax paid by the head office under reverse charge basis

Issue 1: Withdrawal of refund claims by the appellant
The appellant, an EOU engaged in manufacturing chemical products, availed Cenvat credit but could not utilize it, leading to the filing of refund claims totaling ?4,08,15,675. The appellant later withdrew these refund claims and intimated the department to close the proceedings. The adjudicating authority held that the refund claims were withdrawn, but the recording of credit balance in the GST account was deemed illegal due to ongoing dispute over the availment of credit.

Issue 2: Dispute regarding the availment of Cenvat credit
The appellant was aggrieved by the observations of the adjudicating authority regarding the availment of Cenvat credit. The appellant reinstated the credit subject to dispute settlement, citing a Tribunal decision in their favor. The Tribunal's final order dated 30.10.2018 confirmed the appellant's entitlement to Cenvat credit of duty paid by the manufacturer supplier, setting aside the demand and penalty.

Issue 3: Denial of credit for service tax paid by the head office under reverse charge basis
The denial of credit for service tax paid by the appellant's head office under reverse charge basis was based on the argument that the tax was not paid routinely but disclosed under the VCES scheme, indicating suppression. The Tribunal held that the VCES scheme allows declaration of past tax liabilities, and since the head office's tax was not paid from 2009 to 2012, there was suppression, making the credit unavailable. The Tribunal rejected the appellant's reliance on circulars and precedent decisions, upholding the denial of credit for service tax paid by the head office.

In conclusion, the Tribunal allowed all appeals, deleting observations related to withdrawn refund claims and confirming the appellant's entitlement to Cenvat credit of duty paid by the manufacturer supplier while upholding the denial of credit for service tax paid by the head office under reverse charge basis.