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2019 (3) TMI 1334 - AT - Service TaxReversal of CENVAT Credit - shifting of capital goods from their own unit to the another unit - Held that - As the appellant are transferring capital goods of their one unit to another unit it means the appellant is clearing goods for themselves only, in that circumstances, the appellant is not required to reverse cenvat credit as held by this Tribunal in their own case M/S BSNL, SALEM VERSUS CCE, SALEM 2013 (1) TMI 142 - CESTAT CHENNAI - reversal not required - penalty set aside. CENVAT credit - recovery in terms of Rule 6 (3)(C) of Cenvat Credit Rules, 2004 - taxable as well as exempted service - Held that - It is fact on record that in the month of February 2008 the appellant utilized cenvat credit account more than 20%, but, in the subsequent month i.e. March 2008 the appellant has not utilized 20% of the cenvat credit available in the cenvat credit account. If utilization of both months is taken together, in that circumstances, the appellant has utilized only 20% of the cenvat credit lying in their cenvat credit account - no demand is sustainable against the appellant on this issue - penalty set aside. Extended period of limitation - Held that - The appellant as claiming bonafide belief that on non taxable/exempted services, they are not required to reverse the service tax, as same has shown in their ST-3 returns. This cannot be the reason for bonafide belief when law is clear from 01.04.2008. As on 01.04.2008 law has been changed for the period of availment of cenvat credit restricted to 20%, but, post on 01.04.2008 law has been changed and they are required to reverse the proportionate cenvat credit or to pay 8/6% of the value of the exempted services. In that circumstances, bonafide of the appellant are absent - the demand is rightly confirmed by invoking the extended period of limitation for non reversal of proportionate cenvat credit of exempted service or payment of 8/6% of the exempted services alongwith interest. Penalty - Held that - The appellant is a public sector undertaking and being a mistake of the officers of the organisation should not be penalized as no benefit is going to arise to the public sector undertaking. Therefore, penalty against the appellant on this account is set-aside. Appeal disposed off.
Issues:
1. Denial of cenvat credit on the ground of clearing capital goods without reversal. 2. Recovery under Rule 6 (3)(C) of Cenvat Credit Rules, 2004 for exceeding credit limit. 3. Failure to reverse proportionate cenvat credit for exempted services post-01.04.2008. Analysis: Issue 1: Denial of cenvat credit for clearing capital goods without reversal: The appellant, a public sector organization providing telecom services, contested the denial of cenvat credit amounting to ?9,76,387. The appellant argued that they shifted capital goods from one unit to another, relying on a previous Tribunal decision. The Tribunal held that since the goods were transferred within the organization, no reversal of cenvat credit was necessary, ensuring revenue neutrality. Consequently, the cenvat credit of ?10,62,700 was deemed not to be reversed, and no penalty was imposed on the appellant. Issue 2: Recovery under Rule 6 (3)(C) of Cenvat Credit Rules, 2004: A show cause notice proposed recovery under Rule 6 (3)(C) for exceeding the cenvat credit limit due to providing taxable and exempted services. It was noted that although the appellant exceeded the limit in one month, the subsequent month's utilization balanced out to the permissible limit. Therefore, no sustainable demand was found against the appellant on this issue, leading to no penalty imposition. Issue 3: Failure to reverse proportionate cenvat credit for exempted services post-01.04.2008: Post-01.04.2008, the appellant was required to reverse proportionate cenvat credit or pay 8/6% of the value of exempted services. The appellant claimed a bonafide belief based on their ST-3 returns, but the Tribunal found this belief unfounded as the law was clear post-01.04.2008. Consequently, the demand was upheld due to the absence of bonafide belief, and the extended period of limitation was invoked. However, considering the appellant's public sector status and the mistake being attributed to organizational officers, the penalty was set aside. In conclusion, the appeal was disposed of based on the detailed analysis of each issue, ultimately providing clarity on the cenvat credit denial, recovery under Rule 6 (3)(C), and the failure to reverse proportionate cenvat credit for exempted services post-01.04.2008.
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