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2020 (12) TMI 281 - AT - Service TaxReversal of CENVAT Credit - works contract service - case of revenue is that the the service provided is partly exempted services which is the part of works contract service to be treated as exempt service in view of Rule 2(e) of the Cenvat Credit Rules, 2004 and as such the appellant was required to pay an amount under Rule 6(3)(i) of cenvat credit availed by them - HELD THAT - As the facts of the case similar to the facts of the case of M/S SURYA CONTRACTORS PVT. LTD. VERSUS CCE ST- JALANDHAR 2020 (3) TMI 756 - CESTAT CHANDIGARH , which is not disputed by any side. It was held in the said case that there is only one transaction of Works Contract Service which is taxable service of which certain portion has been exempted. There are no distinct transactions for two services involved. In such a situation, Rule 6 doesn't become applicable, it is only one distinct service. It is not even the case of the department that the appellant was providing two different services when it is one service where exemption has been provided to certain value would not mean that the appellant was providing exempted service which otherwise is taxable. As Rule 6 (3) was not applicable, the demand made under Rule 6(3) cannot be sustained. As the issue has already dealt with this Tribunal, the provisions of Rule 6(3) of CCR, 2004 are not applicable to the facts of the case, consequently no demand is sustainable against the appellant. Appeal allowed - decided in favor of appellant.
Issues Involved:
Appeal for early hearing based on precedent, Confirmation of demand under Rule 6(3) of Cenvat Credit Rules, 2004, Interpretation of Rule 6(3) in the context of exempted and taxable services, Applicability of Rule 6(3) to works contract services, Comparison with precedent case of M/s Surya Contractors Pvt Ltd, Adjudication based on audit findings, Imposition of interest and penalty, Reference to the decision of the Larger Bench in the case of Steel Strips vs. CCE Ludhiana, Tribunal's analysis of Rule 6(3) and exemption provisions, Decision to set aside the impugned order and allow the appeal. Analysis: The judgment of the Appellate Tribunal CESTAT CHANDIGARH involved the consideration of an appeal for early hearing based on a precedent case. The appellant sought early hearing citing a decision in the case of M/s Surya Contractors Pvt Ltd, which was deemed relevant. The Tribunal allowed the application for early hearing and proceeded to address the issue at hand, which concerned the confirmation of demand under Rule 6(3) of the Cenvat Credit Rules, 2004. The appellant, a registered contractor providing Works Contract Service, was found to have availed cenvat credit for services deemed partly exempted. This led to the initiation of proceedings, including the demand for reversal of cenvat credit under Rule 6(3)(i) of the CCR, 2004. The Tribunal's analysis delved into the interpretation of Rule 6(3) in the context of services provided by the appellant. The Tribunal considered the applicability of Rule 6(3) to works contract services and compared the facts of the case with the precedent set by M/s Surya Contractors Pvt Ltd. The appellant argued that the decision in the earlier case supported their entitlement to avail Cenvat Credit, thus challenging the demand for reversal of credit. On the other hand, the Revenue referenced a decision by the Larger Bench in the case of Steel Strips vs. CCE Ludhiana, suggesting the possibility of raising the issue in light of that decision. After hearing both parties, the Tribunal examined the provisions of Rule 6(3) and the exemption provisions under Rule 2(e) of the CCR, 2004. The Tribunal's analysis concluded that Rule 6(3) was not applicable to the present case as there was only one transaction of Works Contract Service, which was a taxable service with a certain portion exempted. The Tribunal emphasized that Rule 6 was intended for distinct transactions of services, not for situations where a part of a taxable service was exempted. Consequently, the demand made under Rule 6(3) was deemed unsustainable, leading to the setting aside of the impugned order. In light of the Tribunal's findings, the appeal was allowed with consequential relief, indicating that the provisions of Rule 6(3) of the CCR, 2004 were not applicable to the facts of the case. The decision highlighted the importance of distinguishing between distinct services and exempted portions within a taxable service when applying Rule 6(3) in the context of cenvat credit availed by the appellant.
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