2019 (8) TMI 38 - HC - Service Tax

Refund claim - the rules of CENVAT Credit Rule 6(1) Rule 6(2) and Rule 6(3) of CCR as well as Rule 2(I) of Cenvat Credit Rules 2004 not taken into cognizance - HELD THAT - The ratio of the decision of this Court in THE PRINCIPAL COMMISSIONER VERSUS M/S ALEMBIC LTD. 2019 (7) TMI 908 - GUJARAT HIGH COURT is that once the assessee is not required to reverse any credit availed by him on valid input services availed during the period 2010 till obtaining of completion certificate the said amounts reversed by the assessee under protest cannot be retained by the Revenue authorities and those have been refunded to him. Appeal dismissed.

Summary

Issues:
1. Interpretation of provisions of Cenvat Credit Rules, 2004 by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
2. Validity of the order passed by CESTAT without considering specific rules related to Cenvat Credit.
3. Application of the decision in the case of Principal Commissioner vs. M/s Alembic Ltd to the present case.

Analysis:

1. The Tax Appeal under Section 35G of the Central Excise Act, 1944 and Section 174(2) of the Central Goods and Service Tax Act, 2017 was filed by the Revenue against the order of CESTAT. The Revenue raised a question of law regarding the compliance of provisions of Cenvat Credit Rules, 2004 by CESTAT in granting relief without considering specific rules related to admissibility of Cenvat Credit, maintenance of separate records for taxable and exempted services, and procedures under the CCR, 2004.

2. The Court heard arguments from both sides and noted that the question of law raised by the Revenue had already been addressed in a previous case, the Principal Commissioner vs. M/s Alembic Ltd. The Court highlighted that the decision in the Alembic case stated that if an assessee is not required to reverse any credit on valid input services, the amounts reversed by the assessee under protest cannot be retained by the Revenue authorities and must be refunded. Therefore, the Court found that the order passed by CESTAT was in line with the principles established in the Alembic case.

3. Consequently, the Court dismissed the appeal filed by the Revenue and disposed of the connected civil application, as the main appeal had been dismissed. The judgment reaffirmed the application of legal principles established in previous cases to the present matter, emphasizing the importance of compliance with Cenvat Credit Rules and the proper treatment of credit availed by the assessee.